In my former life as a critic, I always argued in favor of analyzing elements of something you loved that didn’t fully coalesce versus dogpiling on something universally disliked. There’s no value in the latter while the former offers pathways to new success. In that spirit, we’re continuing our exploration of The Walt Disney Company’s recent wobbles with a closer look at its animated efforts. Disney is one of the most beloved brands in the world and, at its best, the proud purveyor of unrivaled blockbuster theatrical success. But its bread and butter is getting burned in recent years.
Walt Disney Animation Studios and Pixar films Wish ($238 million in worldwide box office), Strange World ($175 million), Encanto ($231 million), Raya and the Last Dragon ($116 million), Soul, Luca, Turning Red, Lightyear ($219 million) and Elio ($154 million) struggled commercially amid COVID complications, hybrid streaming releases, or general audience apathy. Disney has absolutely delivered successes in the post-pandemic era. Sequels to Inside Out and Moana crossed $1 billion apiece, Elemental showed off enviable legs, and Encanto is the most-watched movie on streaming in the U.S. over the last five years. But new-to-screen efforts are undeniably struggling due to structural and creative obstacles.
Structural challenges in Hollywood
Streaming has irrevocably changed audience behavior and preferences, and Disney+ is no exception. But before we get to that, let’s highlight how Disney’s recent moves reflect leadership’s understanding of the need for a refresh for intellectual property development.
Disney has built its business around four key content pillars: Marvel, Star Wars, Walt Disney Animation and Pixar. “There’s been a very specific way Disney’s animated concepts have been generated over the years,” Simon Pulman, an entertainment lawyer specializing in IP rights at Pryor Cashman, told Observer. “It’s either based on a fairy tale or something that has been generated by their classic braintrust. At some point, you have to ask if any centralized creative force across Hollywood becomes too insular over time?” That question takes on added importance when animated budgets are running $150 million to $200 million-plus while rivals are generating solid ROI at roughly half the cost (hello, Illumination).
Disney’s animated theatrical fare is typically created in-house. The lack of third-party IP and external development has created a creative bottleneck for many studios relying on recycling library concepts.
The Mouse House seems to recognize this. It recently made the rare move to acquire the planned five-book series Impossible Creatures, which is currently delighting young adult audiences across the U.S. and U.K.. It’s also expanding its partnership with BBC Studios to bring licensed streaming sensation Bluey to the big screen.
What else is mobilizing young audiences? Adaptations based on video games, manga and anime—key areas Disney has ignored or previously given up on. That’s changing too. The company invested $1.5 billion into Fortnite maker Epic Games, acquired a 2 percent stake in South Korean digital comics platform Webtoon Entertainment, and has begun dabbling in anime/anime-inspired entertainment with the likes of Star Wars: Visions, Twister-Wonderland: The Animation, Miraculous Stellar Force and more.
“Anime has become a global force because it’s unafraid to confront existential stakes,” Derick Tsai, CEO of the IP development studio Magnus Rex, told Observer. He pointed to climate collapse in Nausicaa, alienation in Neon Genesis Evangelion and systemic oppression in Attack on Titan as key examples. “These stories meet audiences where they actually live emotionally, socially and spiritually, and they do it with a sincerity that feels deeply authentic.”
All of these show Disney slowly but surely breaking with its internal status quo in order to reignite creative engines. But these new creative vessels may not have as much runway if audience behavior can’t be reconditioned.
Across Hollywood, the pre-streaming era was defined by carefully constructed windows. Films debuted in theaters, became available on home video three to six months later, and then finally hit broadcast and cable TV. The limited availability created a sense of exclusivity and premium allure that drove more urgent theater attendance. The company’s brilliant Disney Vault marketing strategy drove frenzied family purchases for decades.
“Films felt more like an event and, therefore, very special. Now, it’s all available all the time in one place,” Pulman said. “Parents are running a calculus in their heads as to whether their children are going to terrorize them to see a movie in theaters or if they can wait for Disney+. If kids don’t fear FOMO [fear of missing out] on the playground, then they’re all content to wait.”
This is reflected in Theatrical Intent scores for Encanto (35 percent), Strange World (44 percent), Wish (49 percent), and Elio (35 percent) in the week of release, which are all much lower than typical animated Disney fare, according to Greenlight Analytics, where I work as Director of Insights & Content Strategy. This issue isn’t specific to Disney; it’s an industry-wide epidemic with the advent of streaming. Scarcity once elevated demand. Now, endless availability has conjured apathy.
Creative challenges amid cultural wars
The culture wars that have engulfed American discourse over the last decade created a hyper-polarized environment. Within the swirling winds of charged opinions, Hollywood is frequently cast in the role of public enemy number one.
Whether intentional or not, Disney has increasingly found itself at the center of larger machinations related to state and federal issues. Florida’s 2022 “Don’t Say Gay” bill, corporate DEI initiatives, casting choices across Star Wars, Marvel, The Little Mermaid and other major projects, plot points in Soul, Luca, Turning Red, Lightyear and Elio, Jimmy Kimmel and the notion of free speech—all of these elements have generated discussions that divided Disney’s potential audience. Post-COVID films have been viewed by some corners as therapy sessions for their creators, which has creative merit but is not always rooted in broad appeal.
Speaking generally about Hollywood’s place in the culture wars, Pulman observed that in the period surrounding the COVID pandemic, major entertainment and games companies had become more permissive about employees voicing their political beliefs and infusing creative work with personal ideologies – only to be taken aback when the cultural pendulum swung in the other direction. Owing to several recent controversies, studios seem “afraid of these things being picked up and used as a pawn. That has led to an overcorrection and studios being afraid of having any point of view at all, with a number of projects developed in that period being stripped of certain themes prior to release,” he told Observer. “The solution is probably a back-to-basics rethink on how projects are developed from inception—with an emphasis on universal and character-driven storytelling aimed at general audiences.”
Beyond the political spectrum, Disney animation may also have fallen a touch behind from a thematic and visual standpoint. “Disney’s core themes of believing in yourself, finding strength in family, and discovering that home is inside you are timeless,” Tsai said. “But the world’s hopes and fears have evolved. Audiences today are wrestling with identity in a digital age, climate anxiety and systemic inequality. The stories that resonate most now engage those questions directly with honesty and hope.”
A successful example is Sony’s Spider-Verse film series, Tsai pointed out. They are superhero stories powered by profoundly modern ideas about authorship, destiny and owning your own narrative. Trojan horsing these contemporary ideals into standard blockbuster story structure is the secret sauce to critical resonance and emotional audience buy-in. Packaging all of this in aesthetically innovative new forms creates a strong theatrical pull (see: Spider-Verse, Puss in Boots: The Last Wish, Flow, Demon Slayer: Infinity Castle). It’s something Disney needs to further embrace to keep its art fresh.
“Post-Spider-Verse, audience taste has shifted toward bolder, artist-forward visuals; animation that feels handcrafted and singular,” Tsai said. “Disney started to explore that space with Wish, experimenting with mixing 3D, painterly textures and linework. There’s a huge opportunity to keep pushing in that direction.”
