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Poster for Star Wars: The Force Awakens
Amy Schein

The Business of “Star Wars”

by Amy Schein | Dun & Bradstreet Editor

December 14, 2015 | No Comments »

Poster for Star Wars: The Force AwakensResorting to hyberbole isn’t really an issue in a discussion of the business impact of Star Wars — when it comes to big money, the franchise is a force to be reckoned with.

The force won’t just drive astronomical sales for the movie production and distribution industry, with Disney and its Lucasfilm subsidiary winning big. In fact, Star Wars almost seems like an industry supersector in and of itself, spanning movie theaters, toy manufacturing, and retail outlets, all of which stand to gain more than a few bucks from The Force Awakens‘ much-anticipated December 18 release. That’s without mentioning TV spinoffs, theme park extensions, and video games. Or the fact that new products from soup to couture are paying homage to the franchise. (Star Wars-themed pizza cutter or Darth Vader cuff links, anyone?)

Some believe the film may beat Avatar‘s $2.8 billion global box office record. (Remember, Disney paid $4.1 billion for Lucasfilm back in 2012.) For the film’s opening weekend, forecasts at the domestic box office range from $170 million to $240 million, an impressive feat considering no film has opened to more than about $85 million in December. Expectations are also pretty high in various international markets.

As for Star Wars merchandise sales, the total could reach $5 billion over the next year, according to Macquarie Capital analyst Tim Nollen. Disney, of course, earns royalties, based on a fixed percentage of retail selling price. The company doesn’t make that magic number public, but it’s estimated that the media giant receives an average of 10% of Star Wars-related consumer product sales, putting about $500 million in its licensing pocket for the year.

Hasbro, the lead toymaker for the franchise, is already reporting strong sales and low inventory in the wake of Force Friday, when Toys “R” Us, Target, Walmart, and World of Disney stores began selling Star Wars toys shortly after midnight on September 4. After Disney purchased Lucasfilm, Hasbro and Disney revamped their merchandising agreement, with the toy company paying Disney $225 million through 2020 for Star Wars licensing rights. Given that demand for Star Wars toys is already outpacing supply this holiday shopping season, it’s a safe bet that Hasbro will realize a healthy return on its $225 million investment.

On the exhibition front, movie theaters are behaving rather conservatively. So far, IMAX seems to be the big winner here, as the movie will be shown on every IMAX screen in the US for the first month of its release. As for the other chains, one observer acutely notes, if theaters give up all their screens at the multiplex to Disney, they’ll be putting themselves in a poor position for negotiating with the other movie studios down the road. However, many cinemas are getting creative to boost Star Wars-related revenues, adding pop-up stores in their lobbies to sell posters and other merchandise.

In addition to its wide reach across multiple industries and markets, Star Wars owes much of its existing success and record-breaking potential to its multigenerational appeal. Although it probably goes without saying, in a world where so much is uncertain, it’s nice to know that one thing is clear: The Force Awakens will be a blockbuster, for sure.

Amy Schein is an Industry Specialist at First Research, where she covers various aspects of the media industry. She earned her BS and MA in media studies at the University of Texas at Austin. Follow Amy on Twitter.

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Image courtesy of Lucasfilm / Disney.

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