May the 4th Be With You: ?The Power of the Star Wars Franchise

In 1975, George Lucas got Fox executives to green light his next movie, “The Star Wars,” by predicting that it would make $8 to $12 million in ticket sales. Lucas’ modest prediction is now nothing but a funny anecdote because Star Wars has amassed $32 billion in merchandising sales and Lucasfilms analysts predict that number will increase by $1.5 billion per year. Lucasfilms is now a subsidiary of Disney (DIS)DIS and under the vision of J.J. Abrams, Star Wars is now once again selling out theatres and hooking more and more young fans who have yet to even discover the original trilogy. The Star Wars franchise is not only a class on superior storytelling, but a tutorial on business and licensing. So, in honor of the holiday created in honor of the movies, May the 4^th Be With You, let’s look at the economics of the space opera in a galaxy, far, far away.

The real Empire is not the one you know from the films, but rather the sheer size of the Star Wars business. And the real money for the brand begins in the theater, but really goes intergalactic in the malls all over the world. Star Wars is far and away the world’s highest-grossing franchise and truly changed the movie industry forever.

Source – Statistic Brain

Star Wars is without a doubt the reason why you see movies advertising at fast food restaurants and appearing on cereal boxes. This business move came about because in 1970 Lucas bargained with Fox (FOX)FOX to take a pay cut, but keep any subsequent merchandising rights. Disney has carried Lucas’ torch and the new films, The Force Awakens and Rogue One, made deals with multiple companies to create Star Wars branded products in which Disney would take a 10-15% cut of all sales. Star Wars merchandise is expected to bring in $5 billion in sales over the coming 12 months, rising to as much as $20 billion in the next five years.

One of the key reasons behind the earning power is because of the franchise’s stalwart fans. Star Wars fans covet even the most heinous and strange memorabilia, which have been folded into the kitsch of American life. In fact, the release of the two new films has re-energized the toy industry’s sales. Look at the story of LEGO. Many years ago, the Danish toy brand was seen to be down on its luck, until the company started making Star Wars-themed sets and now LEGO is only a close second to Mattel in worldwide revenue.

The Star Wars legacy already had magic before it met Disney, but as the next wave of movies hit theatres in December of this year, expect for this valuable franchise to create another windfall across multiple economic sectors.