Pixar's 'Elio' is emblematic of a bigger headwind for Hollywood

Disney's Pixar animation studio had its worst opening ever over the weekend — and its problems aren't unique.

"Elio," the story of a young boy who is mistakenly identified as Earth's ambassador to the universe, tallied just $21 million in ticket sales during its first three days in theaters, a record low for the studio.

The underwhelming performance fits a recent pattern among Pixar's releases. While franchise films have lured in moviegoers, the studio's original fare has had far less success in recent years.

Just look at 2023's "Elemental," which brought in the previous lowest-opening haul of $29.6 million, compared to 2024's "Inside Out 2," the studio's second-highest opener at $154.2 million in domestic ticket sales, according to data from Comscore.

But, it's not just Pixar that has seen its original storylines fall flat. Disney's other animation arm, Walt Disney Animation, and even rival animation studios within Universal and Paramount, have seen sequels outperform new stories like "Elio" that aren't tied to previous works. This phenomenon has also held across the board with live-action films, as well.

"A survey of animated film performance post-pandemic shows that the gap between original [intellectual property] and sequel film performances has grown enormously wide, which is a potential problem for studios looking to grow their IP portfolio," Doug Creutz, analyst at TD Cowen, wrote in a note to investors published Monday.

In the wake of the pandemic, studios have sought to deliver films that audiences are already familiar with, including sequels and stories based on books or comics. That's contributed to a flood of franchise content from studios with massive media libraries.

Disney has long been an animated feature empire, since its very first title "Snow White and the Seven Dwarfs" in 1937. It's been a dominating force in the industry for decades, with only a few hiccups along the way.

Part of that strength came from the acquisition of Pixar in 2006.

At the time, Walt Disney Animation was coming off several years of misses — "Treasure Planet," "Brother Bear," "Home on the Range" and "Chicken Little" among them — while Pixar had delivered hit after hit with titles like "Monsters Inc.," "Finding Nemo" and "The Incredibles."

Over the next decade, the two animation engines churned out popular original films like "Frozen," "Wreck-It Ralph," "Zootopia," "Inside Out" and "Coco." At the same time, Disney began to tap back into successful, well-known stories.

However, in the wake of the pandemic, its animation arm, especially Pixar, struggled. With ongoing restrictions and worries about emerging Covid variants, parents kept their kids at home, and Disney sent "Soul," "Luca" and "Turning Red" directly to its newly minted streaming service Disney+.

For a while, industry experts blamed this strategy for Disney's inability to lure in audiences to see non-franchise movies in theaters. There were also some who felt the company had become too socially conscious with its storytelling and alienated a segment of potential moviegoers.

However, at the same time, competition in the animation industry was on the rise from Universal, Sony, Warner Bros. and Paramount. Families had more content to choose from, not just on the big screen, but at home from streaming services. So, parents became pickier about what titles they'd take their kids to and which ones they'd wait to enter the home market.

"Elio" opened on June 20, just weeks after the live-action remakes of Disney's "Lilo & Stitch" and Universal's "How to Train Your Dragon." Those films were still drawing audiences by the time the new Pixar film entered the fray.

This heightened competition and the shift in consumer habits has led Hollywood as a whole to rely even more heavily on existing stories with built-in fan bases.

"For audiences, sequels are comfort food," said Peter Csathy, chairman of Creative Media. "It's the anti-'Forrest Gump' effect, you always know what you're going to get."

The movie industry has long relied on franchise films to drive revenue at the box office, but that trend has expanded exponentially in recent years. Since 2016, no more than five films in the top 20 highest-grossing domestic releases each year have been original titles.

In fact, in 2024, none of the top 20 films were original storylines.

"For Disney and the other major traditional studios, animation sequels are the one safe bet in a world filled with growing existential threats, as they face forever-altered streaming economics, new big tech Hollywood moguls, and now the great unknown of generative AI," Csathy said. "The media landscape has never been murkier. Wall Street has never been more demanding. So sequels to animation success stories are the one remaining safe haven. Sure bets for a highly unsure time."

The saving grace for original fare like "Elio" is the potential for a second wind.

The films could still have long runs in theaters, collecting ticket sales in the weeks and months after opening weekend, and thrive on streaming platforms down the line. Belated fandom then opens up further opportunities for future installments, tie-ins or merchandising.

Look at "Encanto," which hit theaters during the pandemic. The film had limited theatrical success because it arrived in theaters at a time of great uncertainty around public health safety, but became popular in the home market. So much so, that Disney is incorporating the film in updates its making to its Animal Kingdom theme park in Florida.

Disclosure: Comcast is the parent company of CNBC and NBCUniversal.