“Avatar: The Way of Water” was supposed to be a sure thing for Disney. The 2009 movie “Avatar” brought in $2.9 billion. According to Barron’s, the new version brought in $135 million, which was below expectations. Overseas, the film’s ticket sales were $310 million. The movie may lose money. The underperformance serves Disney’s new CEO Bob Iger his first piece of really bad news.
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Disney’s early regret may have been what it cost to make the film, which was about $350 million. The recent costs of making blockbuster films have made them riskier financially.

Disney could count on movie success before the pandemic as a key driver of both revenue and profits. Disney’s box office market share over the past 10 years was extraordinary, averaging about 12%. That figure was even higher from 2016 to 2019. The success of this segment, along with theme parks, was Disney’s earnings engine.

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Disney needs to make up for the disaster of its streaming business financially. It lost $1.5 billion in the most recently reported quarter. Because its streaming subscriber growth has slowed, and its underpriced products like Disney+, it may take years to repair this Disney division, if it is repaired completely.

Disney finds its streaming business looks like the movie business. Subscriber market share is as critical as ticket sales. Disney has to contend with streaming giants Netflix and Amazon. A dozen other smaller media companies also have staked their financial figures on doing well in the segment. Lurking in the wings, Apple TV+ is funded by Apple’s deep balance sheet and the fact it can offer its service to the billion-plus people who own iPhones, iPads and Macs.

Theme parks will continue to provide Disney with a solid foundation for its earnings. Movies and streaming may not.

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