Disney CEO Josh D'Amaro Downplays 'The Mandalorian and Grogu' Box Office Failures

Disney released financial results this morning before the opening bell. During a conference call with investors, CEO Josh D'Amaro (who replaced Bob Iger in the role earlier this year) discussed historically low earnings. The box office
on The Mandalorian and Grogu seriesand also said that the company is exploring the possibility of launching an ad-supported streaming service.

As widely reported, The Mandalorian and Grogu, released in May of this year, became the lowest-grossing film in the Star Wars franchise. Despite the average ticket price being higher than in 2018, Jon Favreau's failed to reach the worldwide box officeSolo's $392 million to top aStar Warsfilm that failed to gross more than $200 million in the United States. However, D'Amaro said on the earnings call that the film did have some impact on Disney's earnings in additional markets. First of all, it stimulated retail sales and attracted visitors to amusement parks. He said:

“The Mandalorian and Grogu have driven strong retail sales growth for the Star Wars franchise, attracted visitors to the revamped Millennium Falcon attraction at Disneyland and Walt Disney World, and significantly increased engagement in the gaming industry.”

This is Disney's long-standing strategy. They usually argue that the financial benefit of a film is not limited to box office receipts alone; it often extends to other areas of their business. Still, we have specific numbers on how much the film made, but D'Amaro has said absolutely nothing about other numbers. There was certainly an increase in retail sales, but how significant was it? Did it make up for the $100 million the film may have lost at the box office? In terms of parks, has the new, redesigned attraction Millennium Falcon resulted in a significant increase in attendance?Or did the parks record several cases of above-average attendance due to this attraction?

Disney's streaming strategy has also come under the spotlight lately. Last week, the company canceled the renewal of Marvel'sMonder Man after announcing it would return for a second season earlier this year. The company also hasn't given any indication as to which Star Warsseries will come next after Ahsoka's second season next year, hinting at a slowdown in the development of big-budget live-action series. D'Amaro emphasized the importance of Disney Plus to the company's strategy, but rather than talking about filling the platform with a slew of new series and movies, he called it "the digital hub of our relationship with fans."

Disney today announced a partnership with TikTok to create short-form content for the streaming service. According to Variety, as part of the new agreement, “content creators on the popular short-form video service will create short films related to characters and stories from Marvel, Pixar, Star Wars, FX and others.” A US launch is planned for the coming months.Asad Ayaz, director of marketing and branding of the company, said:

“This collaboration creates a new bridge between the stories we tell and the creativity they inspire, giving creators a broader platform to showcase their work and audiences more opportunities to discover new content every day on Disney+.”

Then D'Amaro also stated that they want to get into the ad-supported free streaming business:

“We see this as a way to expand our reach to a more price-sensitive customer segment, and expanding our reach, as we have said previously, is one of our strategic priorities. Unlike many of our competitors in the AVOD space, we are fairly well endowed with advertising space, which means that increasing our ad inventory will really help us accelerate ad revenue growth. Finally, the free offer can help drive Disney+ subscriber growth at the top of the funnel. So we won't be announcing anything specific today, but it's definitely something we're looking at."

This is the latest example of Disney trying to make up ground in the streaming wars. They launched Disney Plus as an answer to Netflix at a time when many other companies were preparing their own subscription services. Then, when these companies began exploring cheaper rates with advertising, they too followed suit. Now, seeing that audiences are tired of paying for half a dozen different subscriptions and are instead flocking to platforms like Pluto TV or Tubi, they are switching to them too.

It's pretty clear that the strategy isn't working, mainly because they can't attract the same audience that used to buy movie tickets. It's also clear that by the time Disney Plus celebrates its 10th anniversary, it will be a very different place than what it was originally intended to be.Judging by the deals with TikTok, OpenAI and Epic Games, watching new movies and TV shows online is no longer a priority for Disney.