By David Poland email@example.com
The Disney Math
I’m going to do this as simply as I can.
This is Iger’s legacy… at least it is the current one, after he failed with Rich Ross to turn the company into a distribution-driven studio with little internal production. So now, it’s that Disney will become the first an All-Franchise, All-The-Time studio, owning EVERYTHING they put out. So…
7 or 8 releases a year.
2 Disney Animation
1 Other Disney Franchise Film
I don’t expect DreamWorks to be there at this time next year.
So that’s about $200m, $325m, $160m, $125m, $200m, $90m in production each year… total: $1.1 billion.
Marketing for all these franchises would have to be about $1.2 billion.
So the annual nut of Disney 7.0 will be about $2.3 billion each year.
They’ll gross about $3 billion worldwide this year with 5 new films and two 3D re-releases in distirbution. That’s about $1.65 billion in rentals coming back to the studio. They should hit black ink, but there won’t be a lot of profit.
They did about $3.1 billion last year and $4.7 billion in 2010, with 14 films in release each of those years.
The studio has had at least one billion-dollar movie in each of these years, two in 2011.
And that’s what they will have to count on to make this work. If you have one John Carter for every Avengers, it doesn’t work. If you don’t have at least one billion-dollar movie, it probably doesn’t work.
The theory is that this group of brands will consistently deliver and that they won’t have any big losers because there is a base audience for all of this material.
Marvel still hasn’t delivered a sure-fire franchise internally that doesn’t involve Iron Man. Things have gotten better with Thor and Captain America, but $450m and $370m are triples, not home runs. They are profitable, but not sure hits. All but one of the other film film produced by Marvel directly has grossed under $300m worldwide. You could argue that the catalog is on the ascension. But it’s risky.
Pixar is stable. Disney Animation is pretty stable, but tends to be on the lower end of the formula.
This brings us to LucasFilm. The dream is that future Star Wars films will be a billion-dollar-a-shot cash machine.
So the fantasy is that you get a billion-dollar hit, alternating between Marvel and Star Wars, every year. Until they can get Star Wars back on its feet, the slot is filled by Bruckheimer… perhaps after, if he can get Depp to two another couple Pirates movies. So a billion every year hit is the foundation. You have a solid success with your one Pixar film and the other Marvel film each year. You hope between the two Disney Animation films, you have one that is bigger and one that is just slightly profitable. And then, the 6th film or 7th and 8th films are wild cards, aiming high, and capable of turning a good year into a great year.
So is there any room for the flops?
Not so much. If you have your billion-dollar-plus film, you can take the hit. If you don’t, there starts to be some real trouble. And if you have two major flops out of eight, the only reason your studio isn’t bankrupt is ESPN.
This all reminds me of Peter Guber’s story about The Japanese not understanding why he didn’t just make all the hit movies and not make the flops.
And then there is the $4 billion price tag. Maybe it pays off in time.
It’s been six years since Disney bought Pixar and the deal still isn’t close to being profitable for the studio… but the run has continued, so it now looks like this deal will be a net positive for Disney and actually be paid off by sometime around 2020.
Marvel isn’t even close. But The Avengers has everyone feeling good about the deal. And though Spider-Man and X-Men are unlikely to be coming home anytime soon, they are still nice profit centers for Disney.
And when Star Wars puts $6 billion or so in movie revenues in Disney’s pockets, that deal will be looking good.
But it’s a long way to muthaf***ing Tipperary, man. A long, long way.
The last Iger move was gutsy too… and was dismantled in 2 years, in spite of the studios having had their 2nd – 5th billion dollar grossers in its history during that time. It wasn’t enough.
Scary-high tightrope Iger is walking. No joke.