Is Walt Disney Co's Marvel TV Universe Collapsing?

Disney 's development of the Marvel Cinematic Universe (MCU), which the company took over through its $4 billion acquisition of Marvel in 2009, redefined summer blockbusters and sent rival studios scrambling to create their own unified movie worlds. Disney started distributing all MCU films in 2012 with The Avengers , and the subsequent eight films have already generated over $2.8 billion in global box office revenue.

The Avengers. Image source: Marvel Studios

In 2013, Disney expanded the MCU to the small screen by launching Agents of SHIELD on ABC. Marvel boldly claimed that its movie and television universes were"all connected" and added more shows to the year-round lineup. Agent Cartersimilarly made itsdebut on ABC, and Disney partnered with Netflix to launch Daredevil and Jessica Jones. Looking ahead, Netflix plans to launch three more shows starring Iron Fist, Luke Cage, and the Punisher, as well as a crossover series called The Defenders. ABC is also expected to launch a new half-hour sitcom called Damage Control, andFreeform (formerly ABC Family) willlaunch a new MCU show called Cloak and Daggerin 2017.

With so much content coming down the pipeline, it would appear Disney is enjoying as much success on the small screen as it has with its massive blockbusters. However, big cracks have begun to form across the company's television universe -- Disney recently firedABC President Paul Lee, cancelled Agent Carter due to low ratings, and bumped the next season of Agents of SHIELD to 10pm on Tuesdays -- a time slot notorious for killing off dying shows. ABC also refused, for the second time, to greenlight a new spin-off series for Agents of SHIELD called Most Wanted.

It's not "all connected" anymore

The growing rift between Marvel's movie and television universes can be attributed to conflicts between the people in charge of the MCU. Kevin Feige, the head of Marvel Studios, was reportedly frustrated with running all MCU-related decisions through Marvel Entertainment CEO Ike Perlmutter, whohas a reputation for exercising creative control and cutting costs.

Disney CEO Bob Iger intervened and had Feige report directly to Disney Studios head Alan Horn, but Marvel television chief Jeph Loeb remained under Perlmutter, who likely had less interest in working with Feige and his MCU movies. That dispute also meant that it was less likely for major movie characters to appear on the television shows and for small screen characters to "graduate" to the movies.

This meant that certain characters and storylines, like the recent one featuring the Inhumans onAgents of SHIELD, would likely diverge from the films instead of converge with them in the future. That's probably whyMarvel recently removed Inhumans, which was originally scheduled for 2018, from its long-term theatrical release slate. Chloe Bennet, who plays lead character Daisy Johnson on Agents of SHIELD, recently stated during a Q&A session in Des Moines that the people on Marvel's movie-making side "don't acknowledge our show at all."

Marvel's Agents of SHIELD. Image source: ABC

But it's all about the ratings

The split between Marvel's two divisions might seem like something Disney should try mending, but ABC's Marvel content has been struggling with overall ratings. Modern Family and Grey's Anatomy, the two most watched shows on ABC, drew in about eight million viewers between the ages of 18 to 49 last season. By comparison, Agents of SHIELD's average viewership fell 23% annually to 3.4 million, making it the 13th most watched show on ABC. Agent Carter's average viewership plunged 47% to 2.7 million last season, making it the 22nd most watched show on the network.

ABC's numbers were poor across the board, with all of its returning programs posting year-over-year declines in viewership. Operating income at Disney's broadcasting segment fell 8% year-over-year last quarter due to weaker program sales, higher programming costs, and lower ratings. That triple whammy of bad news explains why Disney replaced Paul Lee and why the company is reluctant to greenlight any new higher-budget Marvel television properties.

Working with Netflix might be a better idea

Funding and producing Marvel shows under its own ABC network was always a risky strategy. However, partnering with Netflix reduces that risk, since the two companies co-produce each series. Netflix also reportedly pays Disney around $300 million per year for the multi-year streaming rights to its shows and movies.

Netflix's Marvel series are much darker than their ABC counterparts, but they are still "connected" to the film universe without being heavily influenced by their events. That approach might be more sustainable, since the "everything's connected" strategy relies too heavily on dedicated fans watching everything with "Marvel" stamped across the opening credits.

But as the ratings for Agents of SHIELD and Agent Carter imply, that unified fan base could be smaller than Disney originally predicted. Therefore, the Marvel television universe isn't collapsing, but it could become more focused, streamlined, and less dependent on the movies over the next few years.

The article Is Walt Disney Co's Marvel TV Universe Collapsing? originally appeared on Fool.com.

Leo Sun owns shares of Walt Disney. The Motley Fool owns shares of and recommends Netflix and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.