The Force Is With Fox

Fear not, young Jedi Padawans... the wait is almost over. George Lucas' original Star Wars trilogy will be released on DVD next week. Well, it's not exactly the original trilogy, as the movies have been altered and "special-editioned" since they made their respective debuts so many years ago. (There may even be yet another take on the meeting between Han Solo and his Rodian nemesis in the scurrilous Cantina at Mos Eisley, or so I've heard.)

Fox (NYSE: FOX  ) couldn't be happier. It's funny, because although there doesn't seem to be a red-hot, blistering marketing machine supporting the DVD with hype brighter than the scorching reflection of the harsh twin sunlight off the sand dunes of Luke Skywalker's home planet, I would venture to guess that this collection is going to be one of the most successful releases in the medium's history. Fox may be playing it smart by being somewhat conservative on the promotional schemes -- after all, why engage expenditures that might not add any more demand? After all, one would have to assume that the celluloid phenomenon has pretty much planted itself in the mindshare of the cult and mass audiences around the globe in an efficiently spontaneous manner and that the seeds of buying intent have already germinated on their own. The DVD is going to fly off the shelves faster than a bunch of Rebel transports evacuating Echo Base.

Then again, maybe the sales will stink like steaming Tauntaun guts oozing out of one of the creatures' freshly eviscerated abdomens (that's not going to happen, but I wanted to fit the phrase "Tauntaun guts" somewhere in this piece).

Even so, investors -- particularly new ones -- should be wary of picking up shares in the company based on the DVD. For one thing, Lucas is most likely taking the bulk of the profits. It's been reported that he may divert 90% or more of the spoils from the theatrical release of the new trilogy into his myriad bank accounts. One can only assume that he takes a lot out of the DVD revenue stream as well (he probably had a Hutt as an agent). Secondly -- and this is something that has been mentioned by Rick Munarriz in one of his recent commentaries -- there's a whole host of other factors that will affect Fox's bottom line, an example being the important broadcasting assets. A single successful video launch isn't going to guarantee share appreciation; yes, it can help drive earnings and buying sentiment, but once again, think before you leap. Look at Fox's business model, its stock's past performance (not so great in my opinion; it seems to be stuck in a range rut, although I might be a bit biased because I lost money on it several years ago), its growth prospects, etc. Check out recent news on the company, such as other high-profile video releases and earnings reports. Don't become mesmerized by the shiny lightsabers.

The Star Wars DVD will have some compelling extras, such as a lengthy documentary called Empire of Dreams: The Story of the Star Wars Trilogy and promos for video games that will be released on Sony's (NYSE: SNE  ) PlayStation 2 and Microsoft's (Nasdaq: MSFT  ) Xbox systems. A playable demo of Star Wars Battlefront will be available for owners of the Xbox unit. Plus, the ball for next summer's final entry in the saga gets rolling with a "making-of" feature dedicated to the game based on Episode III: Revenge of the Sith. Fox wants to do its best to take the summer away from the studios at competitors such as Viacom (NYSE: VIA  ) and Time Warner (NYSE: TWX  ) -- this DVD might be the first salvo fired in the sure-to-be fierce battle at the box office.

So, all you Wookiee fanatics, get ready to hit the local Best Buy (NYSE: BBY  ) or Wal-Mart (NYSE: WMT  ) in short order to pick up your copy. Come back to a time when Darth Vader was a mean guy in a metallic skull-like helmet, Midi-Chlorians had nothing to do with the Force, and Jar Jar Binks wasn't annoying (because he was nowhere to be found). Live long and prosper, my Foolish friends (yeah, yeah, I know).

Fool contributor Steven Mallas thinks George Lucas should've made sequels instead of prequels. He also owns none of the companies mentioned here.


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