What strategies will Disney use to grow and what are the problems? According to venture investor Matthew Ball, Disney recorded the highest revenue in the film industry for five years from 2015 to 2019. Many of the works were also included in the worldwide box office rankings. In terms of box office revenue, three of the five films that recorded more than $2 billion in the past, and 23 of the 36 films that recorded more than $1 billion between 2009 and 2019 were Disney tickets.
In the global box office rankings in 2019, five titles including Avengers End Game, The Lion King, Captain Marvel, Toy Story 4, and Aladdin were named. In addition, the dawn of Star Wars Skywalker, Frozen 2 is also raising expectations. Matthew Ball says that Spider-Man’s Far From Home is also a Disney piece, so at the maximum, 8 out of 10 are likely to become Disney.
Disney acquired Pixar, Marvel Entertainment, and 21st Century Fox at a cost of $300 million. The company acquired by Disney greatly outperformed competitors’ profits after entering Disney’s subsidiary. George Lucas, who once refused to sell Lucasfilm, also decided to sell Lucasfilm to Disney after seeing the success of Marvel Entertainment, which was affiliated with Disney. Lucas did not announce the sale to the company so as not to bid on the company.
Disney’s success is supported by the acquisition, based on a management strategy and massive profits that other companies cannot imitate. Not only that, to understand Disney’s success, we need to understand the benefits that are made by brand values.
Businesses based on brand equity have excellent sales power. People don’t necessarily have a high number of fans for the work. Companies like Disney can enjoy enormous benefits because of the large profits from fans’ love for low costs. Although the profits of movie productions by Disney have increased over the past few years, operating profits such as product sales are higher, indicating the depth of business using brand equity.
The value of IP becomes more effective when limited products with scarce value are introduced. There are no restrictions on movie tickets or TV viewers. For example, if Elsa’s limited dress from Frozen is released, fans will purchase it all. Having a lot of fans for a work can actually increase your ability to set prices.
Marvel Entertainment is growing faster than expected for 10 years from 2008. Prior to 2015, only one or two works were released per year, and in the United States, it generated an average of $291 million. However, since 2016, the Marvel Cinematic Universe MCU has released two to three works per year and generated $450 million per work. Of the 11 films released since 2016, only two produced less than the average before 2015.
The increase in MCU profits is due to the increase of fans due to the credit built by the early works, and the start of a new project focusing on unfamous characters such as Guardians of Galaxy and Black Panther.
Meanwhile, revenues related to Star Wars theme parks that appeared at Disney Resorts in California and Florida in 2019 were not very impressive. The reason is that the demand is overestimated, too high admission fees and lack of attractions. Star Wars-related product sales have decreased significantly since the awakening of the Star Wars Force in 2015. In other words, some point out that Disney should have built the Avengers campus first, which is expected to appear after 2020.
Matthew Ball says sales of movies, music and books are like a referendum. For example, in 2016, DC Comics sold $166 million and $134 million for Batman, Superman and Suicide Squads, respectively. However, in the Justice League two years later, Batman, Superman, and Wonder Woman, who were popular as DC Comics characters, remained at $93 million. Also, Netflix’s Marvel The Defenders series collapsed because the season was too long.
Creating a new work is always challenging and changing the expectations of fans. In a good sense, betraying the expectations of the fans should be the same or more impressive than the previous work. Profits can become unstable as it keeps fans waiting or takes time to release.
Matthew Ball points out that Disney’s movie revenue is likely to decline significantly after 2020. This is because Robert Downey Jr. of the popular characters Iron Man, the pillar of the MCU, and Chris Evans, who played the role of Captain America, have ended their contracts, and the release of the next work of Mighty Sol is scheduled for November 2021. According to him, the rapid growth of the original MCU was unexpected and is expected to settle at an appropriate level in the future.
Another reason is the IP stagnation using characters whose popularity is not so high, which was the reason for the improvement in the MCU’s profits. In the MCU, the Infiniti phases 1 to 3, which started in 2008, are finished, and the 4th phase will begin in 2020. The first, Black Widow, is based on Black Widow, which appeared in Iron Man 2 as a shield agent, but it was not so popular in the original cartoon, and may actually be an unknown IP.
Star Wars, a popular series, also unveiled the Force’s Awakening in 2015 and the last Jedi released in 2017. As much as it does, it seems difficult to increase the number of fans significantly.
In addition, Pixar seems to be making the original, not the existing IP sequels such as Toy Story or The Incredibles for several years after 2019. This is nice in that Disney can get a new IP, but the new IP isn’t going to be commercialized right away. It takes time per year to build the charm of a theme park and expand product sales.
Disney, which cannot expect growth due to existing IP, may create a spin-off work as a make-up factor. Guardians of Galaxy, for example, has proven that Marvel can make enormous profits with a novel genre of work. However, it may be difficult for Eternals, released in 2020, to reproduce the same level of success. In addition, Disney +, which started service in 2019, will offer spin-off series of Star Wars, Marvel, and Pixar, and the Star Wars TV series may hit the level of The Walking Dead or Game of Thrones.
Disney Plus is not just an SVOD service, it can be said to be a tool to know exactly what needs Disney fans want. By figuring out which characters are popular and how often you view the content, you can not only supply the content appropriately, but also optimize the supply of individual fan demand.
Most importantly, Disney Plus is how it grows a company called Disney and develops relationships with fans. Even if Disney doesn’t release budget-hungry movies through Disney Plus, it can increase character recognition and popularity. Disney’s SVOD strategy is because consumers don’t have to spend money or go out to see Disney Plus. This strategy allows Disney’s IP value to grow rapidly. In addition, as Disney already recognizes that its growth in the movie market has matured, it is also in need of a new market. Related information can be found here .