Walt Disney Co. chief Bob Iger has been preaching the power of franchises for the Mouse House for years. On Thursday, he and other Disney execs spent the day outlining to investors — with a slew of facts and figures — how the focus on cross-platform properties like “Toy Story,” “Cars” and its newly acquired Marvel characters will bolster the Mouse House’s bottom line for years to come.
“Over the last five years, we created a more managed approach to how we deal with franchises,” Iger said during the Mouse’s daylong investor confab in Anaheim. “Now we have the ability to view the full potential of a franchise.”
“Franchises drive higher returns for the company,” said Jay Rasulo, Disney’s senior exec VP and chief financial officer. Rasulo noted that while only 40% of the studio’s feature production dollars were spent to make franchise films last year, the results generated 60% of its overall revenue. This year, 80% of its production spending will be devoted to franchise features.
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As an example, Rasulo compared the earnings of “Alice in Wonderland,” a nonfranchise film, to those of Pixar’s “Toy Story 3.”
While the live-action “Alice” has raked in more than $1.6 billion since its release in March, most of that was collected at the B.O., since the Tim Burton pic offered little opportunity for consumer products. Licensed merchandise homevideo and TV sales made $400 million.
“Toy Story 3,” on the other hand, earned more than $1 billion at the B.O., plus $650 million on homevideo, $250 million from books, $220 million from videogames and $7.3 billion in other merchandise sales, while launching park rides and cruise ship shows, turning it into a $10 billion property.
Rasulo stressed the importance to the Mouse House of buying Pixar in 2006, saying the $6.4 billion acquisition occurred when “our Disney animated film business was actually destroying value” because of the pics’ underwhelming performance at the B.O. and elsewhere.
“Animation must be successful since the IP we create there is propagated throughout the whole Disney ecosystem,” Rasulo said.
This summer, “Cars 2” is expected to rev up similar coin at the B.O. and at retail.
The first “Cars” film, released in 2006, continues to be a major licensing powerhouse, earning $240 million in 2010 from toy and other merchandise sales. That’s impressive considering there hasn’t been a new film or direct-to-vid release and the brand had to compete against “Toy Story 3” for attention.
“Every movie merchandise program experiences a steep decline after the DVD release, but ‘Cars’ has grown,” said Andy Mooney, chairman of Disney Consumer Products Worldwide.
Last year, Disney had five of the six top franchises, based on merchandise sales, with Mickey Mouse and Winnie the Pooh leading theDisney Princess line, “Toy Story” and “Cars.”
This year, Disney wants to see “Cars” to surpass “Toy Story 3” and “Star Wars” in merchandise sales. What should help: deals like the one in which Toys R Us will get 70 exclusive toys to promote in stores.
A redesign of the Disney Stores should help, too. The outlets are now aimed at kids under 12, with displays that promote established franchises and hype new properties. Traffic is already up 20% at those outlets, helping sales increase 25%.
In addition to the opening of “Cars Land” at the Disney’s California Adventure theme park in Anaheim next summer, Disney plans to spin off “Cars” first with “Planes,” which will feature a cast of new airborne characters.
That direct-to-homevid toon will be followed by projects built around other “stuff that kids absolutely love,” said Rich Ross, chairman of Walt Disney Studios. “Planes” takes flight on Blu-ray and DVD in spring 2013.
Project is produced by DisneyToon Studios, a division of Walt Disney Animation Studios that produced the successful line of “Tinker Bell” direct-to-vid pics.
Studio was built to get its own franchises off the ground, similar what Pixar’s sister studio in Vancouver did with the “Cars Toon” series of shorts; the 10th installment is in production.
“Toy Story” is also getting its own “Cars Toons”-like shorts. First is “Toy Story Hawaiian Vacation,” to bow in front of “Cars 2.” A second will unspool in front of the upcoming “Muppets” movie.
ABC execs were also on hand for the confab, with new ABC Entertainment chief Paul Lee talking up the potential for TV skeins based on Marvel’s superheroes. ABC has several projects in the works with high-profile creative auspices, including dramas “The Incredible Hulk,” with Guillermo del Toro, and “AKA: Jessica Jones” with “Twilight” scribe Melissa Rosenberg.
“On cable you can hyper-target an audience,” said Lee, who moved to the Alphabet from ABC Family. “On ABC the target is the entire viewing population. Our job is to make big event programming that invites in all of the viewing audience. Marvel’s properties are going to be fantastic for that.”
Over at the Disney Channel, the cabler is breathing new life into “High School Musical” by prepping to launch spinoff “Madison High” with a new cast. It’s also working with the studio to create a feature based on Disney XD’s hit toon “Phineas and Ferb” that will blend live action and animation.
The interactive division is also set to focus on building a multi-platform approach to games that revolve around just four to six core franchises, including Marvel heroes and “Toy Story,” as its new exec team looks to make the group profitable by 2013.
New Disney games co-prexy John Pleasants said the group missed an opportunity with products tied to the December release of “Tron: Legacy.” “We did a lot of things well but, boy, can we do things better,” he said.
All of this should prove financially lucrative as Disney focuses on expanding in emerging markets like China, India, Russia and Latin America and targets the growing middle classes there.
It plans to build a new park in Shanghai and is currently expanding Hong Kong Disneyland, with one land devoted to “Toy Story.”
“Expansion outside the United States is the most important growth opportunity,” said Walt Disney Parks and Resorts chief Tom Staggs. Company is especially interested in China, where leisure travel spending is expected to top $200 billion by 2015.
By 2030, there will be 600 million children in China. “The opportunity to reach them with Disney-branded content is huge,” Iger said.