Star Wars ep. VII ... Who's Hyped?

[Deacon]

Spoke to a friend in the industry yesterday....

Apparently this movie needs to gross over $1B in ticket sales before the end of the year AND generate over $10B in sales next year just to justify the investment Disney has put into it (cost of movie, buying Lucasfilm, advertising, etc.).

So, we will read about record revenues for this.movie, but Disney could still call it a financial failure.

That doesn't sound right. Take the cost of buying Lucasfilm. You don't try to recoup that after one project. That is a long term investment that would span many different mediums including television shows, books, direct to DVD/Stream movies, etc, etc, etc.

Now the actual cost of the movie would need to be recouped immediately but I don't see why that would not be a span of at least one year.

Advanced ticket sales have already topped $7 million so I don't think they have much to worry about.

 

[Flint]

Spoke to a friend in the industry yesterday....

Apparently this movie needs to gross over $1B in ticket sales before the end of the year AND generate over $10B in sales next year just to justify the investment Disney has put into it (cost of movie, buying Lucasfilm, advertising, etc.).

So, we will read about record revenues for this.movie, but Disney could still call it a financial failure.

That doesn't sound right. Take the cost of buying Lucasfilm. You don't try to recoup that after one project. That is a long term investment that would span many different mediums including television shows, books, direct to DVD/Stream movies, etc, etc, etc.

Now the actual cost of the movie would need to be recouped immediately but I don't see why that would not be a span of at least one year.

Advanced ticket sales have already topped $7 million so I don't think they have much to worry about.

Gross proceeds are not the same as profit. In addition to the acquisition of LucasFilm, Disney has sunk hundred of millions of dollars into this franchise and they need to show significant return on that investment. Seriously, if this film doesn't gross over $1B before 2016, they will have to explain to the bankers and share holders why they did this. So much is riding on this, it is crazy.

Fortunately, they got JJ Abrams on the project, and if anyone can satisfy the largest possible audience, it is him.

 

[Batman]

Advance ticket sales has already exceeded $50m.

:text-link:

 

[Deacon]

So if this thing doesn't do $1B in two weeks it is a failure? That's a pretty harsh logic model.

 

[Flint]

The realities of big business...

I believe it will succeed as Disney's marketing engine is doing it right. They have tapped into the culture better than I've have ever seen.

 

[Akula]

I don't think Disney is going to have a problem making their money back.

They've *already* been generating revenue from TV shows (Rebels) and merchandising (I just got back from Disney World, it would amaze you what all is being sold down there). There are other films already in the works. Disney Parks tie-ins are already beginning and will only expand (Disney's Hollywood Studios is expected to announce specifics on the expanded presence of SW in the parks fairly soon).

Disney bought themselves a license to print money. Some may consider things a failure if they don't make it back within a year, but the fact is that Star Wars has been extremely popular for nearly 40 years. The more Star Wars that's been released, the more demand there is for it. They have a franchise that will generate regular (and large) revenues for generations.

 

[Flint]

I am basing my statement about it potentially being considered a "failure" from actual insiders at Disney.

High risk demands high returns.

 

[Batman]

I don't think Disney is going to have a problem making their money back.

They've *already* been generating revenue from TV shows (Rebels) and merchandising (I just got back from Disney World, it would amaze you what all is being sold down there). There are other films already in the works. Disney Parks tie-ins are already beginning and will only expand (Disney's Hollywood Studios is expected to announce specifics on the expanded presence of SW in the parks fairly soon).

Disney bought themselves a license to print money. Some may consider things a failure if they don't make it back within a year, but the fact is that Star Wars has been extremely popular for nearly 40 years. The more Star Wars that's been released, the more demand there is for it. They have a franchise that will generate regular (and large) revenues for generations.

I'd submit that one could argue that the brand/franchise of Star Wars has been THE most popular of its kind over the last 40 years.

One thing that's apparent Disney seems to have achieved based on the trailers, and was critical for Disney to achieve, is a level of authenticity that fans expect when seeing a Star Wars film. Its a look, feel, tone and urgency that you automatically expect to experience from "Star Wars". Many believe Lucas himself missed that mark, and not just a little bit, with the prequel trilogy.

I don't know if 2 weeks is enough time to hit the $1B mark by the end of the year. But they are well on their way. I've heard estimates between $1.5-2B when it's all said and done.

 

[Flint]

I'd submit that one could argue that the brand/franchise of Star Wars has been THE most popular of its kind over the last 40 years.

In fact, in terms of Film, merchandizing and licensing, the Marvel empire is significantly bigger than the Star Wars franchise in every way. The greatest profit center for LucasFilm has always been Industrial Light and Magic, not the Star Wars franchise.

That could very easily change if Disney does it right.

 

[Batman]

^ sustained over the course of the last 40 years though? That's a hard one to believe, I'm not coming from a hard numbers based argument, just my opinion. I'd be willing to wager that in random polling (online, on the street, etc) that a majority of people recognize Star Wars as a fictional brand is more popular (again over 4 decades) than Marvel, DC, Potter, etc....but again that's just my opinion. I can accept that though if the numbers support it, especially with the surging popularity of Marvel since 07-08. But I also personally view Spider-Man as a brand, Batman as a brand, Iron Man, etc as a brand since they would probably thrive even if the rest of DC and Marvel ceased to exist. Especially when I look at marketing strategies with movies.

I don't know......I'm just spouting off :happy-smileygiantred:

 

[Flint]

You make a good point. Star Wars pretty much invented the concept of a movie being a sustained cultural phenomena. But before that the Lord of the Rings books played that role and while more of a subculture proved extremely successful.

But Marvel succeeds due to breadth of characters and stories and they learned from all of mistakes Lucusfilm made in the early days of Star Wars.

 

[Akula]

I am basing my statement about it potentially being considered a "failure" from actual insiders at Disney.

High risk demands high returns.

You'd be more likely to know such people than we would. I am a little surprised they're expecting that much of a payback that quickly or deeming it a failure, but in the long run I think they're going to turn it into a cash generating monster the likes of which Lucas could neither have done nor even envisioned.

I am assuming that Disney has tons of smart people who signed off on this before they did anything with it and they have every expectation they'll make it back. Sure, they've made movies that bombed before (as well as some that succeeded beyond anybody's expectations- none of them seemed to see Frozen's success coming), but I figure they have a pretty good plan to monetize this investment.

 

[Huey]

They need to make 11 billion on a 4 billion dollar investment in a year to be considered successful? Off of just one movie with everything else they have going on Star Wars related? If you believe that, I have a bridge I need to sell that you might be interested in. Heck, just the money they have made off of marketing so far has to be a boat load of money, and the movie hasn't even come out yet.

 

[Flint]

They need to make 11 billion on a 4 billion dollar investment in a year to be considered successful? Off of just one movie with everything else they have going on Star Wars related? If you believe that, I have a bridge I need to sell that you might be interested in. Heck, just the money they have made off of marketing so far has to be a boat load of money, and the movie hasn't even come out yet.

It is not as simple as Disney paid $4B on LucasFilm and nothing else.

They paid for LucasFilm,
plus all the legal costs for the transaction,
plus all the personnel costs like layoffs, hires, merging of benefits, pensions, insurance, etc,
plus spending hundreds of millions investing in the franchise itself with theme parks, promotions, merchandise, etc.
plus the annual costs of running LucasFilm which is huge in its own right,
plus the costs of making the movie at over $200M
plus the costs of promoting the movie where one ad agency has already spent over $100M on ad placements alone

This is not some simple, small, garage yard transaction.

Disney needs to fund all of the ongoing activities, pay back all the expenses already put into the film, and earn enough profit to justify all this effort. They could make produce and sell ten movies earning $500M each at 50% return on investment, or they could make one $5B earning movie earning only 20% return on investment. They need Star Wars to earn more for their effort than 10 other movies and franchises would return.

 

[Huey]

They need to make 11 billion on a 4 billion dollar investment in a year to be considered successful? Off of just one movie with everything else they have going on Star Wars related? If you believe that, I have a bridge I need to sell that you might be interested in. Heck, just the money they have made off of marketing so far has to be a boat load of money, and the movie hasn't even come out yet.

It is not as simple as Disney paid $4B on LucasFilm and nothing else.

They paid for LucasFilm,
plus all the legal costs for the transaction,
plus all the personnel costs like layoffs, hires, merging of benefits, pensions, insurance, etc,
plus spending hundreds of millions investing in the franchise itself with theme parks, promotions, merchandise, etc.
plus the annual costs of running LucasFilm which is huge in its own right,
plus the costs of making the movie at over $200M
plus the costs of promoting the movie where one ad agency has already spent over $100M on ad placements alone

This is not some simple, small, garage yard transaction.

Disney needs to fund all of the ongoing activities, pay back all the expenses already put into the film, and earn enough profit to justify all this effort. They could make produce and sell ten movies earning $500M each at 50% return on investment, or they could make one $5B earning movie earning only 20% return on investment. They need Star Wars to earn more for their effort than 10 other movies and franchises would return.

For one, you realize they make money on this stuff right? Even with the overhead, which is a part of any movie release, they can't be banking on one movie to justify the initial expense, especially with multiple movies planned or in production. I think you need to throw your contacts name and number here so he can clarify your, I mean his statements.

 

[TitaniumTroy]

I'm hyped for this movie, Abrams seems to have the concept right. Better story, less about the technology (think prequels), and no Jar-Jar Binks. Though it would be kind of cool if Kylo Ren cut off his head with that light saber that has the cross guard on it. I would just like to see it before I find out too many, spoilers.

Okay Darth Maul and his dual bladed light saber was pretty awesome, the Dual of the Fates from the soundtrack was also great. The battle between Yoda and Darth Sidious, while not great. I liked Sidious's pure glee and and even laughing while fighting. In contrast to the stoic Jedi's mind set, a nice contrast.

 

[Flint]

They need to make 11 billion on a 4 billion dollar investment in a year to be considered successful? Off of just one movie with everything else they have going on Star Wars related? If you believe that, I have a bridge I need to sell that you might be interested in. Heck, just the money they have made off of marketing so far has to be a boat load of money, and the movie hasn't even come out yet.

It is not as simple as Disney paid $4B on LucasFilm and nothing else.

They paid for LucasFilm,
plus all the legal costs for the transaction,
plus all the personnel costs like layoffs, hires, merging of benefits, pensions, insurance, etc,
plus spending hundreds of millions investing in the franchise itself with theme parks, promotions, merchandise, etc.
plus the annual costs of running LucasFilm which is huge in its own right,
plus the costs of making the movie at over $200M
plus the costs of promoting the movie where one ad agency has already spent over $100M on ad placements alone

This is not some simple, small, garage yard transaction.

Disney needs to fund all of the ongoing activities, pay back all the expenses already put into the film, and earn enough profit to justify all this effort. They could make produce and sell ten movies earning $500M each at 50% return on investment, or they could make one $5B earning movie earning only 20% return on investment. They need Star Wars to earn more for their effort than 10 other movies and franchises would return.

For one, you realize they make money on this stuff right? Even with the overhead, which is a part of any movie release, they can't be banking on one movie to justify the initial expense, especially with multiple movies planned or in production. I think you need to throw your contacts name and number here so he can clarify your, I mean his statements.

Right, and you should share your experience with running a $60B business, or even a $100M business, to show that it is as simple as paying off the loan to buy LucasFilm.

Seriously, doubt me if you want. It is your prerogative. I just know what the financial world and my buddies in the company are all saying (and yes, they are all saying it).

 

[Botch]

I'm leaving a spoiler here:

 

[Huey]

Right, and you should share your experience with running a $60B business, or even a $100M business, to show that it is as simple as paying off the loan to buy LucasFilm.

Seriously, doubt me if you want. It is your prerogative. I just know what the financial world and my buddies in the company are all saying (and yes, they are all saying it).

Whether it's a 5 million dollar business, or 50 billion dollar business, they both hope for a good return on investment. The numbers you give aren't just a good return on investment, it's a phenomenal return on investment, and almost hard to believe. Saying that this movie needs to make 11 billion to be considered successful is trolling.

 

[Akula]

Right, and you should share your experience with running a $60B business, or even a $100M business, to show that it is as simple as paying off the loan to buy LucasFilm.

Seriously, doubt me if you want. It is your prerogative. I just know what the financial world and my buddies in the company are all saying (and yes, they are all saying it).

Here's the thing: there's no way they dropped a few billion to buy Lucasfilm just on the spur of the moment. From our end it sounds like some Disney execs looked at the numbers and said "Oh, crap! We need to make so many billion from THIS ONE MOVIE or we're toast!"

If that's how they did it, then yeah, they have it coming. I have to assume they had a good hard look at the potential profit/loss and various opportunities to leverage the properties to make money over time. It just sounds fantastic (as in full of fantasy) to think they wanted this to pay off over one single year as opposed to over a longer time. Maybe that's how stuff works... if so, it just seems ludicrous.