In 2019, Disney went from a very large and powerful company to a virtually inescapable cultural monolith. It dominated the box office, reached record revenues, bought a rival film studio, and launched a major streaming service to compete directly with Netflix over the future of entertainment. The year was everything Disney had been building toward for a decade.
Ten years ago, the company bought Marvel Entertainment with the goal of putting many of the world’s most beloved superheroes together on movie screens around the world. Just a few years later, Disney purchased Lucasfilm to unite Star Wars fans new and old in a galaxy far, far away. This year’s releases of Avengers: Endgame and Star Wars: The Rise of Skywalker, perhaps the two highest-grossing movies of 2019 when all is said and done, marked the culminations of those two acquisitions, respectively. (The Rise of Skywalker‘s only real competition for second-place after Endgame is The Lion King, another Disney movie).
Disney topped all that off by officially acquiring Fox’s film and TV assets this year in order to bolster the offerings of its streaming service, Disney+. Between Marvel, Lucasfilm, Fox, Pixar, and all of Disney’s other franchises, the company owns enough intellectual property to supply another century’s worth of entertainment.
But, first, it must prove it can succeed in the post-Avengers, post-Star Wars trilogy, streaming-first era. 2019 may have been its biggest year ever, but 2020 will be its biggest test.
Three charts that explain Disney’s huge 2019
In 2019, Disney movies represented nearly a third of the total US box office gross. And that doesn’t include movies distributed by 20th Century Fox, which Disney now owns. Disney’s share of the total box office has grown steadily in the last decade as it churned out more Marvel and Lucasfilm movies.
And it’s managed to do that while making fewer movies in total. In 2009, Disney released 23 feature films that sold tickets that year. In 2019, only 12 movies accounted for Disney’s market share. The company has doubled down on its tentpole strategy, in which it invests large quantities of resources in an increasingly smaller amount of movies—though each one is a potential blockbuster.
Disney’s reach is widening as well. It sold a record number of tickets in 2019, before The Rise of Skywalker was even released:
Even adjusted for inflation, Disney easily made more money at the box office in 2019 than in any other year. Avengers: Endgame, which earned $2.8 billion worldwide, alone made almost as much as every Warner Bros. movie combined.
Disney didn’t just have success at the movies. Its total revenue across all business segments, which includes theme parks and media networks (TV channels), hit a record high in 2019 at nearly $70 billion. On that, it made $10.4 billion in profit—slightly less than the record $12.6 billion in profit it made in 2018. Disney partially blamed the consolidation of Fox’s assets for the slight downturn in profit from a year ago.
So everything’s great, right? Nothing to worry about?
Two charts that will explain Disney’s 2020
First, Disney will have to enter 2020 without Avengers or Star Wars to rely on:
Since Disney started making Star Wars movies in 2015, the company has made at least one Star Wars- or Avengers-branded movie a year. Of course, as The Lion King and Black Panther proved, Disney can still find massive success at the box office with movies that are not technically part of either franchise (even if Black Panther exists in the same cinematic universe as Avengers).
Second, its traditional TV business is in trouble. ESPN, Disney’s lucrative sports network, has lost 13% of its subscribers in the last five years:
As more and more Americans cut the cord every year, it’s unlikely that Disney will be able to reverse this trend. To that end, in 2018, Disney launched ESPN+, a sports subscription streaming platform for $5 a year. As of November, it had about 3.5 million subscribers. Disney is now offering it in a bundle alongside Hulu and Disney+ at a rate reduced from what it would cost to sign up for all three services together.
Disney’s TV business, which also includes the ABC network, isn’t in danger of bottoming out any time soon. In fact, it represents the largest portion of the company’s overall revenue—more than double what its tentpole movies bring in with arguably half the cultural buzz. But Disney needs to staunch the bleeding and prove to investors it has a sound streaming strategy for when its traditional TV business can no longer be counted on as a consistent source of revenue. After nearly a decade of revenue increases, the growth of Disney’s media networks segment has slowed down.
No more Avengers or Star Wars (for now)
Disney must move forward with its two biggest franchises in 2020. It will still have a Black Widow movie (and plenty of other Marvel characters will get their own movies in subsequent years), but if you’re looking for Iron Man or Captain America, you’re not going to find them on the big screen. The same can be said for Luke Skywalker, Rey, Kylo Ren, and the gang. Those stories are over.
It won’t be long before Star Wars resurfaces at the multiplex—Disney is already developing a new trilogy with The Last Jedi director Rian Johnson. And on the Marvel side, Disney will now turn its attention to The Eternals, the upcoming 2020 film based on the Marvel comics of the same name. The Eternals are not as well known as the Avengers were prior to their film adaptations, so Disney has some brand-building ahead of them. The franchise, which Disney hopes will be the spiritual and financial successor to the Avengers, is not guaranteed success. And neither is Johnson’s new Star Wars trilogy, which does not yet have a release date.
2020 will be a crucial year for Pixar
With no Avengers or Star Wars next year, perhaps Pixar can pick up the slack. The animation studio will make two new original films in 2020: Onward and Soul.
As other animation houses catch up to Pixar’s ingenuity, the Disney brand will have to get bolder in order to maintain its edge on the field. Many of Pixar’s most recent films have underwhelmed at the box office as the company moved away from the boldness and originality that separated it when it first started making films and toward sequels of films that should never have gotten them in the first place (hello, Cars 2.)
Pete Docter, the director of Inside Out, is now the chief creative officer of Pixar, after his predecessor, John Lasseter, left the company amid a sexual misconduct scandal. Docter has already issued a new mandate: No more sequels. Onward and Soul are the first two attempts at restoring Pixar’s global status, and recommitting to its founding vision.
Disney+ still has a lot to prove
Technologically speaking, the November launch of Disney’s streaming service could have gone smoother. And despite a treasure trove of content, The Mandalorian, a Star Wars-based TV series, is the only Disney+ offering anyone is really talking about. The nascent streaming service still has a long way to go to prove to investors and fans that it was a sound longterm investment.
Credit Suisse estimates Disney+ will have 20 million global subscribers by the end of 2019 (it has only launched in a few countries outside the US so far, including Canada, the Netherlands, and Australia). That’s well ahead of Disney’s own projections (it forecasted about that many subscribers by the end of next year), but some of those are undoubtedly free trials. Verizon also offered its new customers a free year of the Disney service, which could be inflating its early subscriber totals. Netflix has 160 million global subscribers, and has not yet been substantially affected by the presence of Disney+.
It’s too early to assess the success of Disney’s streaming gambit. By the end of 2020, however, we’ll know a lot more about whether or not it was a smart move for Disney to wager much of its future on streaming entertainment. 2020 will be Disney+’s first full year of existence, and next fall, it’ll debut a new Marvel TV series, The Falcon and the Winter Soldier, to go alongside The Mandalorian. It will launch in several more countries, including the United Kingdom, France, Germany, and Spain.
Beyond bringing in subscribers, can Disney+ compete at the Emmys, as Netflix routinely does? Can it bring in renowned creators from outside the existing Disney ecosystem, as Netflix has done with filmmakers like Martin Scorsese? Disney has never performed especially well at the Oscars, and that has yet to deter them. But finding a way to cozy up to the Hollywood elite could not only help sell the product to more subscribers, but it could also serve as a thorn in Netflix’s side as it looks to distance itself from its streaming competitors in the awards landscape.
Can Disney still create new franchises?
Outside of the occasional Pixar movie, all of Disney’s biggest movies are based on intellectual property that’s already immensely popular. But at some point—and it may already be happening—audiences will tire of the same stories, told in the same ways, and will clamor for more new stuff. Maybe that won’t happen in 2020. But Disney would be smart to get ahead of the curve and anticipate when its tried-and-true franchises inevitably hit a wall. It hasn’t had to start franchises from scratch in a long time. Sooner or later, it will.
In 2020, we’ll see how strong the Disney brand is when Luke Skywalker or Iron Man are not involved. Here’s Disney’s 2020 movie slate (not including those from 20th Century Fox):
If 2019 was the year Disney took over the world, 2020 will be the year that signals whether it’ll stay there, or fall back to the pack. Over slightly more than a decade, the company leveraged its globally beloved brand to buy Pixar, Marvel, Lucasfilm, and Fox, positioning itself as the most dominant cultural force in the world. But with that success have come expectations that will become harder and harder to meet.
If Disney+ fails to catch on in a meaningful way, if the company struggles to generate more water-cooler shows beyond The Mandalorian, or if The Eternals and its other upcoming tentpole blockbusters underperform at the box office, it could set up Disney for a decade much bumpier than the last. It doesn’t help that every media rival on the planet is trying to figure out each day how to cut into Disney’s foothold.
CEO Bob Iger, who will step down from the role he’s held for more than 15 years in 2021, has staked his legacy on streaming. So far, investors are pleased—the stock is up almost 35% from last year on the strength of the company’s box office and the perception that Disney+ is an early success. But if either of those things falter in 2020, stockholders might not be so thrilled. No successor has been named, but consumer chief Kevin Mayer and Facebook COO Sheryl Sandberg, a former Disney board member, have been floated as replacements. Whomever that person is, he or she will have to lead Disney through a new decade marked with uncertainty.