Why ‘Star Wars: Episode VII’ Is a Huge Risk for Disney

The next installment of the Star Wars series will be a hit no matter what. But if it's not a good movie it will likely hurt the box office prospects of its sequels.

Mar 21, 2014 at 10:09AM

It's silly to suggest that the first of the new Star Wars will be anything but a massive hit for Disney (NYSE:DIS). Even if the movie is terrible -- which anyone who saw Episode I: The Phantom Menace knows is possible -- curiosity will bring the movie a huge box office haul.

But unlike the prequel trilogy -- which built to the have-to-see-it moment of the creation of Darth Vader -- a lousy first film could dim prospects for its sequels.

Star Wars box office history

The first Star Wars, Episode IV, A New Hope, was a completely unexpected hit. The movie was an unknown quantity from George Lucas, a then largely unknown director. That film has gone on to become one of the most (if not the most ) profitable movies of all times. In addition to its huge box office, the movie also basically created the licensed toy business and has been repackaged for rerelease in various formats more times than even the most ardent fan would want.

Box Office Mojo shows the domestic, international, and total box office takes for the second Star Wars trilogy.  . 

  • Episode I, The Phantom Menace (1999): $474 million U.S., $552 million foreign, $1.02 billion total.
  • Episode II, Attack of the Clones (2002): $310 million U.S., $338 million foreign, $649 million total
  • Episode III, Revenge of the Sith (2005) : $380 million U.S., $468 million foreign, $848 million total

Interest in the series was clearly enormous with Phantom Menace  bringing in $1 billion, but that film being lousy chased away 35% of the audience as Attack of the Clones brought in $350 million less.

It can also be argued that had Phantom Menace been a better movie, Revenge of the Sith would have maxed out over $1 billion (an extra $150 million in box office). Making a bad first movie -- Phantom Menace scores a mediocre 57% at Rotten Tomatoes, which is kind for how dull the movie was -- may have cost the trilogy half a billion in lost revenue.

There is a huge potential audience for Star Wars

Disney and director J.J. Abrams have been very slow to release any details of the new movies, but they did post a press release about Episode VII earlier this week. In it they announced that principal photography starts May 2014 and will be based at London's Pinewood Studios.

They also released the first official details on the storyline for the films, when they take place, and a very hopeful piece of information for fans of the original trilogy. 

"Star Wars: Episode VII is set about 30 years after the events of Star Wars: Episode VI Return of the Jedi, and will star a trio of new young leads along with some very familiar faces. No further details on casting or plot are available at this time," the release said.

If familiar faces means a return of Mark Hammil as Luke Skywalker, Carrie Fisher as Leia Organa, and Harrison Ford as Han Solo, than Disney is doing the right thing. The enormous Star Wars fan base is more likely to connect to the movies if they in part update the audience on what has happened to these beloved characters. 

For the most ardent Star Wars audience -- the ones that buy the books and comic books that comprise the extended Star Wars universe -- it's not just having these characters in the film that's important, but what aspects of their literary past are acknowledged. 

The extended universe mostly makes sense

Though the early Star Wars books contain some logistics problems, a large effort has been made to make the entire Star Wars Universe fit together. For example, 2013's Kenobi, a book that explored the years after Revenge of the Sith but before A New Hope, took painstaking effort to explain why Obi Wan Kenobi in Episode IV looked way older than he should have given that only 20 years had passed.

Pleasing fanboys entirely and respecting every little piece of backstory is not always appropriate or possible on the big screen. But being respectful of the audience that has devoted time and money to keeping the Star Wars brand vital is important. 

It's OK if the Episode VII changes some details but if it skips over major story points -- say Han and Leia being married or Luke rebuilding the Jedi order -- then the series biggest fans could turn on it.

The Force should be with Episode VII

J.J. Abrams showed with the Star Trek reboot that he could be respectful of a franchise's past while creating a movie that does more than please fan boys. Episode VII will be one of the most anticipated movies of all time, but it will also be one of the most heavily scrutinized films ever as well. 

A bad first movie won't tank at the box office, but it might cost later films a huge chunk of potential box office. If a bad Phantom Menace cost $500 million, the stakes should be even higher here because this is the first movie under the Disney banner.

Make a good movie -- not even a great one just more Episode III than Episode I -- and Episode VII could be a billion-dollar movie that leads to billion-dollar sequels.

The Force is strong with this stock

Like the difference between A New Hope and Phantom Menace, there's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Daniel Kline has no position in any stocks mentioned. He has read nearly every Star Wars book and owns a (toy) lightsaber. The Motley Fool recommends Walt Disney. The Motley Fool owns shares of Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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