Why Disney Doesn’t Need Every Movie to Be a Box Office Hit

Imagine walking into a movie theater; you grab some popcorn, a drink, and then settle in for a two-hour adventure. Decades ago, that transaction was where the story ended: you paid for entertainment, received it, and went home.

Today, that movie ticket is merely the first push of a massive, unseen wheel—one that will follow you home, pop up on your TV screen, land on your children’s toy wish list or your apparel wish list, and eventually shape your next vacation.

In the corporate world, executives call this seamless loop a flywheel. While it sounds like just another piece of boardroom jargon, understanding how it works reveals why Disney operates the way it does and how they keep you coming back for more.

During the most recent earnings call, Disney CEO Josh D’Amaro illustrated how well the flywheel works when the movie is popular, as well as what happens when it ‘s not a box office hit. 

To understand the business strategy, it helps to start with the real thing. A physical flywheel is a heavy mechanical device invented during the Industrial Revolution. Pushing a giant iron wheel from a complete standstill requires immense effort. You strain and push, and for a long time, it barely moves.

However, if you keep pushing in the exact same direction, something shifts. The heavy mass that initially made the wheel so stubborn begins working for you. It gathers momentum, stores kinetic energy, and starts spinning smoothly on its own inertia. Once it reaches full speed, maintaining that motion takes little effort compared to getting it started.

In the business world, the “Flywheel Effect” describes how a company creates continuous, compounding growth. Rather than relying on a single lucky hit or a one-off product launch, a business builds an interconnected network where every product, service, and division naturally feeds energy into the next.

While Jim Collins is credited with creating the concept and making it popular in his 2001 book Good to Great, Walt Disney cracked the code about 45 years earlier with a diagram.

In 1957, Disney sketched a flowchart that mapped out his company’s vision. At the center of the diagram sat Feature Motion Pictures. Spoking out from that central hub were comic books, television, music, licensing, and a brand-new theme park called Disneyland. Arrows showed energy and cross-promotion flowing back and forth between every area. The core idea was simple: the movies fueled the park rides, the park rides promoted the TV shows, the TV shows drove music sales, and the profits from all of them funded the next motion picture.

And to this day, The Walt Disney Company relies on this concept. Here’s how D’Amaro explained it with the Toy Story franchise during the earnings call. 

The five Toy Story films have delivered over $4 billion in global box office and over 2 billion hours streamed on Disney+. Across all retailers, Toy Story generates more than $1 billion in annual global retail sales and reaches fans across every Disney park and cruise ship, including four immersive lands, 19 attractions and two hotels.

“Now that’s the Disney flywheel in action, one powerful and enduring story told across theaters, streaming, retail, and physical experiences. That integration creates a structure no one else has been able to replicate,” he said.

“Even when our franchise films don’t meet our box office expectations, as with The Mandalorian and Grogu and the live-action Moana, our investments in these core properties fuel other parts of our company,” D’Amaro said.

The Mandalorian and Grogu drove healthy growth in retail sales for the Star Wars franchise and drew guests to the updated Millennium Falcon attraction at Disneyland and Disney World, and led to significant engagement in gaming as well. The live-action Moana is expected to be a strong title on Disney+, building on the success of the original film, which is one of the most streamed movies of all time.

Now, if you’re wondering how streaming on Disney+ helps the bottom line, take into consideration that subscribers pay a flat monthly or annual fee to access the library. Popular, highly rewatchable catalogs act as retention anchors. When families regularly watch these films, they feel they are getting continuous value from their subscription, which stops them from canceling (reducing churn). Lower churn directly protects predictable, recurring monthly revenue. For subscribers on ad-supported tiers, every hour streamed translates directly into ad impressions. So yes, the streaming hours do matter.

Even if a movie, like the live-action Moana, tanks in the theater, it might push people to go back to the original animated film on Disney+, again increasing streaming, and maybe inspiring people to purchase some new merchandise. 

At its core, the Disney flywheel is designed to turn a movie into a lifelong relationship—ensuring that no matter where you turn for entertainment, Disney is right there waiting for you.