The Force Awakens opened December 18. Image: Mike Maguire.
The newest installment of the Star Wars franchise, The Force Awakens, is well on its way to becoming one of the largest-grossing films of all time. During its opening weekend, the film raked in $247 million in domestic ticket sales, with global sales reaching $528 million. Those numbers are both records, besting the numbers set by Jurassic World earlier this year.
Walt Disney (DIS -0.45%), which bought Star Wars-maker LucasFilm for $4 billion in 2012, needed a big box-office win from Episode VII -- not just to recoup its investment, but to strengthen the long-term outlook of the company.
A new universe
After paying $4 billion for Marvel in 2009, Disney realized a huge return on investment relatively quickly after its first few box-office releases. Disney accelerated Marvel Film's release schedule, releasing 10 movies in just more than five years, and each movie has been a box-office success.
Additionally, Disney has been able to leverage its television studio to produce TV series based on the Marvel Universe, including Agents of S.H.I.E.L.D. and Jessica Jones, which streams on Netflix. Disney also has eight more Marvel series in the works for release on multiple networks, including its own ABC. On top of that, it has 11 more feature films scheduled for release by Summer 2019.
Disney has plans to do the same thing for Star Wars. Disney already produces an animated series, Star Wars Rebels, for its Disney XD cable channel, and renewed it for a third season last month. But The Force Awakens will act as a major launching pad for the success of the renewed Star Wars brand, just as Avengers did for Marvel. With the success of its opening weekend at the box office -- even without a presence in China, the second-largest movie market -- it looks like Disney has another universe it can expand.
Disney plans to release four more Star Wars movies between now and 2019: two more sequels, and two spin-offs. It may also spin off more characters or timelines into television series like it's done with Marvel.
Disney also gained the rights to use Star Wars IP in its theme parks, which is another major opportunity for the media company. Disney doesn't currently have the rights to Marvel's IP for its theme parks due to a pre-acquisition licensing agreement with Universal. Theme-park expansions, including Star Wars-themed sections, are already under way, and represent yet another revenue stream for Disney to capitalize on its investment.
Couldn't come at a better time
The Star Wars relaunch couldn't come at a better time for Disney. When the company reported its fiscal 2015 earnings, it noted that subscribers to its cable networks had declined noticeably. ESPN, the centerpiece of its cable networks division, has lost 7 million subscribers during the last two years.
The cable networks division accounts for 44% of operating income at Disney, but it's growth has slowed significantly as subscriber losses offset affiliate fee increases. Last year, operating income for the segment grew just 5%. Meanwhile, Disney's operating income for its other segments, parks and resorts, studio entertainment, consumer products, and interactive, all grew at double-digit rates.
As income from cable networks stagnates, Disney needs another piece to drive profits. The Star Wars franchise is capable of improving every segment Disney operates. The box-office numbers for The Force Awakens aren't just an indicator of a single film's success; they represent the potential for Star Wars to drive a meaningful long-term return for Disney investors.
