Disney (DIS -0.52%) is getting comfortable in its perch on top of the studio entertainment industry. It finished 2016 as the top-grossing movie maker for the first time in over a decade. And the entertainment giant just made box-office magic happen again this past year.
A few late-season blockbusters allowed Disney to race ahead of Time Warner's (TWX) Warner Bros studio to capture over one-fifth of all ticket sales, or about $2.3 billion. By the time the numbers are finalized, Warner Bros will be comfortably behind in second place, with roughly $2 billion in receipts, according to Box Office Mojo.
Spinning theatrical magic
Disney achieved that happy result with far fewer films in 2017 -- 12 compared to Time Warner's 33. It helped that this small selection included the two top-grossing movies overall, Beauty & the Beast, which pulled in over $500 million in domestic receipts, and Star Wars: The Last Jedi, which was on track to pass that figure over the New Year's holiday weekend. Sure, Wonder Woman grossed over $400 million, but that film wasn't joined by big enough blockbusters to let Time Warner seriously compete with Disney for first place overall.
As usual, the market-thumping performance was a team effort from Disney's diverse collection of studios. Thor: Ragnarock and Guardians of the Galaxy Vol 2, produced by Disney's Marvel studio, each pitched in over $300 million, while Coco and Cars 3, from Pixar, together contributed $300 million. A new Pirates of The Caribbean title, by Disney Pictures, grossed nearly $200 million.
An even brighter 2018
Disney's movie business hasn't seemed impressive lately. In the fiscal year that ended in September, in fact, the segment booked an 11% sales decrease and a 13% decline in profits. That weakness contributed to Disney's reporting its first overall operating decline in seven years.
However, the studio slump had a lot to do with the quirky cadence of Disney's movie releases. After all, three of its biggest launches, Thor: Ragnarok, Star Wars: The Last Jedi, and Guardians of the Galaxy Vol. 2, didn't make it into fiscal 2017 even though they were critical in pushing Disney into first place among studios for the calendar year. That also means the financial benefit from these films will really be felt in fiscal 2018.
CEO Bob Iger and his team have an aggressive release schedule planned for the year that includes four Marvel movies, two Pixar launches, and the Star Wars film that's likely to keep setting records into 2018. That packed pipeline should help the studio business rebound from the prior year's unusual decline. Those improving results will likely combine with a healthy parks and resorts segment to offset weakness in Disney's core media segment and push overall sales and profits higher this year.
Looking further out, Disney's biggest financial gains tend to come in years following its successful theatrical outings as it incorporates the new intellectual property into its theme parks and television shows while selling and licensing toys and games around the popular brands. It's only just starting this process with prior-year hits like Finding Dory, Moana, and The Jungle Book, and 2017's Beauty & the Beast will be no exception.
As for rivals like Time Warner, they might have just missed their last chance to knock Disney off of its top industry spot. Movie production from the 21st Century Fox (FOX) studio, which in 2017 accounted for $1.3 billion in box office receipts and 12% of the industry haul, will begin lifting Disney's results as soon as its $52 billion merger closes, likely by June 2018.