The Disney(NYSE:DIS)catalog of animated classics is unrivaled in the film industry, and the company is now aiming to capitalize on some of these otherwise dormant movie properties by bringing live-action remakes to theaters. Like the incredibly successful Frozen, these projects have the potential to strengthen the business by winning fans, both old and new, and ensuring that the company remains at the forefront of popular entertainment.
The House of Mouse has already found incredible success bringing old characters back to life. Last year, Maleficent earned more than $758 million at the global box office and breathed new life into a sleeping property. Before that, Alice in Wonderland generated more than $1 billion in ticket receipts.
While there is great box office potential for the upcoming live-action remakes, the value of these properties extends far beyond ticket sales.
Frozen Fever helps Cinderella find the perfect demographic fit
The company is set to release its modern take on the classic Cinderella story on March 13th, and the picture has a good chance of being one of the early big earners of 2015. Cinderella will be the first live-action remake centered on Disney's famed princesses, so it is safe to say there is a fair amount of pressure on the film to deliver.
Cinderella looks to be a more traditional adaptation than Maleficent, and its box office performance could influence the direction Disney takes for other upcoming projects. Adding to the likelihood that the movie will be a hit, Disney has attached a Frozen short film to Cinderella. Frozen stands as the fifth highest grossing film in history and has a highly dedicated fanbase, so there is a good chance that the short film, Frozen Fever, will help Cinderella get off on the right foot.
The Jungle Book and Beauty and the Beast
An update of The Jungle Book is set for an April 2016 release, but it is not the only remake currently in production. Time Warner is working on its own live-action version of the tale that is more closely based on the original story from Rudyard Kipling -- Jungle Book: Origins is on track for a 2017 release. Releasing first should benefit Disny here, as it allows the company the opportunity to shape public perception of the property.
Beauty and the Beast is another Disney project in development with a competing Warner Bros. counterpart. Emma Watson was rumored to be on board with Time Warner but has recently signed to play the female lead for Disney. It is unclear whether Warner is still moving ahead with its project, but a potential delay or cancellation should again be good news.
Far beyond the box office
For the 2014 fiscal year, the film entertainment segment generated roughly 15% of Disney's top line. Its media networks, theme parks and resorts, consumer products, and interactive segments accounted for roughly 43%, 31%, 8%, and 3% of revenue, respectively. If successful, the live-action remakes have the potential to create benefits across each of these segments.
The appeal of Disney theme parks is closely tied to its famous characters. Megahits such as Frozen and Maleficent will create windfalls at parks for years to come, and there is reason to believe that the upcoming remakes can deliver similar synergistic benefits. Reviving old characters presents an opportunity to appeal to people who grew up with the classic characters, while also capturing new audiences -- a prospect that fits incredibly well with its business model.
Elements from Maleficent have already been incorporated into park events like the "Disney Festival of Fantasy Parade," and further spotlighting of the eponymous character seems probable in light of sequel rumors. Frozen characters have also made their way to the theme parks, and the attraction based on the film is sure to be a massive draw when it opens in 2016.
Hit characters are also the key to the consumer products divisions. The record first quarter in fiscal 2015 was partially propelled by great performance from Frozen merchandise. Disney delivered its best-ever quarterly revenue at $13.39 billion and its second-highest quarterly net income at $2.18 billion. Sales from the consumer products segment increased 22% year-over-year to $1.4 billion, while operating income increased 46% to $626 million with Frozen merchandize being cited as the main growth driver. Cinderella and the other stories should create new opportunities to drive product revenue from classic properties.
The remakes could also wind up as assets for the Disney Channel and ABC networks. Hit movies can be a draw on television and programming that has little in the way of additional costs for the company. The remakes also create greater potential for new TV spinoffs and added interest in existing programs such as the Once Upon a Time series. They even foster tie-in potential with the Disney Infinity video game and toys.
With its slate of updated takes on animated classics, new hits like Frozen, and major properties such as The Avengers and Star Wars, Disney is looking stronger than ever.