Welcome Back, Pixar: Inside Out 2 Leads Disney's Strategic Theatrical and Streaming Success

Pixar is back. And the company is carrying the film industry this summer. After stumbling with its latest releases, Pixar’s Inside Out 2 enjoyed the second-highest-ever opening weekend for an animated movie during the weekend of June 14.

Thus, Disney continues to recover from a major pandemic misfire and is learning how to master the distribution of movies in theaters and online -- a lesson all studios are learning. By releasing Inside Out 2 exclusively in theaters, Disney and Pixar generate revenue streams from theatrical release and build anticipation for the movie’s eventual premiere on Disney+. But figuring out this sensible interplay has not been easy.

Disney+: Promise and Disappointment

Disney+ should have been Disney’s savior during the pandemic with theaters and theme parks shutting down. Indeed, then-CEO Bob Chapek reorganized its media and entertainment divisions to focus on streaming content. The company did some things very well, such as driving subscriber growth.

But Disney, like its New Hollywood rivals, had a problem on its hands: what to do with the films they had lined up for release. Studios had already pumped millions into marketing high-profile films such as No Time to Diein anticipation of theatrical releases. Shelving them meant committing to an uncertain future. No one knew when theaters would open again.

Some studios, such as Paramount, held on to major titles such as Top Gun: Maverick, originally slated for release in 2020, Paramount eventually released the movie in 2022 and reaped a huge financial windfall.

But Disney stumbled. The company distributed Pixar movies like Soul directly to Disney+, which industry watchers say conditioned people to watch new Pixar movies at home. When people returned to theaters in 2021, Disney experimented with releasing movies such as Black Widow simultaneously at home and in theaters. This approach alienated theaters and triggered a breach of contract lawsuit with Black Widow star Scarlett Johansson. Meanwhile, Disney+ encountered problems including soaring content production costs and internal strife, both of which led to the ouster of Bob Chapek.

New Hollywood Is Figuring It Out

Disney wasn’t the only streaming operation that made mistakes. Netflix committed a gaffe by limiting Glass Onion: A Knives Out Mystery to a small theatrical run in 2022 before taking the movie online. The movie achieved bonkers success in theaters. Netflix left money on the table by limiting Glass Onion’s theatrical release.

But New Hollywood is figuring it out now. Movies such as The Batman have generated big box office revenue and boosted streaming viewership numbers (the latter is especially important to attract advertisers). To its credit, Disney is figuring it out, too. Black Panther: Wakanda Forever also enjoyed a huge box office before driving strong viewership ratings on Disney+.

Disney will keep Inside Out 2 in theaters until well after Labor Day. The film industry, suffering through a summer downturn, will actively cheer the success of the movie. Meanwhile, Disney is pulling out all the stops through a multichannel marketing approach that includes, among other things, mascots from the movie greeting fans at select locations. Brand collaborations include Bubble Skincare promotions on TikTok, clever tie-ins with Airbnb and Uber, and much more. Disney is also sharing behind-the-scenes footage on social media to build excitement.

Disney has other reasons to celebrate. In May, Disney said that its streaming segment (which includes Disney+, ESPN+, Hulu, and Star+) realized its first quarterly profit. One reason for this positive turn of events is the introduction of a he introduction of an ad-supported tier on Disney+. This tier has earned ad revenue that contributes to the bottom line.

Disney is counting on the Inside Out 2 marketing blitz to drive viewership on Disney+. So are advertisers.