Star Wars Will Make Its Real Money in the Mall, Not the Cinema

The Star Wars franchise has generated more than $32 billion in revenue over the past 38 years. The Force Awakens is expected to be its biggest earner yet, but the film’s fortune won’t be made in the cinema. It will be in the mall, where shoppers are expected to pick up $5 billion worth of merchandise over the next 12 months. http://bit.ly/1YwGpTr
  1. Disney made a huge bet on the Star Wars franchise
    Back in 2012, Disney bought Lucasfilm — the studio that created Star Wars — for $4.02 billion. The pair’s first foray together, Strange Magic, was released in January this year. It was a total flop, one of the worst ever opening weekends for a widely released film. Buying Lucasfilm had one purpose: to acquire the rights to Star Wars. It’s the world’s most lucrative franchise, and it has been sitting on the shelf for 10 years since Star Wars Episode III: Return of the Sith.
  2. Branded products are the real force behind Star Wars
    When 20th Century Fox decided to pick up Star Wars back in the early 1970s, George Lucas came back with a deal: He was willing to accept a $350,000 pay cut as director in order to keep the film’s merchandise rights, along with the rights to any sequels. Not anticipating how popular the film would be, Fox accepted. Lucas is now worth more than $5 billion. In the 38 years since the first film, Star Wars has grossed $28 billion in revenue. And less than a sixth of this has come from ticket sales.
  3. For a new era, there a new collector’s item (or a hundred)
    In buying Lucasfilm, Disney has secured both Star Wars’ film and merchandise rights. It’s estimated that for every branded item sold, Disney takes a cut between 10 and 15 percent. Star Wars merch is expected to bring in $5 billion in sales over the coming 12 months, rising to as much as $20 billion in the next five years.
  4. Star Wars is embracing its diverse fan base
    Women are a big focus of The Force Awakens’ merchandise campaign. This is likely the effect of two forces — the popularity of the new film’s heroine Rey and a growing awareness of the female market. CoverGirl has released a Star Wars–branded makeup collection, Hot Topic has a clothing line. In one Walmart ad (viewed ~21 million times), a young girl plays with Star Wars toys as her mom asks why the princess doesn’t let boys rescue her. "Because she’s a modern, empowered women," the girl replies.
  5. All this hype doesn’t come cheap
    While there’s been a lot of focus on Star Wars products, building excitement around the film and actually getting people into cinemas is still vitally important. The average global marketing budget for a "tentpole" film (a release whose profits fund smaller productions) is around $100 million. Building hype overseas is increasingly important for blockbusters. Since 1999’s Phantom Menace, the franchise has been making more money overseas than at the US box office.