Star Wars is undoubtedly one of the biggest franchises that Disney (NYSE: DIS) owns, and some investors may be worried that the latest installment is not performing as expected.
Solo: A Star Wars Story, has so far failed to produce the box office results expected by Disney, falling flat on its first weekend of release. Current estimates track the movie at $101 million of domestic sales during the long holiday weekend box office period, which is well short of the $140 million that had been predicted.
Internationally, the film only made $65 million, which is again far less than what could be expected from a release in such a powerful franchise. As far as Star Wars movies go, this is the worst performing release since Star Wars: Episode II – Attack of the Clones in 2002.
Disney Stock not Shaken, Yet
The good news for investors is that Disney stock hasn’t fallen after news of the poorly performing release. This is likely due to the fact that The Avengers Infinity War, another one of Disney’s films, is still topping the box office.
What should be worrying for investors is the long term viability of the Star Wars license. There was massive fan backlash after last year’s release of Star Wars: The Last Jedi, with the film receiving an average audience rating of 2.9/5 on the largest movie rating website. Longtime fans of the series criticized the film of being tone deaf inside the Star Wars universe, with some even claiming that the film was intended to push social justice ideals which didn’t resonate with the core Star Wars themes.
Despite a large backlash, the film was still commercially successful, but it didn’t meet the figures of earlier Star Wars releases.
Some analysts are calling it Star Wars fatigue, whereas unhappy fans of the series would be more likely to call it a result of poor management and direction for the franchise.
In the future, waning enthusiasm for Star Wars releases could prove bad for Disney and its shareholders.
- Disney spent $4 Billion acquiring Lucasfilm and the Star Wars licenses.
- A long term investment plan is in place to develop at least seven movies and a TV series, with yearly releases.
- Disney spent $250 million developing Solo: A Star Wars Story, with only $166 million recuperated over the opening weekend.
With the studio committed to more star wars films, they will need to find a model that is profitable. This could mean making an effort to get the core fan audience back on board with Disney’s interpretation of the Star Wars universe.
One movie underperforming on a single box office weekend should not concern shareholders. However, continued underperformance will be costly for the studio and could result in financial write-offs. Disney is currently riding a high with the success of their Marvel films, however, investors should watch other franchises closely to try and anticipate any major losses that could come in the future.
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