6 Disney Movies That Blew Their Budgets

Few studios attract as much scrutiny of their spending as Disney and there is good reason for this.

Despite being late to the party, Disney became the poster boy of streaming during the pandemic. Fortuitously, its Disney+ platform launched in late 2019 just months before the world went into lockdown. People were stuck indoors with little else to do except watch television and they were flush with furlough money to spend on streaming subscriptions.

Bristling with exclusive shows based on Disney’s most famous franchises, subscription numbers to the Disney+ platform soon shattered analysts’ projections and it became a credible challenger to Netflix which essentially invented the online streaming model in 2007.

Capitalizing on its rapid rise to success, Disney commissioned yet more exclusive movies and series. There were sequels aplenty, shows based on classic characters and live action remakes of its cartoons. They all sent Disney’s content costs soaring and with no end to the pandemic in sight, it looked like the studio had found the magic formula. Its stock price surged to a high of $201.91 in March 2021 but the euphoria didn’t last long.

The rapid global rollout of the Covid vaccine was followed by a return to work and a cost of living crisis fueled by the need to cover the cost of furlough payments. It caused subscriber numbers to crash across the board just as the slew of new Disney content began coming on stream.

In turn, Disney’s Direct To Consumer (DTC) division announced blockbuster losses, still standing at $10 billion, which sent its stock price crashing below $100 just over a year after it reached its all-time-high.

The red ink claimed the scalp of Disney’s chief executive Bob Chapek, who was replaced with his predecessor Bob Iger in November 2022. Iger initially became Disney’s CEO in 2005 but stepped down in 2020. Soon after Iger returned, he announced that the studio needed to “reduce costs on everything that we make because, while we’re extremely proud of what’s on the screen, it’s gotten to a point where it’s extraordinarily expensive.”

To his credit, Disney’s DTC division is now profitable. However, the unchained spending cannot be blamed entirely on Chapek.

Disney’s filings reveal that more than a third of the live action movies based on its classic cartoons which have been released over the past decade have been over budget.

The origins of Disney’s live action remakes dates all the way back to 1894 when celebrated English novelist Rudyard Kipling wrote the Jungle Book, a tale of a human boy named Mowgli who was brought up by animals. It spawned the 1967 animated hit produced by Walt Disney himself but that was just the start.

To commemorate the 100th anniversary of the book, Disney made a live action version of the story in 1994 starring some big names including Sam Neill, Cary Elwes, John Cleese, and Jason Scott Lee in the role of Mowgli.

According to industry analyst Box Office Mojo, it grossed a respectable $52.4 million but the biggest impact it had was proving the popularity of live action remakes. This opened the door to a whole new world for Disney and led to a sequel to the Jungle Book as well as two films based on 1961 cartoon 101 Dalmatians. The duo grossed a total of $504.3 million and set the scene for Disney to build an entire division dedicated to developing live action remakes of its classic cartoons.

It took around a decade for Disney to get going and there was perhaps good reason why it eventually pushed the button. It was reported that Disney’s desire to remake its classic cartoons was driven by the expiry of the copyright to the characters in them. Some which have already fallen into the public domain include Bambi, Peter Pan, Winnie-the-Pooh and even the original version of Mickey Mouse which appeared in the 1928 short film, Steamboat Willie.

This has led to a spate of copycat productions but Disney has a trick up its sleeve to deal with them. The Mouse’s own live action remakes reset the copyright dial by giving the next generation of viewers new versions of the characters to relate to.

The first live action remake in Disney’s modern era was Tim Burton’s Alice in Wonderland in 2010. Its star-studded cast featured Helena Bonham Carter, Anne Hathaway, Alan Rickman and Johnny Depp, fresh from his success in Disney’s Pirates of the Caribbean series. Against all expectations, Alice in Wonderland grossed a staggering $1 billion on a budget of just $153.1 million (£122.5 million) as this report revealed.

Indeed, it was so profitable that a sequel was commissioned along with a string of other remakes and even movies based on the characters from its cartoons rather than live action versions of the fairytales themselves.

That led to 2014’s Maleficent, starring Angelina Jolie as the eponymous villain from Sleeping Beauty. It made $759.9 million in theaters and spawned a sequel five years later. Still Disney didn’t stop there. In December last year it gave the live action treatment to Mufasa, a prequel to The Lion King and in March Snow White got it too.

The majority of the 17 live action movies based on Disney’s fairytales that have been released over the past decade were made in the United Kingdom. This shines a spotlight on their spending as shown in the chart below.

The main reason that many studios film in the U.K. is that they get a reimbursement of up to 25.5% of the money they spend in the country provided that at least 10% of their core costs are incurred there. In order to demonstrate this to the authorities, studios set up separate companies to produce each film in the U.K. and they are obliged to file legally-binding earnings releases.

The earnings releases reveal everything from the cost of the picture and the amount of the reimbursement right down to number of production staff on the crew and the social security payments they receive. They also usually state whether the picture was over, under or in line with the budget.

It is important to note that the budget of a movie isn’t the same as its cost. The budget is the sum that the studio allocates to it on its internal forecasts. The movie’s cost is the amount that is actually spent on it. If this is higher than the budget the studio has to allocate further funds to it in order for production to continue.

Accordingly, although budget and cost are connected, there is no direct correlation between them. This means that a movie which costs less to make than it peers can still be over budget and one which is the most expensive of its kind can be under budget.

Whether a movie is over or under budget depends on how much the studio forecasts it will cost to make. It is important for investors to know if productions hit their budgets because if a studio can’t meet its internal forecasts it could suggest that its financial controls are insufficient unless the over-spend is due to an external reason beyond its control.

As the data above shows, Disney’s live action movies blew their budgets before the pandemic and after it. And although the latest instalment, Lilo & Stitch, was a resounding success with box office takings of $1 billion, it immediately followed Snow White which bombed with a gross of just $205.7 million. Given this uncertainty combined with Disney’s track record of struggling to stick to the budget, it explains why investors may see these movies as somewhat disenchanting.