Please ensure Javascript is enabled for purposes of website accessibility

Instant Analysis: Sony's "Angry Birds" Is a Surprise Hit

By Leo Sun - May 29, 2016 at 8:03PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

How did the Angry Birds knock out Captain America?

Sony (SONY -0.77%) Pictures' Angry Birds recently soared to the top of the U.S. box office, raking in $39 million during its opening weekend. As of May 25, that total has risen to $46 million, and its worldwide box office revenue has hit $158 million -- more than double its production budget of $73 million.

Image source: Sony.

That impressive return was enough to knock out Disney's (DIS -1.13%) Captain America 3: Civil War, which topped the U.S. box office during the previous two weeks. The film probably won't face much competition until Disney releases Finding Dory on June 17. Angry Birds' box office performance will also likely guarantee a sequel and launch a lucrative new film franchise for Sony.

What does this mean for Sony?

Last year, Sony's film revenue rose 7% to $8.3 billion, but operating income plunged 34% to $341 million. That bottom line decline was mainly caused by a drop in home entertainment revenues, weaker-than-expected theatrical performance from The Walk and The Brothers Grimsby, and tough currency headwinds. Those declines offset robust box office results from Hotel Transylvania 2 and Spectre. The Pictures business accounted for 12% of Sony's 2015 sales and 13% of its operating income.

For fiscal 2016, Sony expects revenue at its Pictures division to rise nearly 8% and for operating income to improve 12%. New films like the Ghostbusters reboot and the Magnificent Seven remake, along with new franchise entries like Inferno, Resident Evil: The Final Chapter, and Underworld: Blood Wars are expected to drive the unit's growth until the fiscal year ends next March.

Sony has generally lagged behind Disney and other film studios when it comes to animation, but Angry Birds could help expand its slate of animated franchises. In August, Sony will take a bigger chance on R-rated animated comedies with Sausage Party.

Should investors care?

Scoring a box office success on a new animated film is a definite victory for Sony, but investors shouldn't overestimate its impact. Sony still has nearly 20 more films to release this year, and any of them could bomb or become a blockbuster. Sony's future growth also depends on a lot of other moving parts besides its movie business. Therefore, Angry Birds' success is good news, but it probably won't move the needle for Sony anytime soon.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Sony Corporation Stock Quote
Sony Corporation
SONY
$80.33 (-0.77%) $0.62
The Walt Disney Company Stock Quote
The Walt Disney Company
DIS
$96.08 (-1.13%) $-1.10

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
323%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/06/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.