Millennium Falcon Tie Fighters The Force Awakens

Star Wars: The Force Awakens should push Disney's film and TV profits to new highs, but not as fast as some might like. Image credit: StarWars.com.

May the fourth be with you! That's the rallying cry for what's become Star Wars Day, an annual rite among longtime fans of the Star Wars universe of films, cartoons, comics, toys, books, games, and everything else either licensed or made by Disney's (NYSE:DIS) Lucasfilm division. In honor of the day, we're taking a closer look at the likely financial impact of Star Wars: The Force Awakens, due in theaters this December. It's probably not what you think.

Get ready for another record
Not that it'll lack impact. Huge fan interest in the newest trailer for The Force Awakens suggests a record-breaking performance at the box office:

Movie (trailer version)YouTube ViewsApproval %
Star Wars: The Force Awakens (teaser 2) 47,670,978 97.8%
Avengers: Age of Ultron (trailer 3)
33,026,635 97.6%
Batman v Superman: Dawn of Justice (teaser 1) 32,876,131 95.1%
Ant-Man (trailer 1) 11,005,195 97%
Fantastic Four (trailer 1) 8,126,051 87.1%

Data as of April 30, 2015. Source: YouTube.

Look at that table again before you move on. The Force Awakens not only earns higher approvals but also 44% more views than the final trailer for Age of Ultron, screening at what should be the apex of interest in the film. An analysis by Networked Insights points a record $240 million domestic opening this weekend. Other data point to Age of Ultron netting $2 billion at the global box office. That Star Wars:The Force Awakens is more grabbing at this point should be telling.

How this mouse gets his cheese
So 2015 is going to be the biggest year in the history of Walt Disney Studios, right? Wrong; 2016 is going to be much bigger. Here's why:

Fiscal Year* Studio RevenueOperating IncomeOperating Margin %Key Theatrical Releases
 2015   $1,858 million  $544 million  29.3%  Big Hero 6CinderellaAvengers: Age of UltronInside OutAnt-Man
 2014   $7,278 million   $1,549 million  21.3%  Frozen, Captain America: The Winter Soldier, MaleficentGuardians of the Galaxy
 2013    $5,979 million  $661 million  11.1%  Iron Man 3Monsters University
 2012    $5,825 million  $722 million  12.4%  The Avengers, Brave
 2011    $6,351 million  $618 million   9.7%  TangledPirates of the Caribbean: On Stranger TidesCars 2
 2010   $6,701 million  $693 million  10.3%  Toy Story 3Alice In Wonderland

Source: S&P Capital IQ. Box Office Mojo.
* Disney's fiscal year usually concludes at the end of September.

See the pattern? Disney ends its fiscal year on or around September 30, which means big-ticket November releases from Marvel and Disney Animation act as catalysts for the year to follow. In 2015, these kick-starters include Pixar's The Good Dinosaur (Nov. 25) and, of course, Star Wars: The Force Awakens (Dec. 18). Follow that with Captain America: Civil War (May 6, 2016) and Finding Dory (June 17, 2016) and you've four potential blockbusters due in fiscal year 2016.

To put this in perspective, Disney Studios broke records in fiscal year 2014 on the strength of Frozen ($1.27 billion worldwide), Captain America: The Winter Soldier ($714.8 million), Maleficent ($758.4 million), and Guardians of the Galaxy ($774.2 million). Considering what we already know about fan interest in The Force Awakens, it wouldn't be surprising to see more records broken this fiscal year and next. Heck, we're only a quarter into fiscal year 2015 and already Disney Studios is on track to eclipse $2 billion in operating profit. Next year, Disney could earn close to that just on the strength of The Force Awakens and Captain America: Civil War, which teams two box office favorites in Chris Evans' Cap and Robert Downey Jr.'s Iron Man.

Three more things should stand out as you look at the table above:

  1. Multiple Marvel movies makes a huge difference. Disney took over from Paramount for distribution of Marvel movies with 2012's The Avengers. Studio operating profit has been on a sharp uptick ever since, mostly because films such as Iron Man 3 and Guardians of the Galaxy tend to generate strong home video sales. (Over $80 million and $111 million, respectively, at last count.)
  2. Animated tentpoles are key to the mix. Frozen is one of the great Disney success stories, but it's also hardly alone as a recent catalyst among the studio's animated properties. At $652 million in worldwide ticket sales and $76.8 million in home video sales, Big Hero 6 is arguably responsible for a huge chunk of Disney Studios' massive first-quarter operating profit.
  3. Disney's franchise focus is producing progressively higher returns. The biggest winners in Disney Studios' lineup are movies that build on each other. Avengers leads to Iron Man 3, which leads to Captain America: The Winter Soldier, which leads to Guardians of the Galaxy. Continuity is getting fans interested in seeing what comes next.

Star Wars: The Force Awakens is the next to come from Disney's franchise factory. Whether or not it helps the House of Mouse eclipse $3 billion in studio operating profit in fiscal year 2016 is anyone's guess. Regardless, one thing is certain: Thanks to a growing roster of bankable film projects, The Force is strong with this business.

Tim Beyers still owns his share of Star Wars comics. He's also a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission and owned shares of Apple and Disney at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool.

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