Pixar's Original Crisis: Why Sequels Reign Supreme in Animation's New Era

The box office collapse of Elio—Pixar's 2025 animated film—has become a cautionary tale for investors. With a record-low $21 million domestic debut and $35 million globally, Elio underscored a troubling trend: original Pixar films are losing their luster in a market dominated by sequels and reboots. This shift isn't just about box office numbers; it's a seismic shift in consumer behavior, post-pandemic streaming habits, and the economics of animation. For investors, the message is clear: the future of animation lies with studios that prioritize high-margin franchises over risky originals.

The Box Office Divide: Sequels Outperforming Originals

Let's start with the cold, hard numbers. Between 2020 and 2025, Pixar's original films have struggled to match the success of their sequels:

• Originals: Soul ($121.9M), Lightyear ($122.6M), Elemental ($496M), and Elio ($35M)
• Sequels: Inside Out 2 ($1.69B), Despicable Me 4 ($969.6M), Moana 2 ($1B)

The gap is stark. Sequels like Inside Out 2—which shattered records with a $652M North American opening—have become cash machines, while originals like Elio face audience apathy. The pandemic accelerated this trend, conditioning viewers to favor familiar franchises they can watch at home or stream later.

Why Originals Are Failing

1. Audience Craves Familiarity

Families are now risk-averse. The success of sequels like How to Train Your Dragon or Lilo & Stitch (a surprise hit) shows that audiences prioritize brands they know. Originals, even from Pixar, lack this built-in marketing.

2. Post-Pandemic Streaming Habits

The shift to streaming during lockdowns left a lasting imprint. Films like Luca and Turning Red skipped theaters entirely for Disney+, training audiences to wait for originals at home. Meanwhile, sequels dominate theaters, where their spectacle and nostalgia earn premium ticket prices.

3. Budgets vs. Returns

Pixar's films cost 50–90% more than competitors'. Elio, for example, had a $150M budget—nearly double DreamWorks' The Wild Robot ($80M). High costs paired with declining box office revenue strain profitability.

Pixar's Struggling Responses

Pixar is trying to adapt:
- Balanced Releases: Planning one original for every sequel (e.g., Hoppers in 2026 alongside Toy Story 5).
- Marketing Overhauls: Post-credits teasers and extended campaigns aim to build buzz, but Elio's poor timing (against How to Train Your Dragon) shows execution remains flawed.
- Streaming Integration: Underperforming films like Elemental may find life on Disney+, but this complicates revenue forecasts.

Investment Implications: Pivot to Franchise-Driven Studios

The Risk for Pixar Investors

Disney's animation division—80% of which relies on Pixar—faces a profitability crunch. High production costs ($16B annually for Disney) and declining theatrical returns mean originals like Elio could turn into financial drains.

Where to Invest Instead

1. Studios with Franchise Depth:
2. Universal/ Illumination: Despicable Me, Sing, and Dr. Seuss reboots generate reliable returns.
3. DreamWorks: Diversified into global IPs (Kung Fu Panda) and lower-budget films.
4. Streaming-First Players:
5. Netflix: Bets on cheaper, data-driven originals (The Sea Beast) while acquiring hit franchises (Stranger Things).
6. International Expansion Leaders:
7. Warner Bros. Animation: Leverages DC's global appeal and Warner's streaming platform (HBO Max).

Avoid Overvalued Original-Heavy Bets

Pixar's model—high-cost originals with uncertain returns—is increasingly risky. Investors should favor studios that blend sequels with scalable content (e.g., Netflix's hybrid model) or those diversifying into gaming/VR (e.g., Luca's rumored AR expansion).

Conclusion: The Franchise Era Has Begun

Elio's failure is not just Pixar's problem—it's a warning for the entire industry. In an era where sequels deliver predictability and profitability, studios clinging to originality at any cost will struggle. Investors should prioritize firms with deep franchise libraries, flexible distribution strategies, and cost discipline. The animation market is no longer about creativity alone; it's about audience loyalty, scalability, and the power of nostalgia.

For now, bet on the sequels. The originals? They're just too risky.