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Disney Becomes First Studio To Gross $7 Billion; But Here’s The Real Reason Shares Will Only Go Up

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Walt Disney studios has gone from Mickey Mouse to Darth Vader, and boy is it paying off. With Rogue One: A Star Wars Story having a worldwide opening weekend coup of $290 million, Disney has become the first movie studio in history to gross $7 billion globally at the box office. Where does the studio go from here? And just how high is the roof for The Walt Disney Company?

Disney Grossed $7 Billion, But Shares Will Go Up For One Reason Only

While Disney is celebrating the massive success of Rogue One: A Star Wars Story, the company knows that the real profits come from offscreen. So while Rogue One brought in almost $300 million in its opening weekend, the real measure of success comes after the movie. Where does Disney’s profits spring from? Can those profits be maintained?

The fact is, studios only make a fraction of their profits from movies. The goal of a movie is to cover the costs of production. While massively successful movies are a great bonus, a studio’s real money comes from merchandising. A successful opening weekend is basically just a measure of how well merchandise sales may perform. And based on last weekend, Rogue One merchandise should be through the roof as the newest Star Wars movie just had the highest grossing opening weekend of all time.

Rogue One: A Star Wars Story grossed $290 million worldwide, breaking the previous record of $248 million, held by … Star Wars Episode VII: The Force Awakens. The franchise’s newest film beat out other major box office smash hits including (in order) Jurassic World, Marvel’s The Avengers, The Avengers: Age of Ultron, Captain America: Civil War, and Iron Man 3.

What does this list have in common?

Other than Jurassic World, Disney owns every single one of the top seven highest grossing opening weekends of all time. Disney purchased Lucasfilm in 2012 for $4 billion, Pixar for $9 billion in 2006, and Marvel for $4 billion in 2009, meaning that in addition to the aforementioned movies, Disney also owns Zootopia, Finding Dory, and Frozen, all of which topped $1 billion in theatres globally.- along with both Avengers movies and Captain America: Civil War. A

All of those movies had massive success on the licensing front, with Frozen generating $1.275 billion in theatres and more than doubled that number in retail sales. And Elsa’s tale opened to a “mere” $67 million weekend. Disney recorded $48.8 billion revenues in 2014, the majority of which comes by licensing its characters for use on third-party products such as toys, games, school supplies, lunchboxes, clothing, and even snacks. Disney is a master of branding, and earns royalties based on a fixed percentage of retail selling price. So the more products for sale, the more money Disney brings in.

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That’s not counting the DVD sales, streaming rentals, or wildly successful theme parks

And because Disney controls just about every level of the sales funnel, the company also dictates profits by strategically launching sequels and new movies to sync up with holidays such as Halloween and Christmas, and peak movie seasons such as summer, allowing Disney to ensure revenues stay constant.

 

Check out Wochit Entertainment’s video on Disney’s huge achievement:

So while Disney may have produced $7 billion in ticket sales this year, the real profits come once the credits are done rolling. And if the opening weekend success of Rogue One: A Star Wars Story is any indication, The Walt Disney Company (DIS) shares will continue to rise.

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Featured image via Hollywood Reporter

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