By Danny F. Santos (doddleNEWS)
Want to know what might be a good investment? Spending $4 billion dollars in cash and stocks to purchase Lucasfilm in order to get your hands on Star Wars. And that’s exactly what Disney did in late October 2012.
In a recent L.A. Times article, analysts originally wondered if purchasing the studio for that much was a mistake. Here’s what JPMorgan analyst Alexia Quadrani thought when the announcement was originally made 3 years ago:
“I remember when it happened, thinking, ‘Wow, what are they buying?’ It was going to be several years before we’d even see the first film from that company.”
The major question settled around the issue of distribution rights for the original and prequel trilogies. 20th Century Fox will hold the rights to the original 1977 Star Wars film in perpetuity, while the sequels and prequels won’t revert back to Disney until 2020. Quadrani added:
“That was one of the concerns that we had — it was, what are they actually buying if they are not getting that [original] film? There was a concern Disney was putting all of its eggs in one basket — everything was hinging on if the company could make a successful new ‘Star Wars’ film. Now, however, given the trailer, all of the buzz and the huge merchandising hype we’ve heard about, there is definitely a positive bias that this will turn out to be a great acquisition.”
I didn’t even realize that anyone thought of this as a lousy financial decision. Star Wars had spent the intervening 16 years between Return of the Jedi and The Phantom Menace producing merchandise, even though the film side was dormant, save for the Special Editions in 1997.
Anyone who has paid attention to the marketing machine of Star Wars has understood that the films aren’t the biggest money making vehicles for the franchise. Rather it’s the merchandising is what drives profit. Now that even the most pessimistic financial analyst understands that, they estimate that the box- ffice receipts, merchandise, video games, theme park tie-ins, DVD sales, digital downloads, and all other revenue tied to Star Wars could hit $25 billion over the next five years.
Robin Diedrich, an analyst at Edward Jones Research, says:
“They will make back their investment in a relatively short period of time. Whether it is three or four years — you can see that being a pretty reasonable scenario.”
The upcoming film is expected to make $1.5 to $2 billion alone. Adding in all of the tie-ins and Star Wars looks to be one of the biggest cash-cows Disney has ever acquired.
Star Wars: The Force Awakens will premiere in theaters on December 18, 2015. That’s right, THIS WEEK!