Disney didn't expect to be in this position. When the 2023 live-action remake of The Little Mermaid swam into theaters, the hype was massive, but the financial reality turned out to be a bit of a cold shower. People keep asking if it actually flopped. Well, The Little Mermaid lost money according to detailed filings, and a massive report from Forbes contributor Caroline Reid shed light on exactly how the numbers spiraled out of control. It’s not just about ticket sales. It’s about the brutal cost of UK-based production and those pesky "participation" checks that eat into the pie before the studio even sees a cent.
The movie made $569.6 million worldwide. Sounds like a win, right? Wrong.
In the old days of Hollywood, doubling your budget meant you were in the black. That rule is dead. Today, between global marketing spends that rival the production budget and the fact that theaters keep roughly half of the gate, a movie needs to clear a much higher bar. For Ariel and crew, the bar was stuck in the Mariana Trench.
The Forbes Breakdown: Why The Little Mermaid Lost Money Despite Huge Sales
Most people look at Box Office Mojo and think they see the whole story. They don't. Forbes dug into the financial statements of Sandcastle Pictures, the Disney subsidiary created specifically to produce the film in the United Kingdom. Because the movie was filmed in the UK, Disney was required to disclose its spending to benefit from the Film Tax Relief scheme. This gave us a rare, unvarnished look at the ledger.
The production costs were eye-watering. We are talking $297 million just to get the film made.
Then you add the marketing. Disney doesn't release exact P&A (prints and advertising) numbers, but industry standard for a tentpole of this size is at least $140 million. Suddenly, you’re looking at a total spend north of $430 million. When the movie brings in $569 million, and the studio only keeps about $280 million of that after theaters take their cut, the math starts to look pretty ugly.
Tax Credits: The Only Reason It Wasn't a Total Disaster
Disney actually managed to claw back some dignity through the UK government. They received a $53.5 million tax rebate. This brought the net production cost down, but it still didn't bridge the gap to profitability during the theatrical run. Honestly, without those British taxpayers helping out, the headlines would have been much worse.
It's a weird system.
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The studio spends a fortune on local labor and studios like Pinewood, and the government hands back a percentage to keep the industry thriving. But even with a $50 million-plus "coupon," the sheer scale of the CGI requirements—making hair look like it's floating underwater is notoriously expensive—inflated the budget beyond what a $500 million global take could support.
The "Disney Plus" Factor and Long-Term Value
Is a movie a failure if it drives a million new subscribers to a streaming service? That’s the question Disney executives use to sleep at night. While The Little Mermaid lost money at the box office, it performed exceptionally well on Disney+. Within its first five days on the platform, it racked up 16 million views.
But you can’t pay actors in "views."
Forbes noted that the financial filings showed high administrative expenses, likely tied to residuals and overhead that don't just vanish because the movie is on an app. There is also the merchandise. If every five-year-old wants a Halle Bailey doll, the "loss" on the film might be a "loss leader" for the toy aisle. However, purely as a piece of cinematic business, the numbers don't lie. The theatrical window was a deficit.
Comparing Ariel to Her Princess Peers
To understand why this hurt so much, you have to look at the predecessors.
- Aladdin (2019) crossed the $1 billion mark.
- Beauty and the Beast (2017) cleared $1.2 billion.
- The Lion King (2019) roared to $1.6 billion.
By comparison, The Little Mermaid underperformed by nearly half a billion dollars against the top-tier remakes. The international market was the real culprit. While the film did decent business in North America, it completely stalled in major markets like China and South Korea. In China, the film made a measly $3.7 million. For a blockbuster, that is essentially zero.
The cultural conversation around the film was loud, but the box office in those regions was quiet. Some analysts point to a lack of brand resonance; others point to more controversial social factors. Regardless of the "why," the "how much" was the problem.
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The Hidden Costs of Underwater CGI
Creating an "underwater" world without actually filming underwater is a technical nightmare. This isn't Avatar: The Way of Water where they actually submerged the actors. Disney used "dry-for-wet" techniques involving blue screens and complex wire rigs. This requires frame-by-frame digital manipulation of skin, hair, and clothing.
Every second of that costs thousands.
The Forbes report highlighted that the production spend surged during post-production. This is where many modern blockbusters bleed out. If the director wants to change a scene in an office, you move a desk. If you change a scene in the Kingdom of Atlantica, you have to re-render an entire digital ecosystem.
Why the Forbes Report Matters for Future Movies
When Forbes publishes these deep dives into "The Little Mermaid" and its lost money, it sends ripples through Wall Street. Investors start questioning the "remake machine." If Disney can't guarantee a billion dollars by dipping into its vault of 90s classics, the strategy has to shift.
We are already seeing this. Disney has started trimming budgets and becoming more selective about what gets the green light. The era of the "blank check" for live-action remakes is likely over.
You've got to wonder if Snow White or Hercules will face the same scrutiny. If they can't keep the budget under $200 million, they are essentially walking a tightrope without a net. The Little Mermaid proved that nostalgia isn't a bulletproof vest against a bloated budget.
Practical Takeaways for Tracking Movie Profits
If you want to understand if a movie actually made money, stop looking at the "Worldwide Gross" as a profit figure. It's a revenue figure. To get the real story, follow these steps:
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1. Calculate the Studio's Actual Cut
In the US, studios take about 50-55% of the ticket price. Overseas, it drops to 40%. In China, it’s a mere 25%. If a movie makes $500 million but $100 million of that came from China, the studio only sees $25 million of that specific chunk.
2. Watch the UK Filming Credits
Keep an eye on Forbes and Caroline Reid's reporting. If a movie is filmed in the UK, the financial disclosures are public record eventually. This is where the "real" budget is hidden, often far higher than the "estimated" budgets reported by trade magazines during the shoot.
3. Factor in the Marketing 2x Rule
A general rule of thumb is that a movie needs to earn 2.5 times its production budget just to break even. For The Little Mermaid, with a $297 million budget, the break-even point was likely around $750 million. It missed that mark by nearly $200 million.
4. Distinguish Between Brand Value and Cash Flow
A movie can be a "brand win" and a "cash loss." Disney might be okay with losing $50 million on the film if it keeps the "Ariel" brand alive for another generation of theme park visitors. But from a pure accounting standpoint, a loss is a loss.
Moving forward, expect Disney to lean harder into "low-risk" environments and perhaps scale back the hyper-realistic CGI that drove the costs of The Little Mermaid into the stratosphere. The lesson is clear: even the most famous mermaid in the world can't stay afloat if the weight of the budget is too heavy.
To truly understand the future of Disney's theatrical strategy, one should monitor the quarterly earnings calls where CEO Bob Iger discusses "content curation" and "margin improvement." These are corporate buzzwords for "we aren't spending $300 million on a remake anymore." Check the SEC filings for The Walt Disney Company for the most granular data on how their film segment is balancing streaming costs against theatrical returns.