Disney (NYSE:DIS) was doing well there for a while. Vin Diesel brought in the crowds with The Pacifier. Before that, Nicolas Cage took everyone on a hunt for a National Treasure. And, of course, Pixar (NASDAQ:PIXR) helped the Mouse deliver a superhero spoof titled The Incredibles.
Unfortunately, there isn't a lot of summer magic working for Disney right now. There are some winners; Disney just isn't among them. Take a look at current gross domestic box-office earnings for competitors' films, as reported this week by Box Office Mojo.
News Corp. (NYSE:NWS) wields the box-office Force with Star Wars: Episode III -- Revenge of the Sith and Mr. and Mrs. Smith ($368 million and $150 million, respectively).Viacom (NYSE:VIA) scores with War of the Worlds and The Longest Yard ($130 million and $150 million, respectively). And movie fans go batty over Time Warner's (NYSE:TWX)Batman Begins ($160 million).
But Disney has failed to achieve much interest with its Lindsay Lohan project, Herbie: Fully Loaded. The film's cumulative domestic gross stood at about $40.5 million Wednesday after a couple of weeks in theaters. Lohan may have done well last year with the highly lauded Mean Girls flick, but she couldn't bring the droves Disney needed to resurrect the popularity of poor old Herbie.
Disney looked as if it was going to score with The Hitchhiker's Guide to the Galaxy, but it didn't. As of Monday, the movie had only taken in a bit more than $50 million -- after more than two months in the domestic marketplace.
Even though Disney's competition is taking in more bucks at the box office, the movie industry, in general, is suffering from a box-office slump. Exhibitor Relations reported last month that box-office ticket sales were about $4.5 billion so far this year, down 6% from a year ago. It's impossible to say with certainty which, if any, of these films would have fared tremendously better given a larger pool of moviegoers. In fact, as I've pointed out before, shareholders must accept the vagaries of the box-office business, which is always cycling in and out of favor -- not only on a macro level, but with each individual studio's slate.
Of course, some are probing the celluloid slump deeply, raising serious questions about the possibility that it's indicative of a genuine industry downturn. They want to know whether the model is breaking down.
Are we going to see a delay in DVD releases? It's possible. Many theorize that the unwillingness of people to watch movies on the silver screen is directly related to the quick appearance of theatrical releases on the video shelves. The spread between the cost of a DVD and a ticket is narrowing, another proffered observation for the weakness.
And while theatrical exhibition is taking its knocks, look at this: The DVD model might be crumbling as well. First it was DreamWorks Animation (NYSE:DWA) that overestimated demand for Shrek 2 when it was released on DVD; then, it was Pixar that felt the squeeze when video stores returned unsold DVDs. Is the DVD business in trouble, too?
In terms of theater ticket prices, there's not much that can be done. They will always rise with inflation, and from an economic perspective, I think it is important to keep a premium of value attached to them. Why? Because it's certainly arguable that seeing a film at the theater is a much different experience from watching it at home. (Yes, even with all the snazzy home theater technology available today.)
As far as the DVD side of the equation goes, I urge companies to fight the flood-the-market/strike-while-the-iron-is-hot mentality that is apparently very addicting. Manufacture a conservative number of copies of any given movie and strive to get store returns down to a minimal number.
The movie industry is still a valid business, and it will eventually perk up again; I thought it would happen sooner, but don't worry -- it'll happen. As a Disney shareholder, I can only look forward to the next features: Chicken Little, a computer-animated adventure coming out in November; the company's potential Lord of the Rings substitute, The Chronicles of Narnia: The Lion, the Witch, and the Wardrobe, debuting in December; and next summer's Pixar piece Cars.
My gut tells me that Fox and Marvel Enterprises' (NYSE:MVL) Fantastic Four is going to give Disney's Dark Water a pretty difficult time this weekend, but that's OK -- I own shares in Marvel Enterprises as well.
More Takes on Mickey:
What do you think of Disney's movie slate, or the movie business in general? Spread some magical opinions at the Disney discussion board.
Fool contributor Steven Mallas owns shares of Disney and Marvel Enterprises. The Fool has a strict disclosure policy.
