Felm disney (NYSE: DIS) CEO Bob Iger, who stepped down in 2020, was a visionary leader who expanded Disney’s operations through several acquisitions. He led the purchase of animation studio Pixar in 2006 and Lucasfilm in 2012, both of which added many lucrative franchises to Disney’s repertoire. But the first studio he had the foresight to acquire was Marvel Studios in 2009, and since then it’s become the highest-grossing movie studio in the world. Here’s what he’s done for the company and why he’s so great for the stock.
The perfect synthesis of characters and products
Marvel makes comic book superhero action movies, and Disney goes one step further with theme park add-ons and consumer products. Disney acquired Marvel for $4 billion in 2009, and Marvel has released 29 films over the 13 years that Disney has owned it. Marvel releases have grossed over $26 billion since then, more than any other movie studio.
Marvel, or the Marvel Cinematic Universe (MCU), is important to Disney in several ways. The first, of course, is ticket sales. Marvel’s first hit of 2022, Doctor Strange in the Multiverse of Madness, was released in May and was the second-highest-grossing film of 2022 so far, with nearly $1 billion in sales. Marvel produced the three films with the highest-grossing domestic opening weekend sales since theaters reopened, which include Doctor Strange in the Multiverse of Madness, Spider-Man: No Coming Home (which was published by sony Entertainment under a revenue sharing agreement with Disney), and Thor: Love and Thunder, which was released last week and has held the No. 1 spot ever since. It should be noted that all of these films are part of already existing franchises. Many of the studio’s characters have been used to create more cinematic hits, almost obvious bets for the studio. When Disney bought it, it bought nearly limitless potential for new movies — and more. It is worth much more than the original purchase price.
This brings us to why these movies are so important to an entertainment company like Disney. One of the things Disney is best at is milking content for all it’s worth, practically defining the term “cash cow.” There are four areas where Disney is making money from the MCU. Along with ticket sales, there’s streaming, parks, and merchandise, and all of these encompass nearly all of Disney’s operations.
Disney was able to get Disney+ up and running quickly thanks to its unparalleled library of content. Popular Marvel movies are a big part of the pull for subscribers, both in what’s already out there and what’s to come. The production costs of these films are already factored into ticket sales, making them more profitable than direct-to-stream content.
Disney has an Avengers Campus at Disneyland California and is opening one at Disneyland Paris this summer. He also recently redesigned a hotel at this resort with a Marvel character theme. Disney is limited, however, by deals other companies made with Marvel before the company was sold to Disney, which is why there are Marvel-themed rides at Comcast‘s Universal Studios Orlando, but not Disney World. Marvel merchandise is the final step in how Disney earns owning Marvel, and Marvel characters easily lend themselves to licensed toys, books, and accessories in everything from book bags to pajamas.
What Marvel is doing for Disney stocks
Marvel is a strong revenue generator for Disney, delivering its top movies in 2021 and 2022.
Although Disney stock is down 45% this year, it has gained more than 300% since 2009, when Marvel acquired it. The important takeaway from this, however, is that there’s a lot more to come. Marvel has one more movie slated for release in 2022, two more pending release in 2023, and at least two more in production. These will likely be instant hits and provide plenty of revenue-generating opportunities for Disney in all four segments where it uses the MCU, and Marvel gives Disney one of its highest potentials for future growth.
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Jennifer Saibil holds positions at Walt Disney. The Motley Fool holds positions and recommends Walt Disney. The Motley Fool recommends Comcast and recommends the following options: January 2024 Long Calls at $145 on Walt Disney and January 2024 Short Calls at $155 on Walt Disney. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.