Iger and Chapek Livid With Lucasfilm

[Wendy Pleakley]

How do you get $70 billion? Do you mean 7 billion? If so, a 7 billion gross does not equate to paying off the loan they used to purchase Lucasfilm.

Disney has yet to pay off the Lucasfilm acquisition. After expenses, they have made around 2.5 billion. The interest payments on the initial loan have now started so it is unlikely that they will ever pay off the original loan amount. Disney needed Star Wars to be more profitable in the short run to pay off the loan.

You also need to factor in Industrial Light & Magic. Don't forget that they make a profit when ILM does special effects for other studios, and the special effects for all Disney movies are now done in house.

 

[doctornick]

How do you get $70 billion? Do you mean 7 billion? If so, a 7 billion gross does not equate to paying off the loan they used to purchase Lucasfilm.

Disney has yet to pay off the Lucasfilm acquisition. After expenses, they have made around 2.5 billion. The interest payments on the initial loan have now started so it is unlikely that they will ever pay off the original loan amount. Disney needed Star Wars to be more profitable in the short run to pay off the loan.

I have no idea how much revenue Disney has brought in from Star Wars, but people seem to discount the revenues from merchandising which is surely the biggest piece of the pie for the franchise. You can't walk down an aisle in Target without finding Star Wars branded items. And even with sales having peaked during the timeframe of Episode VII and has tailed off, we are still talking about significant numbers that are basically pure profit for the company.

 

[Sirwalterraleigh]

This. Wall Street's "problem" with ESPN is that it is not the insane money printing unit that it was a decade ago. Instead, it "only" makes a few billion in profits each year now. There's nothing wrong with that segment as long as as expectations are more modest with the new reality. And ESPN+ has the opportunity to fill in the gap at least somewhat if cord cutting continues/accelerates and people turn to live streaming for sports more.

Granted that COVID-19 isn't helping ESPN right now, but sports and sports broadcasting will be return at some point.

That’s the same issue Disney has with Star Wars...espn still is profitable but still underachieves...both can be true.

The problem disney had with Espn is Eisner gave them “cheap” profit off it for a long time and they couldn’t adjust. They were given rights fees and ad revenue with minimally addition work.

It’s been a problem particularly with espn.

 

[Jaccsen]

The problem is that the egghead accountants in Burbank...or Marin county before...failed to realize the SCARCITY of Star Wars was a big part of the legend.

I disagree. I would watch 2-3 SW movies per year if they were quality products like Marvel. Scarcity has nothing to do with it when you create a timeline that no one cares about.

 

[Sirwalterraleigh]

You also need to factor in Industrial Light & Magic. Don't forget that they make a profit when ILM does special effects for other studios, and the special effects for all Disney movies are now done in house.

Again...and you can ignore me but I’ll put it out there for discussion...lucasfilm makes profit but they are leaving a lot on the Table. Product stakes have declined since they bought the damn thing.

And ILM is not a profit generator. This isn’t 1993...there are many games in town now.

 

[Jaccsen]

I have no idea how much revenue Disney has brought in from Star Wars, but people seem to discount the revenues from merchandising which is surely the biggest piece of the pie for the franchise. You can't walk down an aisle in Target without finding Star Wars branded items. And even with sales having peaked during the timeframe of Episode VII and has tailed off, we are still talking about significant numbers that are basically pure profit for the company.

They get licensing fees from Hasbro. The merchandising for Star Wars was feeding a decline in profits. Disney folded the merchandising into Parks to try to hide the decline.

SW merchandise was far more profitable prior to the acquisition. As an example, Diamond Selects CEO just commented recently about how the demand is way down and that the Sequal trilogy merchandise does not sell.

 

[Sirwalterraleigh]

I disagree. I would watch 2-3 SW movies per year if they were quality products like Marvel. Scarcity has nothing to do with it when you create a timeline that no one cares about.

You would...I would...but there is still a disconnect.

Many of this is wrapped with history.

The main reason why the EU was so profitable and the mass excitement for the prequels was so huge was that it seems like it had been 100 years since Jedi. And i still can’t believe how long that gap seemed.

It was also pre-internet. Different world.

My opinion: scarcity grew the legend and made more money.

 

[rio]

The other point along this Marvel/Star Wars comparison is that each Marvel episode would carry the overall story forward; if you miss one, then you're missing out on a gap in the story. If you don't go to see Captain Marvel then the events in Endgame don't make sense.

I feel like this is also going to be Marvel’s (and Star Wars’s) undoing. The time investment to catch up to Marvel’s story is now over 30 movies. Even at 1.5 hours a movie, that’s 45 hours of content. If they keep going, it’s just going to get too much.

Its not any better with Star Wars: 9 movies, 2 huge TV shows, and now even books, games, and comics are cannon? At least George knew where to limit the universe and keep it from swallowing itself.

Too much media across too many formats pushes people away from the franchise. Both franchises have become work to keep up with, and when your fun becomes work, it’s time to re-evaluate if it’s worth it. For many, I’m suspecting this is already happening, but is just more visible with Star Wars.

 

[Sirwalterraleigh]

They get licensing fees from Hasbro. The merchandising for Star Wars was feeding a decline in profits. Disney folded the merchandising into Parks to try to hide the decline.

SW merchandise was far more profitable prior to the acquisition. As an example, Diamond Selects CEO just commented recently about how the demand is way down and that the Sequal trilogy merchandise does not sell.

There’s no question here...just check a store (in a mask, of course)...there is hardly any product. It’s a pathetic fraction of what it was.

Some of that is consumer change...kids don’t consume toys a much...growth of online...i get it.

But product levels shouldn’t be this low. What the did have - that I noticed when I was in a target to pick up a script last week - was “empire strikes back 40th anniversary”.

That’s telling...it goes with what I’ve been told by friends who work at/with Lego...

Can only sell the OT stuff.

 

[Sirwalterraleigh]

I feel like this is also going to be Marvel’s (and Star Wars’s) undoing. The time investment to catch up to Marvel’s story is now over 30 movies. Even at 1.5 hours a movie, that’s 45 hours of content. If they keep going, it’s just going to get too much.

Its not any better with Star Wars: 9 movies, 2 huge TV shows, and now even books, games, and comics are cannon? At least George knew where to limit the universe and keep it from swallowing itself.

Too much media across too many formats pushes people away from the franchise. Both franchises have become work to keep up with, and when your fun becomes work, it’s time to re-evaluate if it’s worth it. For many, I’m suspecting this is already happening, but is just more visible with Star Wars.

Two quick ones:

1. George certainly knew no limits...his product saturation is a huge problem now
2. MCU off it’s two biggest characters...I think at least part of that is to reset the dial a little to mitigate against what you’re staying. And to save money - of course.

 

[Tom P.]

Again...and you can ignore me but I’ll put it out there for discussion...lucasfilm makes profit but they are leaving a lot on the Table. Product stakes have declined since they bought the damn thing.

And ILM is not a profit generator. This isn’t 1993...there are many games in town now.

ILM is no longer the only game in town for visual effects. But they are still a respected and widely used effects house, which works on any number of non-Disney films each year. I am sure they are generating profit for Disney.

 

[Jaccsen]

My opinion: scarcity grew the legend and made more money.

I see your point but I would argue that scarcity was not a factor between 1999-2012. You had a huge amount of toys, books, comics, and video games. You had 4 movies and 6 seasons of Clone Wars.

I think the main difference between 1999-2012 and 2012-2020 has been corporate media strategy. George was more of an outline guy and he allowed authors to build new characters and tell new stories. I would not say that the New Jedi Order period was stellar, for example, but it grew the universe.

By contrast, Disney has kept close to the movie 1-6 timeline. The limited content from 6-9 has shrunk the universe. It did not add a lot of characters or launch a new mythology. It basically retold the original 4-6 plotline with new characters. I really liked Rey and Finn in 7 but they were under utilized.

Disney's corporate media strategy was obviously designed to "flesh out" the original timeline and then gap fill 7-9 but in order to give free reign to the movies and their directors, they limited information and expansion in other media. It is obvious that they did not want to have a book contradict a future film but that also meant that the films needed a tight, well-written backstory and that never happened.

I hope High Republic fuels an expansion but I doubt it as they chose a "boring" time period where the post-sith Republic had been at peace for 1000 years.

 

[the.dreamfinder]

Great point.

That was Bob. 100%. Putting out tent poles 3 weeks apart was - MY THEORY - his retirement push. It was tied to D+ too. Retirement prize.

I was right - he retired...well half retired...and then un-retired....

Whatever...I’ll still claim victory

That’s why we got JJ over Favreau, Bird, Fincher, GDT. He was willing to work on Bob’s unreasonable deadline... for his first retirement.

You don’t make films to hit predetermined release dates. An easy way to get burned.

 

[Wendy Pleakley]

ILM is no longer the only game in town for visual effects. But they are still a respected and widely used effects house, who works on any number of non-Disney films each year. I am sure they are generating profit for Disney.

I really can't say how much money they make or how much business they do now versus before the Disney acquisition. They're still a valuable resource, and a factor in the overall picture when discussing the Lucasfilm acquisition.

What's the effects budget for something like Endgame? It has to be in the $100 million+ range. Pay that to a third party and a good chunk of that is their mark-up. Saving tens of millions of dollars on each big budget movie Disney makes (which is pretty much everything they make at the moment) is not insignificant.

 

[Sirwalterraleigh]

I see your point but I would argue that scarcity was not a factor between 1999-2012. You had a huge amount of toys, books, comics, and video games. You had 4 movies and 6 seasons of Clone Wars.

I think the main difference between 1999-2012 and 2012-2020 has been corporate media strategy. George was more of an outline guy and he allowed authors to build new characters and tell new stories. I would not say that the New Jedi Order period was stellar, for example, but it grew the universe.

By contrast, Disney has kept close to the movie 1-6 timeline. The limited content from 6-9 has shrunk the universe. It did not add a lot of characters or launch a new mythology. It basically retold the original 4-6 plotline with new characters. I really liked Rey and Finn in 7 but they were under utilized.

Disney's corporate media strategy was obviously designed to "flesh out" the original timeline and then gap fill 7-9 but in order to give free reign to the movies and their directors, they limited information and expansion in other media. It is obvious that they did not want to have a book contradict a future film but that also meant that the films needed a tight, well-written backstory and that never happened.

I hope High Republic fuels an expansion but I doubt it as they chose a "boring" time period where the post-sith Republic had been at peace for 1000 years.

That period is regarded by some - including me - as the period that strangled the golden goose.

George got a mulligan for bad material from many. I think Disney assumed they would too and it was not going to happen a second time.

 

[WondersOfLife]

God I hate Star Wars.

 

[Sirwalterraleigh]

ILM is no longer the only game in town for visual effects. But they are still a respected and widely used effects house, which works on any number of non-Disney films each year. I am sure they are generating profit for Disney.

My impression...And id love to hear a better one...is they efx houses aren’t lucrative.

Think about it: they crunch film on computers all day...and occasionally spend a lot of money to do minor things in the real world.

Who else does that? Animation studios...who are notoriously expensive. Cheap animation can clear more profits than high quality ones.

 

[Sirwalterraleigh]

God I hate Star Wars.

Might have walked into the wrong neighborhood then

Disney is now tied to Star Wars...like it or not. Because people have spent a lot on Star Wars. Follow the money.

 

[ImperfectPixie]

My impression...And id love to hear a better one...is they efx houses aren’t lucrative.

Think about it: they crunch film on computers all day...and occasionally spend a lot of money to do minor things in the real world.

Who else does that? Animation studios...who are notoriously expensive. Cheap animation can clear more profits than high quality ones.

What about all the developments they make that are able to simplify processes in huge ways...surely they're able to profit off of those.

For example, there are people who are Photoshop experts who develop suites of actions and sell them.

 

[the.dreamfinder]

ILM is no longer the only game in town for visual effects. But they are still a respected and widely used effects house, which works on any number of non-Disney films each year. I am sure they are generating profit for Disney.

ILM is still a very good VFX shop and has some of the most respected VFX professionals in the business.

That said, VFX firms barely make any money because they are structured around bids on a cost per shot basis instead of hourly/weekly cost. VFX vendors have to undercut each other to get work and thanks to that fixed cost, have to eat iteration/adjustments costs that often go out of control. No one else in the motion picture industry gets paid like this. Disney likely breaks even or loses money on ILM, which is ok if you’re attached to a studio, but most VFX houses aren’t.