Disney Could Spark Recovery in Box Office Market Share with Pirates of the Caribbean Releases
Disney (NYSE:DIS) has had success with some of its recent films in 2010. Its Toy Story 3 surpassed $1 billion in global box office revenues this year, becoming the second movie after Alice in Wonderland to reach the $1 billion mark in 2010. [1] Disney’s Pirates of the Caribbean 4 is also on the horizon, with the company already planning 5th and 6th sequels. Given the past success of the Pirates of the Caribbean series, the possibility of a continued run of successful film releases could lift Disney’s box office market share and stock value.
Disney competes with other studios like Fox Studios owned by News Corp (NASDAQ:NWS), Paramount Studios owned by Viacom (NYSE:VIA) and Warner Brothers owned by Time Warner (NYSE:TWX). Our current price estimate for Disney’s stock stands at $39.72, in line with market price.
Pirates of the Caribbean Box Office Snapshot
The charts below present U.S. and global box office revenues from the 3 Pirates of the Caribbean movies to date. [2] The success of the series has accelerated since the first movie’s release, particularly in international markets. Global box office revenues have averaged around $1 billion for the 2nd and 3rd releases. Disney’s plan to produce as many as 6 Pirates of the Caribbean movies demonstrates the confidence the studio has that this success will continue.
US Box Office Sales - Pirates of the Caribbean Series
Global Box Office Sales - Pirates of the Caribbean Series
Market Share Impact
Notably, during the time when the 2nd and 3rd Pirates of the Caribbean movies were released, Disney was close to its global box office market share peak. The 5th and 6th movies are likely to be launched back-to-back, allowing each to build off of the other’s success in both box office and DVD sales. [3]
Can the upcoming releases facilitate a market share gain back towards prior levels? The modifiable chart below illustrates the impact of various market share scenarios on the company’s stock value.
Potential success of the series goes beyond pure box office sales. Box office popularity also spawns higher DVD sales and content licensing. While these revenues tend to lag box office sales, they ultimately constitute more value to Disney’s stock – we estimate that DVD sales and content licensing generate 7% and 6% of the company’s stock value, respectively, vs. roughly 4% for box office sales.
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Notes:- DISNEY·PIXAR’S TOY STORY 3 CROSS $1 BILLION MARK; DISNEY BECOMES FIRST STUDIO WITH TWO $1 BILLION FILMS IN ONE YEAR [↩]
- Data compiled from http://boxofficemojo.com/alltime/world/ [↩]
- Disney May Shoot Pirates 5 and 6 Back to Back, screensave.com, Dec 3 2010 [↩]