Taking time out of his busy schedule running Disney, Bob Iger flew to the Cannes film festival in support of Harrison Ford’s latest movie, even posting on social media snapshots of the aging action hero on the red carpet.
Lucasfilm Ltd. had just premiered the fifth installment in its Indiana Jones franchise and a lot is riding on the fedora-sporting, bullwhip-toting archeologist portrayed by the now 80-year-old Hollywood star. At nearly $300 million, Dial of Destiny is one of the most expensive films ever made and initial reviews suggest it could bomb big at the box office when it lands on June 30.
When Iger acquired Lucasfilm for just over $4 billion a decade ago, it paired the century-old animation company with the studio behind Star Wars and Raiders of the Lost Ark. Yet the match made in heaven now risks becoming an albatross around Disney’s neck.
The third Skywalker trilogy started off with a bang in late 2015 with The Force Awakens, only to end with a whimper four years later as fans deserted the franchise. The studio hadn’t produced a theatrical release of any kind since, allowing the Marvel Cinematic Universe—despite recent setbacks—to supplant it as Disney’s cash cow.
“The Force has left Lucasfilms,” said Eric Schiffer, CEO of private equity firm Patriarch Organization, in an interview. “That emotional connection it enjoyed with fans has been damaged.”
The Los Angeles-based media industry investor and self-admitted Star Wars fan still counts the deal a success for Iger, but he believes it got lost producing too much subpar content for Disney.
At Disney, less is now more
“To get the Force back, Lucasfilm needs to reconnect with its Joseph Campbell roots—the inner set of mythologies we’re all hardwired to that motivated Lucas to create Star Wars in the first place,” said Schiffer.
He argues the constant hunger to feed the streaming business with fresh material helped sow the seeds for the current malaise.
Even as The Mandalorian—“the series that started it all for Disney+” in Iger’s words—helped the CEO attract subscribers and catch up quickly to Netflix, it came at a cost of stretching the Star Wars brand beyond recognition.
Now that growth has faltered, with 4 million customers canceling their membership in the three months through March, and Wall Street is pushing Iger to end the scattergun approach of showering creators with money for new content. Instead, investors want him to end the over $10 billion in cumulative streaming losses since the launch of Disney+ three and a half years ago.
The idea that less is often more could apply to Lucasfilm’s Indiana Jones films, which enjoyed their heyday in the 1980s. Fans were largely satisfied when the titular character finished on a high note, literally riding off into the sunset at the end of the third film.
And so, when Kingdom of the Crystal Skulls was released fifteen years ago, the spectacle of seeing an aging Ford emerge unscathed from a nuclear blast by hiding in a refrigerator left no one asking for more.
But they will get a sequel nonetheless when Dial of Destiny swings into theaters a full 42 years after the first installment. Factoring in marketing and distribution costs, including the cinemas’ cut of receipts, it will likely have to pull in around $800 million at the box office just to break even.
Franchises cannot be measured in box office receipts alone
Iger didn’t come out of retirement in November just to watch his prize possessions wither on the vine. The board expects him to right the ship, breathe life back into the dormant stock and resume paying a cash dividend to shareholders.
To do so, he’ll need to churn out family-friendly fare full of iconic characters and thrilling settings capable of being repurposed into immersive experiences for his amusement parks.
“The value of intellectual property cannot be measured simply in a franchise’s box office receipts,” said Guy Bisson, co-founder of the media industry research firm Ampere Analysis. “You need to take into account its contribution in streaming, in merchandising, in the characters and rides at parks.”
For example, Disney finance chief Christine McCarthy explained to investors something seemingly mundane as refreshments can squeeze more revenue out of each Disney World visitor if they can be turned into a Star Wars-themed experience.
But Lucasfilm, which did not respond to Fortune’s requests for comment, knows it is running out of excuses now that a movie based on a Nintendo video game proved you can still rake in over $1 billion post-pandemic as long as you have the right concept.
For this very reason, Iger notably started off his fiscal Q2 earnings call this month by congratulating Universal for the success of Super Mario Bros: “It gives us reason to be optimistic about the movie business.”
Lucasfilm's first return to the theatres in years opens to poor reviews
The pressure on Dial of Destiny to perform for the Disney CEO became apparent through a telling exchange at Cannes, which he was attending for the first time.
Film critic Pete Hammond recounted Iger’s reaction when informed Deadline just published a rave review of the fifth Indiana Jones movie: “You could see the absolute relief on his face. ‘You have made me very happy to hear that,’ he told me, and he meant it.”.
That’s probably because first impressions have otherwise been dreadful, with a franchise-low 50% score on Rotten Tomatoes as of writing. Vanity Fair proclaimed it “not worthy of the whip”, while the BBC felt Ford’s globe-trotting adventurer had been relegated to a background figure in his own film, included mainly for the purpose of being upstaged by younger co-star Phoebe Waller-Bridge.
“I’m not sure how many fans want to see Indiana Jones as a broken, helpless old man who cowers in the corner while his patronizing goddaughter takes the lead, but that’s what we’re given, and it’s as bleak as it sounds,” the BBC wrote, branding it a “gloomy and depressing” final act.
With Disney needing to shell out $9 billion at least to buy Comcast out of Hulu as early as next year, the last thing Iger needs is bad word of mouth building over the next four weeks to asphyxiate any hopes of blockbuster success.
Right now, though, grim news is all that Lucasfilm has to offer the Disney CEO. An attempt to expand on the lore of its 1988 fantasy tale Willow flopped hard when the series debuted on Disney+ in November.
Not only was it canceled after the first of three seasons, but the show was banished entirely from the platform as part of a thorough spring cleaning. Critics argued Willow in retrospect would have been more valuable to Disney as a tax write-off than as actual content for subscribers.
Fans desert Disney Star Wars
At the heart of this mess is Lucasfilm president Kathleen Kennedy. A member of Fortune’s 2015 class of Most Powerful Women, the youthful 69-year-old is an accomplished industry veteran in her own right, producing dozens of classic feature films including Jurassic Park and E.T.: the Extra-Terrestrial.
Yet even being George Lucas’ hand-picked successor has not shielded her from hefty criticism. A number of fans begrudge her along with Last Jedi writer-director Rian Johnson for deconstructing Luke Skywalker in the third trilogy.
Actor Mark Hamill distanced himself from the creative choices Johnson and Kennedy took with his iconic character in a rare industry rebuke.
Antagonized by the perceived shabby treatment of their childhood heroes, fewer and fewer fans showed up from one movie to the next. The third and final installment, Rise of Skywalker, only took in half of the $2 billion that premiere film The Force Awakens made for Disney.
It’s perhaps no wonder that the company’s $5,000-per-package Star Wars-themed hotel, the “Galactic Starcruiser”, is shutting down. The tactical mistake of placing it in the timeline of the Disney sequel trilogy doomed it to a lifespan of just 18 months after opening.
Those wealthy enough to fork over thousands of dollars just to role-play their heroes tend to be middle-aged fans of the original films who want to do battle against the sinister Darth Vader they remember as kids, not the bland and forgettable Kylo Ren.
Could Kennedy go?
Following the disappointment of 2019’s The Rise of Skywalker, no further theatrical films got off the ground despite past proclamations.
Numerous Hollywood creatives like Lost’s Damon Lindelof, Wonder Woman director Patty Jenkins and Thor: Ragnarok’s Taika Waititi were all reportedly attached to new Star Wars projects—to no avail. As a result, the Star Wars universe has only lived on in Disney’s streaming platform with mixed critical success.
Because of the drop-off in interest, Iger and his studio boss Alan Bergman are now in a difficult position. The Disney CEO has not spared high-ranking figures like Marvel’s Ike Perlmutter or Victoria Alonso from the axe, and he has demanded results from his teams in exchange for greater creative control.
"There needs to be a direct connection between what’s being spent and what’s being earned from a revenue perspective. It’s all about accountability," Iger said in March.
Older Star Wars fans want to see Kennedy go in favor of someone like Jon Favreau, the Iron Man director and creator of The Mandalorian. Allegedly negotiations over whether to renew her contract, due to expire next year, are slated for this August.
“My bet is she stays, just with a different mission,” wagers Schiffer. “The problem isn’t Kathleen Kennedy.”
Everything can be fixed with the right script
If Indiana Jones does flop, what then? Disney is 18 months away from getting a new CEO. Could Iger’s successor, unwilling to mop up his Lucasfilm mess, consider a disposal?
Unlikely, argues Ampere Analysis’ Bisson. Ingenious storytellers can always dream up more compelling Star Wars content—so long as they own the IP.
“I cannot personally see Disney offloading Lucasfilm in the immediate future,” the industry expert told Fortune.
Perhaps sensing the need to deliver after a long creative drought, Kennedy announced in April that not one but three new Star Wars films were in the works.
Yet even those show the Lucasfilm boss is unwilling to commit to any one overarching narrative in favor of spreading her bets. The trio are conceived as separate standalone stories each set in a different period.
Should any one or all three survive development and go into actual production, the damage can still be fixed with the right script and creative vision.
“This is not forever. If another film turned out to be good, the fans will be there,” said Schiffer. “In fact, we’d be there first.”
This story was originally featured on Fortune.com