Streaming vs. Theatrical: Hollywood's Rebound in Mid-Budget Franchise & Original Films

Hollywood's box office landscape in 2025 is a study in contrasts. While studios like Warner Bros. and Disney dominate with nostalgia-driven sequels and reboots, the industry is also witnessing a quiet resurgence of original content—particularly in mid-budget films. This duality raises critical questions for investors: Can original storytelling compete with the safety of established franchises? How are streaming platforms reshaping the economics of theatrical releases? And where lie the most promising long-term opportunities in a sector still grappling with post-pandemic volatility?

The Sequel-Driven Powerhouses: Disney and Warner Bros.

Disney and Warner Bros. have carved out distinct niches in the box office race. Disney's 2025 domestic gross of $1.1 billion was fueled by sequels like Captain America: Brave New World ($200.5M) and reboots such as Lilo & Stitch ($371.7M). These films, part of the Marvel and Disney animation universes, leverage decades of brand equity to guarantee audience turnout. Meanwhile, Warner Bros. has balanced sequels (Godzilla x Kong: The New Empire, $572M) with original hits like A Minecraft Movie ($953.5M worldwide), proving that even in a sequel-saturated market, fresh IP can thrive.

The key to Disney's success lies in its ability to monetize legacy IP across platforms. Sequels like Zootopia 2 and Avatar: Fire and Ash are not just box office draws—they generate ancillary revenue through streaming, merchandise, and theme parks. Warner Bros., on the other hand, has taken a riskier approach by investing in original content. Barbie (2023, $1.446B) and The Minecraft Movie (2025, $720M) demonstrate that original films can outperform sequels when they tap into cultural zeitgeist or existing fandoms.

The Streaming Conundrum: Complement or Competitor?

Both studios have recalibrated their streaming strategies to maximize profitability. Disney's Inside Out 2 and Snow White saw robust performance on Disney+, with 35–40% higher viewership than original streaming films. This underscores the value of theatrical-first releases for flagship franchises, which then serve as loss leaders for streaming. Warner Bros., meanwhile, has adopted a hybrid model. While Barbie delayed its streaming debut by two months to capitalize on theatrical momentum, mid-budget films like Sinners ($71M domestic) are released simultaneously on Max to test audience appetite.

The data is clear: Theatrical films on streaming platforms generate 30–70% less viewership than original content. For example, Prime Video's original films outperformed theatrical titles by 70%, while Netflix's originals led by 39–42%. This suggests that streaming is best positioned as a secondary revenue stream for high-profile franchises, not a replacement for theatrical exclusivity.

Mid-Budget Films: The New Gold Standard

Mid-budget films ($30M–$70M) have emerged as a critical profit driver. Sony's Anyone But You ($126.4M on a $25M budget) and Paramount's Mean Girls (theatrical-only, $126M) highlight the potential of this segment. Warner Bros. and Disney are now prioritizing mid-budget projects that blend originality with franchise appeal. For instance, Sinners (Ryan Coogler's horror film) and Mickey 17 (Bong Joon-ho's sci-fi) represent a calculated bet on originality without the financial risk of tentpole blockbusters.

Disney's Fantastic Four: First Steps and Warner Bros.' Superman: Legacy further illustrate this trend. Both films are original stories within established universes, offering the best of both worlds: the safety of IP and the novelty of new narratives.

Investment Implications: Balancing Risk and Reward

For investors, the key lies in understanding each studio's strategic priorities. Disney's integrated ecosystem—combining theatrical, streaming, and theme parks—provides a predictable revenue stream. Its 2025 Q2 earnings ($10.7B revenue, $1.3B operating income) reflect the strength of this model. However, overreliance on sequels could stifle innovation.

Warner Bros., despite its $10B quarterly net loss in 2025, is experimenting with original content in a way that could redefine the industry. The success of A Minecraft Movie and Barbie suggests that original films can still capture mass audiences—if they're rooted in recognizable IP or cultural trends.

Historical backtesting of earnings release performance from 2022 to 2025 reveals nuanced insights. For Disney (DIS), a buy-and-hold strategy around earnings dates showed a 64.29% win rate over 3 days and 50% over 10 days, with maximum gains of 0.96% in 4 days. Warner Bros. (WBD) mirrored similar short-term performance (64.29% 3-day win rate) but with slightly lower maximum returns (0.81% in 3 days). These patterns suggest that while both stocks historically trend upward post-earnings, Disney's ecosystem provides more consistent short-term momentum, aligning with its stable revenue model.

The Road Ahead

The future of Hollywood hinges on studios' ability to balance nostalgia with innovation. Disney's sequels will likely remain a safe bet, but investors should monitor its forays into original content under 20th Century and Searchlight. Warner Bros., meanwhile, offers higher risk but potentially higher reward, particularly if its original slate continues to outperform expectations.

For long-term investors, the focus should be on studios that can adapt to shifting audience preferences. Disney's profitability and brand strength make it a stable choice, while Warner Bros.'s willingness to take creative risks could yield outsized returns—if its original films maintain their momentum.

In a world where streaming and theatrical coexist, the winners will be those who master both. The question is not whether sequels or originals will dominate, but how studios can leverage each to build sustainable value.