A not-so-long time ago at a variety of retail stores probably not too far away from wherever you might be right now, people flocked for a fabricated retail "event" called Force Friday.
It was a brilliant marketing ploy by Disney (NYSE:DIS) which took advantage of the fact that September 4 happened to fall on a Friday and "fourth" kind of sounds like "force," the mystical life-energy that flows through the Star Wars universe. On that day, the company held an 18-hour unveiling of toys, merchandise, and pretty much anything you imagine tied to the December 18 release of Star Wars Episode VII: The Force Awakens.
Whether you wanted a Darth Vader mug, a remote-controlled Millennium Falcon, or even a Princess Leia onesie, Disney has licensed it and it went on sale on Force Friday. It was a masterstroke of turning the release of new products into a happening, with the company using the anticipation for the movie and the die-hard fandom for the brand to sell a whole lot of product before a single fan has seen the film.
"We've been working closely with the filmmakers to bring the characters and storylines from Star Wars: The Force Awakens to life through an exciting array of products, and we're thrilled to share them with fans around the world," said Disney Consumer Products President Leslie Ferraro in a press release.
That's a clever way to frame a cash grab that Han Solo would have been proud of back in his scoundrel/smuggler days. It's hard to see how Chewbacca-branded soup or Star Wars cereal with Yoda marshmallows and limited-edition box designs brings the film's storyline to fans, but it's a very smart way for Disney to make the franchise pay off before the movie hits theaters.
This is a monster brand
Star Wars has long been a merchandising giant and the original film practically created the licensed toy market. The new movie is reawakening the franchise's fanbase.
"This is going to be a blockbuster merchandise event," Joel Bines, managing director in the retail practice at consulting firm AlixPartners told USA Today. "You will not be able to avoid Star Wars merchandise. It will be impossible this holiday season."
The timing of the movie and its product tie-ins works well for Disney (which is not an accident) because it falls during the holiday season, when the toy industry does more than 70% of its sales, Jim Silver, an industry expert, told the newspaper.
"When you look at the next five years and all of the different products, this is a multibillion-dollar proposition," Silver said.
The numbers for Disney will be huge. Macquarie Securities predicted that products tied to the franchise could generate revenue of $5 billion in the first year and net $500 million in licensing and retail revenue for Disney, Barron's reported. Piper Jaffray put the number at $3 billion in 2015 alone, according to USA Today, so no matter how you look at it, it's a Death Star-like number in its immensity.
I sense a disturbance in the Force
With the movie not coming out until December 18 -- a week before Christmas -- the lightsabers, action figures, T-shirts, and other Star Wars items will have been purchased before the movie is seen. That means that Disney will have amassed a pretty large profit from the film even if it ends up being a Phantom Menace-like disappointment.
That seems unlikely given the care going into making The Force awakens with J.J. Abrams directing and Lawrence Kasdan -- who wrote Empire Strikes Back -- scripting. But even if the movie is nothing but Ewoks singing to Jar Jar Binks, Disney has will have made more money on merchandising in advance of the movie than even the biggest hits make after their release.
Since the film will probably be good and the company has two sequels as well as three stand-alone Star Wars movies planned, this should just be the start of a merchandising cash-in the likes of which the galaxy has never seen.
Daniel Kline has no position in any stocks mentioned. He has the build-a-lightsaber kit on his holiday wishlist. The Motley Fool owns and recommends 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.