That’s No Moon, It’s Disney’s Giant Star Wars Business
By Benjamin Snyder, Stacy Jones, Analee Kasudia, and Kacy Burdette
Star Wars: The Force Awakens is on track to become one of the most successful movies of all time. Ticket pre-sales have destroyed previous records and toys and Halloween costumes have been a hit among kids too. Fortune took a look at the business behind what everyone from investors to movie critics are calling a huge box office hit in the making.
With millions in pre-ticket sales leading up to the movie’s opening on Friday, December 18 and investors are expecting Star Wars’ latest episode to rake in as much as $1.5 billion. The film is a big deal for the entertainment industry which took a hit earlier this year with staggeringly low numbers on Memorial Day weekend.
And the movie’s effect on American culture has reached a fever pitch in recent days. Case in point: collector’s edition toys have sold at auction houses for thousands while Lucasfilm’s owner Disney
dis
has seen its stock surge in recent months.
In honor of the J.J. Abrams-directed film, Fortune examined business highlights surrounding the movie from ticket and toy sales figures to the Halloween costume craze.
Expected ticket sales
Investors are predicting the new film will make anywhere from $1.5 billion on the low end to $2 billion at the global box office. Anything less, and it could be deemed a failure by some, as Fortune reported. Or, at the very least, director Abrams won’t be very happy.
Word is that he’s already pretty stressed out. That’s according to his buddy Steven Spielberg, who knows a thing or two about box office hits. “Those totals would make the film one of the highest-grossing movies of all time, but coming up short would still make it a very high-grossing disappointment,” according to Fortune. “Steven Spielberg–no stranger to blockbuster films himself as well as a friend and mentor to Abrams–told CBS’ 60 Minutes recently that Abrams is ‘terrified’ that The Force Awakens could fail to live up to those expectations.”
Regardless, the flick is on track to make the most of any other Star Wars film. But it’s by no means a shoe-in. In fact, Episode VII could very well be a close call compared with the original, Star Wars: A New Hope. “But, the film would actually have to make more than $2 billion to top the original 1977 film’s inflation-adjusted box office haul of $2.016 billion, according to research firm Rentrak,” as Fortune explained.
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Top toys
Along with totally overhauling video games associated with Star Wars, such as by laying off staff working on them, as Fortune previously reported, Star Wars toy sales have been tremendous leading up to the premiere.
In April, Fortune profiled Sphero, the company behind the wildly popular BB-8 toy.
In November, Hasbro CEO Brian Goldner discussed the impact of Star Wars on the holiday season, saying sales were expected to be booming in the days leading up to the film’s release. In fact, there weren’t enough products to go around. “Over the past few weeks, we had seen some shortage of products that were selling exceedingly well,” he said in an interview with Fortune at the time. “We will not miss sales in the upcoming weeks and months,” he added.
To help prevent that, Hasbro used retailer data to predict the amount of toys needed to be manufactured. “Through many years of energy and work, we have reduced our supply chain timing, particularly from the Orient, down to just eight weeks,” said Goldner. “[That’s] a major improvement from where we were a decade ago.”
The toy craze dates back to September when some retailers opened at midnight on the 4th for “Force Friday” to sell The Force Awakens toys.
“Force Friday provided a phenomenal lift for Star Wars, growing sales by six times its recent average weekly sales,” said Juli Lennett, senior vice president of the U.S. toys division at The NPD Group, in a statement at the time. “About $1 of every $11 for the week was spent on a Star Wars toy.”
According to Jim Silver, editor-in-chief of toy-focused website TTPM.com, this is the most sought after Star Wars toy, at least anecdotally.Star Wars The Black Series Kylo Ren Force FX Deluxe Lightsaber–HasbroCourtesy of Hasbro
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Google search terms
In the vast galaxy of Google search terms, Star Wars has no trouble holding its own. If you go back to October 2012, right before Disney announced it would be acquiring Lucasfilm for $4 billion, the term got a boost.
Fast forward to May 2014, and that’s when principal photography began at Pinewood studios in the United Kingdom.
In November 2014, the teaser trailer was dropped, and Star Wars Google searches surged again.
This year saw the term continue to boost in popularity, starting in April when the annual Star Wars Celebrations, a convention for fans, took place in Anaheim, California.
In October, Disney released the official trailer and the rest of the buildup can be credited to Star Wars fans the world over wringing their hands and waiting (impatiently) for the film to premier.
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Disney stock
Disney’s stock price has been on a tear since the entertainment megalith acquired Lucasfilm in 2012. “On Oct. 31, the company agreed to acquire Lucasfilm for $4.05 billion, a surprise move that will give it control of the lucrative Star Wars franchise,” Fortune reported at the time. “The deal seals Iger’s legacy of growing Disney through large acquisitions that expand the Burbank company’s store of unique intellectual property.”
In 2013, J.J. Abrams was announced as the director for The Force Awakens, as Disney shares continued to rise. The stock has continued to be on the up-and-up, although it did take a dive earlier in 2015.
In November, Fortune examined the case for investing in Disney, noting that there’s been interest in the company’s shares as a result of the movie. That said, there’s also been concern over Disney’s ESPN, which has taken a hit as customers are leaving cable television subscribers quickly.
“In August, Disney lowered its revenue expectations as consumers continued to drop cable at an unexpected rate, leaving 3 million fewer households with access to ESPN, its stalwart sports network,” the article noted. “For the first time in years, investors say, the movie business is the main factor driving Disney’s stock. The big question is whether growing revenue from blockbusters can offset losses from the cord-cutting trend.”
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Halloween costume salesPeople wearing Star Wars-themed costumes eat pretzels in San Francisco, California July 21, 2015.Photograph by Robert Galbraith — Reuters
It wouldn’t be a Halloween without Princess Leia, Darth Vader, or even a Wookie running around.
The most Googled Halloween costume this year? Star Wars, according to Vogue. The National Retail Federation agrees.
“As we’ve seen for several years, Hollywood and pop culture both have a tremendous impact on how adults and their children decide to dress the part each Halloween, and it’s evident some of the biggest newsmakers of the year will be out in full force this fall,” NRF CEO Matthew Shay said in a statement.
In September, the firm expected over 1.8 million children to don Star Wars costumes while collecting their candy. The NRF continued, “Star Wars characters ranked 5th for adults this year after tying for 12th last year: 1.4 million adults will channel Han Solo, Princess Leia, Yoda or another beloved Star Wars character this Halloween.”
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TV advertising
To make investors happy, Disney and Lucafilm have spent millions on advertising and marketing.
“Star Wars is setting a new water mark for the entertainment industry when it comes to co-branding for a movie,” said Sean Muller, CEO of iSpot.tv. “There are already 19 brands running Star Wars movie tie-ins, including Duracell, General Mills
GIS
, Campbell’s
CPB
, Verizon
VZ
, Kraft and CoverGirl amongst others.”
Lucasfilm has spent $22,340,091 to place The Force Awakens trailer 1,466 times across 44 networks, the firm added. It also calculated that 618 of those showings took place in prime time.
But besides trailers, iSpot.tv found that “51.4mil has been spent advertising other Star Wars properties, such as action figures, costumes, and video games.”
The firm likened Disney’s strategy toward marketing the new Star Wars film to Universal’s efforts with the Minions movie. “For Minions, Universal spent nearly $25 million placing variations of the trailer, but extended the reach of their efforts by leveraging the movies characters in co-branded promotions with brands such as Tic-Tac, McDonald’s
MCD
, and General Mills,” according to iSpot.tv.
And at the end of the day, Star Wars is so popular that it pretty much markets itself.