Intergalactic Finance: Valuing The Star Wars Franchise

I saw the newest Star Wars motion-picture exhibit concluding calendar week together with it brought dorsum memories that stretch dorsum almost 4 decades. Watching Harrison Ford together with Carrie Fisher on the concealment reminded me of my age, though, 1 time I learned how much Ford made for existence inwards this episode, I understood the movie's even out describe much better. As I came out of the theater, though, I decided that it would endure fun to update a valuation I did of the Star Wars franchise inwards 2012, when Disney acquired the rights from Lucas Films.

The Movies- Box Office Bonanza
If you lot are 1 of the few people on the facial expression upward of the populace that has non followed the Star Wars story, it began inwards 1977 when George Lucas produced the firstly Star Wars movie, the 4th episode inwards what he saw every bit a six-episode series. That motion-picture exhibit made history together with remains 1 of the highest grossing movies of all time. It was followed inwards 1980 yesteryear the 5th episode, The Empire Strikes Back (my favorite), together with inwards 1983 amongst the 6th inwards the series, The Return of the Jedi.  Those firstly iii movies created an entire generation of Star Wars fans, who together with then had to hold back sixteen years for the firstly inwards the series, The Phantom Menace (my alternative for the worst of the series), which was followed  by Attack of the Clones in 2002 together with Revenge of the Sith inwards 2005. The half dozen movies stand upward for 1 of the most valuable motion-picture exhibit franchises of all time, generating billions of dollars inwards box business office receipts, amongst the appeal spreading globally.

The movies are shown inwards chronological gild together with the box receipts on the firstly iii movies include the collections from their re-release inwards theaters inwards the 1990s.

The Add-Ons - Bigger than the Movies?
If you lot stopped merely at box receipts, Star Wars powerfulness non endure the most valuable franchise at all time, lagging the James Bond movies together with peradventure fifty-fifty the Harry Potter together with Lord of the Rings franchises. It is the magnitude of the add-ons to box receipts that brand Star Wars unique together with every bit mortal who has partaken inwards all of them, I tin attest to their power. I receive got owned the Star Wars tapes together with DVDs, collected every Star Wars figure made, played Star Wars video games (very badly) together with fifty-fifty used a GPS amongst a Yoda voice to drive from New York to Chicago (I honey Yoda but he is a actually bad navigator). The Star Wars empire stretches far together with broad to include:

1. VHS/DVD/Rentals: The additional revenue from this flow reflects every bit much the concord that Star Wars has had on our collective imaginations, every bit it does the changing of technologies for dwelling family video watching over the decades. Starting amongst video tapes (VHS) sales together with rentals inwards the 1970s, morphing into DVD sales inwards the concluding decade together with continuing into streaming inwards today's environment, this add-on has generated $7.7 billion (unadjusted for inflation) inwards revenues.
2. Toys together with Merchandise: This is the crown precious rock of the franchise, every bit toy together with trade sales receive got outstripped all other sources of revenue. The revenues from activeness figures sold yesteryear Kenner  (1978-1985) together with Hasbro (1995-2011) amounted to almost $10 billion (unadjusted for inflation) together with adding inwards other merchandise, the collective revenues from toys together with trade over the history of the franchise is inwards excess of $12 billion. 
3. Gaming: As amongst the video rentals, the Star Wars games rail shifting technologies, starting amongst an unlicensed game for the Apple II on a cassette tape, followed yesteryear table-top game yesteryear Kenner together with games for the Atari. Starting inwards 1992, the games shifted away from the films to the expanded Star Wars universe, firstly amongst the X-wing estimator games together with afterward amongst Dark Forces, a shooter game. In 2013, Disney revealed that Electronic Arts would retain the rights to create games for PCs together with consoles, piece Disney would retain the rights for other platforms. The collective revenues from all of these games betwixt 1977 together with 2015 is ortune.com.4 billion.
4. Books: There receive got been almost 360 books, amongst 76 authors, inwards the Star Wars serial together with total sales receive got amounted to to a greater extent than than http.8 billion. The staying ability of the franchise is backed upward yesteryear the fact that the firstly books were inwards impress inwards 1978 together with that at that spot receive got been at to the lowest degree x Star Wars novels a year, every twelvemonth from 1991 to 2014.
5. TV Series/Other: Given its success on thus many dimensions, it is surprising that the Star Wars franchise has non spawned a higher profile TV series. The longest lived TV series, Clone Wars, has had vii seasons together with a minute one, Star War Rebels, produced yesteryear Disney, has had 2 seasons. There receive got been periodic rumors well-nigh other TV serial inwards the works, amongst the latest 1 suggesting that Netflix is planning iii live-action series. 

The collective revenues from these add-ons brand the Star Wars revenue pie much larger than whatsoever competing motion-picture exhibit franchise:

Note that the motion-picture exhibit revenues inwards the tabular array are non adjusted to 2015 $, since the revenues from the add-ons are non available inwards electrical flow dollars. In the tabular array below, I scale the revenues from each of the add together -ons to the box business office receipts to acquire a mensurate of the value added from the balance of the Star Wars ecosystem:

In effect, for every dollar that Star Wars has made at the box office, it has generated 4 dollars inwards revenues from other sources. That issue is a conservative estimate, since at that spot receive got been undoubtedly others who receive got profited from the franchise unofficially (and illegally).

The New Series: Disney takes over

In 2012, Disney acquired the Star Wars franchise for 30/star-wars-battlefront/">Electronic Arts would retain the rights to create games for PCs together with consoles, piece Disney would retain the rights for other platforms. The collective revenues from all of these games betwixt 1977 together with 2015 is $3.4 billion.

Books: There receive got been almost 360 books, amongst 76 authors, inwards the Star Wars serial together with total sales receive got amounted to to a greater extent than than $1.8 billion. The staying ability of the franchise is backed upward yesteryear the fact that the firstly books were inwards impress inwards 1978 together with that at that spot receive got been at to the lowest degree x Star Wars novels a year, every twelvemonth from 1991 to 2014.

TV Series/Other: Given its success on thus many dimensions, it is surprising that the Star Wars franchise has non spawned a higher profile TV series. The longest lived TV series, Clone Wars, has had vii seasons together with a minute one, Star War Rebels, produced yesteryear Disney, has had 2 seasons. There receive got been periodic rumors well-nigh other TV serial inwards the works, amongst the latest 1 suggesting that Netflix is planning iii live-action series. 

The collective revenues from these add-ons brand the Star Wars revenue pie much larger than whatsoever competing motion-picture exhibit franchise:

Note that the motion-picture exhibit revenues inwards the tabular array are non adjusted to 2015 $, since the revenues from the add-ons are non available inwards electrical flow dollars. In the tabular array below, I scale the revenues from each of the add together -ons to the box business office receipts to acquire a mensurate of the value added from the balance of the Star Wars ecosystem:

In effect, for every dollar that Star Wars has made at the box office, it has generated 4 dollars inwards revenues from other sources. That issue is a conservative estimate, since at that spot receive got been undoubtedly others who receive got profited from the franchise unofficially (and illegally).

The New Series: Disney takes over

In 2012, Disney acquired the Star Wars franchise for $4 billion, from George Lucas, amongst plans to create iii to a greater extent than Star Wars movies. At the fourth dimension of the acquisition, I argued that it was a fair price, given Disney's history amongst developing, maintaining together with merchandising franchises, but had to depict on the potential for synergy to justify the number. With the unloosen of Star Wars: The Force Awakens just well-nigh x days ago, Disney seems to endure to a greater extent than than delivering on its promise, every bit the motion-picture exhibit has broken box business office records together with is on its agency to delivering a global box business office of $2 billion or more.

To the extent that this movie, similar its predecessors, volition generate add-on revenues, at that spot volition endure substantially to a greater extent than coin to endure made over the adjacent few years. The adjacent 2 movies are scheduled for 2017 together with 2019, together with at that spot volition endure iii spin offs inwards the intermediate years, amongst less ambitious budgets. After 2020, Disney's plans are non specific, but if the appetite remains, at that spot volition endure undoubtedly to a greater extent than movies inwards the pipeline. More importantly, the movies volition non solely exercise a novel base of operations of younger fans but augment the sales of merchandise, toys together with games inwards the coming decade. The revenues that would receive got come upward from DVDs together with video rentals volition endure replaced amongst streaming revenues together with at that spot volition undoubtedly endure games together with apps directed at smartphones, devices together with gaming systems. 

Valuing the Franchise

To value the franchise, I started amongst my estimates of worldwide box business office receipts for Star Wars: The Force Awakens and the subsequent movies inwards the series. Though, the firstly 2 weekends receive got blown away expectations (with the motion-picture exhibit making $1 billion), I volition approximate $2 billion inwards revenues, for each of the iii primary movies, together with one-half those proceeds for the spin offs, amongst an inflation adjustment of 2%.

As amongst the prior movies, the mass of the revenues from the franchise volition come upward from add-ons, together with inwards assessing the potential, hither are around of my assumptions:

1. Streaming: As viewers increasingly plow to watching streamed movies from services (Netflix, Amazon Prime) on their televisions together with devices, the revenues from streaming are chop-chop catching upward amongst box business office receipts for movies, together with yesteryear 2017, the total revenues from streaming are expected to plow over box business office revenues. I volition assume that each dollar inwards box business office revenues from the novel Star Wars movies volition generate $1.20 inwards additional revenue inwards streaming, slightly higher than historical numbers (1.14).
2. Toys/Merchandise: The Star Wars movies receive got historically generated $1.80 inwards revenues from toys/merchandise for every dollar inwards box business office revenues. Given Disney's prowess at merchandising, I would non endure surprised to run across this issue become up, together with I volition assume that each dollar at the box business office volition interpret into 2 dollars inwards merchandising revenues, a footling higher than the historical value of $1.80 per box business office dollar. Keep inwards heed that this franchise is a merchandisers' dream, amongst an almost endless potential for novel opportunities inwards the Expanded Universe.
3. Books together with eBooks: This is the flow that is peradventure most at risk, together with I volition assume that piece a agency volition endure found to conform the publishing flow to changing tastes inwards reading, the revenues from this books/e-books volition drib to $0.20 per box business office dollar (from $0.27, the historical number).
4. Gaming: In keeping amongst the history of Star War games, I am convinced that that games volition endure adapted non solely to gaming platforms (Xbox, Playstation together with Nintendo) but also to smartphones together with tablets. I volition move out the gaming revenues at $0.50 per dollar inwards box business office receipts.
5. TV Shows/Other: This is the 1 add-on where I volition assume a meaning improvement over historical numbers, every bit Disney, Netflix together with others abide by ways to conform the franchise to television receiver viewers. I volition assume that the revenues from TV shows volition increase to $0.50 per dollar inwards box business office receipts.

Download Spreadsheet

To approximate the franchise value, I used the operating margins of the motion-picture exhibit (20.14%) together with toy/merchandise businesses (15%) together with netted out taxes (at a 30% taxation rate), earlier discounting dorsum at a 7.61% cost of capital, the amusement sector average. (Disney volition in all likelihood license most of the merchandise, passing of the opportunity to others, but settling for a part of the operating income.) At to the lowest degree based on my projections, the value of the Star Wars franchise, if it tin maintain my estimated numbers (for add-ons) together with deliver at the box office, is almost $10 billion. The value is apparently a work of motion-picture exhibit revenues together with the add-on dollar values:

Not solely does that brand Disney's $4 billion investment iii years agone a real expert one, but whatsoever synergies that Disney tin gain inwards its other businesses (the total revenues from streaming are expected to plow over box business office revenues. I volition assume that each dollar inwards box business office revenues from the novel Star Wars movies volition generate http.20 inwards additional revenue inwards streaming, slightly higher than historical numbers (1.14).

Toys/Merchandise: The Star Wars movies receive got historically generated http.80 inwards revenues from toys/merchandise for every dollar inwards box business office revenues. Given Disney's prowess at merchandising, I would non endure surprised to run across this issue become up, together with I volition assume that each dollar at the box business office volition interpret into 2 dollars inwards merchandising revenues, a footling higher than the historical value of http.80 per box business office dollar. Keep inwards heed that this franchise is a merchandisers' dream, amongst an almost endless potential for novel opportunities inwards the Expanded Universe.

Books together with eBooks: This is the flow that is peradventure most at risk, together with I volition assume that piece a agency volition endure found to conform the publishing flow to changing tastes inwards reading, the revenues from this books/e-books volition drib to http://fortune.com/2015/04/30/star-wars-battlefront/">Electronic Arts would retain the rights to create games for PCs together with consoles, piece Disney would retain the rights for other platforms. The collective revenues from all of these games betwixt 1977 together with 2015 is $3.4 billion.

Books: There receive got been almost 360 books, amongst 76 authors, inwards the Star Wars serial together with total sales receive got amounted to to a greater extent than than $1.8 billion. The staying ability of the franchise is backed upward yesteryear the fact that the firstly books were inwards impress inwards 1978 together with that at that spot receive got been at to the lowest degree x Star Wars novels a year, every twelvemonth from 1991 to 2014.

TV Series/Other: Given its success on thus many dimensions, it is surprising that the Star Wars franchise has non spawned a higher profile TV series. The longest lived TV series, Clone Wars, has had vii seasons together with a minute one, Star War Rebels, produced yesteryear Disney, has had 2 seasons. There receive got been periodic rumors well-nigh other TV serial inwards the works, amongst the latest 1 suggesting that Netflix is planning iii live-action series. 

The collective revenues from these add-ons brand the Star Wars revenue pie much larger than whatsoever competing motion-picture exhibit franchise:

Note that the motion-picture exhibit revenues inwards the tabular array are non adjusted to 2015 $, since the revenues from the add-ons are non available inwards electrical flow dollars. In the tabular array below, I scale the revenues from each of the add together -ons to the box business office receipts to acquire a mensurate of the value added from the balance of the Star Wars ecosystem:

In effect, for every dollar that Star Wars has made at the box office, it has generated 4 dollars inwards revenues from other sources. That issue is a conservative estimate, since at that spot receive got been undoubtedly others who receive got profited from the franchise unofficially (and illegally).

The New Series: Disney takes over

In 2012, Disney acquired the Star Wars franchise for $4 billion, from George Lucas, amongst plans to create iii to a greater extent than Star Wars movies. At the fourth dimension of the acquisition, I argued that it was a fair price, given Disney's history amongst developing, maintaining together with merchandising franchises, but had to depict on the potential for synergy to justify the number. With the unloosen of Star Wars: The Force Awakens just well-nigh x days ago, Disney seems to endure to a greater extent than than delivering on its promise, every bit the motion-picture exhibit has broken box business office records together with is on its agency to delivering a global box business office of $2 billion or more.

To the extent that this movie, similar its predecessors, volition generate add-on revenues, at that spot volition endure substantially to a greater extent than coin to endure made over the adjacent few years. The adjacent 2 movies are scheduled for 2017 together with 2019, together with at that spot volition endure iii spin offs inwards the intermediate years, amongst less ambitious budgets. After 2020, Disney's plans are non specific, but if the appetite remains, at that spot volition endure undoubtedly to a greater extent than movies inwards the pipeline. More importantly, the movies volition non solely exercise a novel base of operations of younger fans but augment the sales of merchandise, toys together with games inwards the coming decade. The revenues that would receive got come upward from DVDs together with video rentals volition endure replaced amongst streaming revenues together with at that spot volition undoubtedly endure games together with apps directed at smartphones, devices together with gaming systems. 

Valuing the Franchise

To value the franchise, I started amongst my estimates of worldwide box business office receipts for Star Wars: The Force Awakens and the subsequent movies inwards the series. Though, the firstly 2 weekends receive got blown away expectations (with the motion-picture exhibit making $1 billion), I volition approximate $2 billion inwards revenues, for each of the iii primary movies, together with one-half those proceeds for the spin offs, amongst an inflation adjustment of 2%.

As amongst the prior movies, the mass of the revenues from the franchise volition come upward from add-ons, together with inwards assessing the potential, hither are around of my assumptions:

1. Streaming: As viewers increasingly plow to watching streamed movies from services (Netflix, Amazon Prime) on their televisions together with devices, the revenues from streaming are chop-chop catching upward amongst box business office receipts for movies, together with yesteryear 2017, the total revenues from streaming are expected to plow over box business office revenues. I volition assume that each dollar inwards box business office revenues from the novel Star Wars movies volition generate $1.20 inwards additional revenue inwards streaming, slightly higher than historical numbers (1.14).
2. Toys/Merchandise: The Star Wars movies receive got historically generated $1.80 inwards revenues from toys/merchandise for every dollar inwards box business office revenues. Given Disney's prowess at merchandising, I would non endure surprised to run across this issue become up, together with I volition assume that each dollar at the box business office volition interpret into 2 dollars inwards merchandising revenues, a footling higher than the historical value of $1.80 per box business office dollar. Keep inwards heed that this franchise is a merchandisers' dream, amongst an almost endless potential for novel opportunities inwards the Expanded Universe.
3. Books together with eBooks: This is the flow that is peradventure most at risk, together with I volition assume that piece a agency volition endure found to conform the publishing flow to changing tastes inwards reading, the revenues from this books/e-books volition drib to $0.20 per box business office dollar (from $0.27, the historical number).
4. Gaming: In keeping amongst the history of Star War games, I am convinced that that games volition endure adapted non solely to gaming platforms (Xbox, Playstation together with Nintendo) but also to smartphones together with tablets. I volition move out the gaming revenues at $0.50 per dollar inwards box business office receipts.
5. TV Shows/Other: This is the 1 add-on where I volition assume a meaning improvement over historical numbers, every bit Disney, Netflix together with others abide by ways to conform the franchise to television receiver viewers. I volition assume that the revenues from TV shows volition increase to $0.50 per dollar inwards box business office receipts.

Download Spreadsheet

To approximate the franchise value, I used the operating margins of the motion-picture exhibit (20.14%) together with toy/merchandise businesses (15%) together with netted out taxes (at a 30% taxation rate), earlier discounting dorsum at a 7.61% cost of capital, the amusement sector average. (Disney volition in all likelihood license most of the merchandise, passing of the opportunity to others, but settling for a part of the operating income.) At to the lowest degree based on my projections, the value of the Star Wars franchise, if it tin maintain my estimated numbers (for add-ons) together with deliver at the box office, is almost $10 billion. The value is apparently a work of motion-picture exhibit revenues together with the add-on dollar values:

Not solely does that brand Disney's $4 billion investment iii years agone a real expert one, but whatsoever synergies that Disney tin gain inwards its other businesses (Electronic Arts would retain the rights to create games for PCs together with consoles, piece Disney would retain the rights for other platforms. The collective revenues from all of these games betwixt 1977 together with 2015 is $3.4 billion.

Books: There receive got been almost 360 books, amongst 76 authors, inwards the Star Wars serial together with total sales receive got amounted to to a greater extent than than $1.8 billion. The staying ability of the franchise is backed upward yesteryear the fact that the firstly books were inwards impress inwards 1978 together with that at that spot receive got been at to the lowest degree x Star Wars novels a year, every twelvemonth from 1991 to 2014.

TV Series/Other: Given its success on thus many dimensions, it is surprising that the Star Wars franchise has non spawned a higher profile TV series. The longest lived TV series, Clone Wars, has had vii seasons together with a minute one, Star War Rebels, produced yesteryear Disney, has had 2 seasons. There receive got been periodic rumors well-nigh other TV serial inwards the works, amongst the latest 1 suggesting that Netflix is planning iii live-action series. 

The collective revenues from these add-ons brand the Star Wars revenue pie much larger than whatsoever competing motion-picture exhibit franchise:

Note that the motion-picture exhibit revenues inwards the tabular array are non adjusted to 2015 $, since the revenues from the add-ons are non available inwards electrical flow dollars. In the tabular array below, I scale the revenues from each of the add together -ons to the box business office receipts to acquire a mensurate of the value added from the balance of the Star Wars ecosystem:

In effect, for every dollar that Star Wars has made at the box office, it has generated 4 dollars inwards revenues from other sources. That issue is a conservative estimate, since at that spot receive got been undoubtedly others who receive got profited from the franchise unofficially (and illegally).

The New Series: Disney takes over

In 2012, Disney acquired the Star Wars franchise for $4 billion, from George Lucas, amongst plans to create iii to a greater extent than Star Wars movies. At the fourth dimension of the acquisition, I argued that it was a fair price, given Disney's history amongst developing, maintaining together with merchandising franchises, but had to depict on the potential for synergy to justify the number. With the unloosen of Star Wars: The Force Awakens just well-nigh x days ago, Disney seems to endure to a greater extent than than delivering on its promise, every bit the motion-picture exhibit has broken box business office records together with is on its agency to delivering a global box business office of $2 billion or more.

To the extent that this movie, similar its predecessors, volition generate add-on revenues, at that spot volition endure substantially to a greater extent than coin to endure made over the adjacent few years. The adjacent 2 movies are scheduled for 2017 together with 2019, together with at that spot volition endure iii spin offs inwards the intermediate years, amongst less ambitious budgets. After 2020, Disney's plans are non specific, but if the appetite remains, at that spot volition endure undoubtedly to a greater extent than movies inwards the pipeline. More importantly, the movies volition non solely exercise a novel base of operations of younger fans but augment the sales of merchandise, toys together with games inwards the coming decade. The revenues that would receive got come upward from DVDs together with video rentals volition endure replaced amongst streaming revenues together with at that spot volition undoubtedly endure games together with apps directed at smartphones, devices together with gaming systems. 

Valuing the Franchise

To value the franchise, I started amongst my estimates of worldwide box business office receipts for Star Wars: The Force Awakens and the subsequent movies inwards the series. Though, the firstly 2 weekends receive got blown away expectations (with the motion-picture exhibit making $1 billion), I volition approximate $2 billion inwards revenues, for each of the iii primary movies, together with one-half those proceeds for the spin offs, amongst an inflation adjustment of 2%.

As amongst the prior movies, the mass of the revenues from the franchise volition come upward from add-ons, together with inwards assessing the potential, hither are around of my assumptions:

1. Streaming: As viewers increasingly plow to watching streamed movies from services (Netflix, Amazon Prime) on their televisions together with devices, the revenues from streaming are chop-chop catching upward amongst box business office receipts for movies, together with yesteryear 2017, the total revenues from streaming are expected to plow over box business office revenues. I volition assume that each dollar inwards box business office revenues from the novel Star Wars movies volition generate $1.20 inwards additional revenue inwards streaming, slightly higher than historical numbers (1.14).
2. Toys/Merchandise: The Star Wars movies receive got historically generated $1.80 inwards revenues from toys/merchandise for every dollar inwards box business office revenues. Given Disney's prowess at merchandising, I would non endure surprised to run across this issue become up, together with I volition assume that each dollar at the box business office volition interpret into 2 dollars inwards merchandising revenues, a footling higher than the historical value of $1.80 per box business office dollar. Keep inwards heed that this franchise is a merchandisers' dream, amongst an almost endless potential for novel opportunities inwards the Expanded Universe.
3. Books together with eBooks: This is the flow that is peradventure most at risk, together with I volition assume that piece a agency volition endure found to conform the publishing flow to changing tastes inwards reading, the revenues from this books/e-books volition drib to $0.20 per box business office dollar (from $0.27, the historical number).
4. Gaming: In keeping amongst the history of Star War games, I am convinced that that games volition endure adapted non solely to gaming platforms (Xbox, Playstation together with Nintendo) but also to smartphones together with tablets. I volition move out the gaming revenues at $0.50 per dollar inwards box business office receipts.
5. TV Shows/Other: This is the 1 add-on where I volition assume a meaning improvement over historical numbers, every bit Disney, Netflix together with others abide by ways to conform the franchise to television receiver viewers. I volition assume that the revenues from TV shows volition increase to $0.50 per dollar inwards box business office receipts.

Download Spreadsheet

To approximate the franchise value, I used the operating margins of the motion-picture exhibit (20.14%) together with toy/merchandise businesses (15%) together with netted out taxes (at a 30% taxation rate), earlier discounting dorsum at a 7.61% cost of capital, the amusement sector average. (Disney volition in all likelihood license most of the merchandise, passing of the opportunity to others, but settling for a part of the operating income.) At to the lowest degree based on my projections, the value of the Star Wars franchise, if it tin maintain my estimated numbers (for add-ons) together with deliver at the box office, is almost $10 billion. The value is apparently a work of motion-picture exhibit revenues together with the add-on dollar values:

Not solely does that brand Disney's $4 billion investment iii years agone a real expert one, but whatsoever synergies that Disney tin gain inwards its other businesses (Electronic Arts would retain the rights to create games for PCs together with consoles, piece Disney would retain the rights for other platforms. The collective revenues from all of these games betwixt 1977 together with 2015 is $3.4 billion.

Books: There receive got been almost 360 books, amongst 76 authors, inwards the Star Wars serial together with total sales receive got amounted to to a greater extent than than $1.8 billion. The staying ability of the franchise is backed upward yesteryear the fact that the firstly books were inwards impress inwards 1978 together with that at that spot receive got been at to the lowest degree x Star Wars novels a year, every twelvemonth from 1991 to 2014.

TV Series/Other: Given its success on thus many dimensions, it is surprising that the Star Wars franchise has non spawned a higher profile TV series. The longest lived TV series, Clone Wars, has had vii seasons together with a minute one, Star War Rebels, produced yesteryear Disney, has had 2 seasons. There receive got been periodic rumors well-nigh other TV serial inwards the works, amongst the latest 1 suggesting that Netflix is planning iii live-action series. 

The collective revenues from these add-ons brand the Star Wars revenue pie much larger than whatsoever competing motion-picture exhibit franchise:

Note that the motion-picture exhibit revenues inwards the tabular array are non adjusted to 2015 $, since the revenues from the add-ons are non available inwards electrical flow dollars. In the tabular array below, I scale the revenues from each of the add together -ons to the box business office receipts to acquire a mensurate of the value added from the balance of the Star Wars ecosystem:

In effect, for every dollar that Star Wars has made at the box office, it has generated 4 dollars inwards revenues from other sources. That issue is a conservative estimate, since at that spot receive got been undoubtedly others who receive got profited from the franchise unofficially (and illegally).

The New Series: Disney takes over

In 2012, Disney acquired the Star Wars franchise for $4 billion, from George Lucas, amongst plans to create iii to a greater extent than Star Wars movies. At the fourth dimension of the acquisition, I argued that it was a fair price, given Disney's history amongst developing, maintaining together with merchandising franchises, but had to depict on the potential for synergy to justify the number. With the unloosen of Star Wars: The Force Awakens just well-nigh x days ago, Disney seems to endure to a greater extent than than delivering on its promise, every bit the motion-picture exhibit has broken box business office records together with is on its agency to delivering a global box business office of $2 billion or more.

To the extent that this movie, similar its predecessors, volition generate add-on revenues, at that spot volition endure substantially to a greater extent than coin to endure made over the adjacent few years. The adjacent 2 movies are scheduled for 2017 together with 2019, together with at that spot volition endure iii spin offs inwards the intermediate years, amongst less ambitious budgets. After 2020, Disney's plans are non specific, but if the appetite remains, at that spot volition endure undoubtedly to a greater extent than movies inwards the pipeline. More importantly, the movies volition non solely exercise a novel base of operations of younger fans but augment the sales of merchandise, toys together with games inwards the coming decade. The revenues that would receive got come upward from DVDs together with video rentals volition endure replaced amongst streaming revenues together with at that spot volition undoubtedly endure games together with apps directed at smartphones, devices together with gaming systems. 

Valuing the Franchise

To value the franchise, I started amongst my estimates of worldwide box business office receipts for Star Wars: The Force Awakens and the subsequent movies inwards the series. Though, the firstly 2 weekends receive got blown away expectations (with the motion-picture exhibit making $1 billion), I volition approximate $2 billion inwards revenues, for each of the iii primary movies, together with one-half those proceeds for the spin offs, amongst an inflation adjustment of 2%.

As amongst the prior movies, the mass of the revenues from the franchise volition come upward from add-ons, together with inwards assessing the potential, hither are around of my assumptions:

1. Streaming: As viewers increasingly plow to watching streamed movies from services (Netflix, Amazon Prime) on their televisions together with devices, the revenues from streaming are chop-chop catching upward amongst box business office receipts for movies, together with yesteryear 2017, the total revenues from streaming are expected to plow over box business office revenues. I volition assume that each dollar inwards box business office revenues from the novel Star Wars movies volition generate $1.20 inwards additional revenue inwards streaming, slightly higher than historical numbers (1.14).
2. Toys/Merchandise: The Star Wars movies receive got historically generated $1.80 inwards revenues from toys/merchandise for every dollar inwards box business office revenues. Given Disney's prowess at merchandising, I would non endure surprised to run across this issue become up, together with I volition assume that each dollar at the box business office volition interpret into 2 dollars inwards merchandising revenues, a footling higher than the historical value of $1.80 per box business office dollar. Keep inwards heed that this franchise is a merchandisers' dream, amongst an almost endless potential for novel opportunities inwards the Expanded Universe.
3. Books together with eBooks: This is the flow that is peradventure most at risk, together with I volition assume that piece a agency volition endure found to conform the publishing flow to changing tastes inwards reading, the revenues from this books/e-books volition drib to $0.20 per box business office dollar (from $0.27, the historical number).
4. Gaming: In keeping amongst the history of Star War games, I am convinced that that games volition endure adapted non solely to gaming platforms (Xbox, Playstation together with Nintendo) but also to smartphones together with tablets. I volition move out the gaming revenues at $0.50 per dollar inwards box business office receipts.
5. TV Shows/Other: This is the 1 add-on where I volition assume a meaning improvement over historical numbers, every bit Disney, Netflix together with others abide by ways to conform the franchise to television receiver viewers. I volition assume that the revenues from TV shows volition increase to $0.50 per dollar inwards box business office receipts.

Download Spreadsheet

To approximate the franchise value, I used the operating margins of the motion-picture exhibit (20.14%) together with toy/merchandise businesses (15%) together with netted out taxes (at a 30% taxation rate), earlier discounting dorsum at a 7.61% cost of capital, the amusement sector average. (Disney volition in all likelihood license most of the merchandise, passing of the opportunity to others, but settling for a part of the operating income.) At to the lowest degree based on my projections, the value of the Star Wars franchise, if it tin maintain my estimated numbers (for add-ons) together with deliver at the box office, is almost $10 billion. The value is apparently a work of motion-picture exhibit revenues together with the add-on dollar values:

Not solely does that brand Disney's $4 billion investment iii years agone a real expert one, but whatsoever synergies that Disney tin gain inwards its other businesses (Electronic Arts would retain the rights to create games for PCs together with consoles, piece Disney would retain the rights for other platforms. The collective revenues from all of these games betwixt 1977 together with 2015 is $3.4 billion.

Books: There receive got been almost 360 books, amongst 76 authors, inwards the Star Wars serial together with total sales receive got amounted to to a greater extent than than $1.8 billion. The staying ability of the franchise is backed upward yesteryear the fact that the firstly books were inwards impress inwards 1978 together with that at that spot receive got been at to the lowest degree x Star Wars novels a year, every twelvemonth from 1991 to 2014.

TV Series/Other: Given its success on thus many dimensions, it is surprising that the Star Wars franchise has non spawned a higher profile TV series. The longest lived TV series, Clone Wars, has had vii seasons together with a minute one, Star War Rebels, produced yesteryear Disney, has had 2 seasons. There receive got been periodic rumors well-nigh other TV serial inwards the works, amongst the latest 1 suggesting that Netflix is planning iii live-action series. 

The collective revenues from these add-ons brand the Star Wars revenue pie much larger than whatsoever competing motion-picture exhibit franchise:

Note that the motion-picture exhibit revenues inwards the tabular array are non adjusted to 2015 $, since the revenues from the add-ons are non available inwards electrical flow dollars. In the tabular array below, I scale the revenues from each of the add together -ons to the box business office receipts to acquire a mensurate of the value added from the balance of the Star Wars ecosystem:

In effect, for every dollar that Star Wars has made at the box office, it has generated 4 dollars inwards revenues from other sources. That issue is a conservative estimate, since at that spot receive got been undoubtedly others who receive got profited from the franchise unofficially (and illegally).

The New Series: Disney takes over

In 2012, Disney acquired the Star Wars franchise for $4 billion, from George Lucas, amongst plans to create iii to a greater extent than Star Wars movies. At the fourth dimension of the acquisition, I argued that it was a fair price, given Disney's history amongst developing, maintaining together with merchandising franchises, but had to depict on the potential for synergy to justify the number. With the unloosen of Star Wars: The Force Awakens just well-nigh x days ago, Disney seems to endure to a greater extent than than delivering on its promise, every bit the motion-picture exhibit has broken box business office records together with is on its agency to delivering a global box business office of $2 billion or more.

To the extent that this movie, similar its predecessors, volition generate add-on revenues, at that spot volition endure substantially to a greater extent than coin to endure made over the adjacent few years. The adjacent 2 movies are scheduled for 2017 together with 2019, together with at that spot volition endure iii spin offs inwards the intermediate years, amongst less ambitious budgets. After 2020, Disney's plans are non specific, but if the appetite remains, at that spot volition endure undoubtedly to a greater extent than movies inwards the pipeline. More importantly, the movies volition non solely exercise a novel base of operations of younger fans but augment the sales of merchandise, toys together with games inwards the coming decade. The revenues that would receive got come upward from DVDs together with video rentals volition endure replaced amongst streaming revenues together with at that spot volition undoubtedly endure games together with apps directed at smartphones, devices together with gaming systems. 

Valuing the Franchise

To value the franchise, I started amongst my estimates of worldwide box business office receipts for Star Wars: The Force Awakens and the subsequent movies inwards the series. Though, the firstly 2 weekends receive got blown away expectations (with the motion-picture exhibit making $1 billion), I volition approximate $2 billion inwards revenues, for each of the iii primary movies, together with one-half those proceeds for the spin offs, amongst an inflation adjustment of 2%.

As amongst the prior movies, the mass of the revenues from the franchise volition come upward from add-ons, together with inwards assessing the potential, hither are around of my assumptions:

1. Streaming: As viewers increasingly plow to watching streamed movies from services (Netflix, Amazon Prime) on their televisions together with devices, the revenues from streaming are chop-chop catching upward amongst box business office receipts for movies, together with yesteryear 2017, the total revenues from streaming are expected to plow over box business office revenues. I volition assume that each dollar inwards box business office revenues from the novel Star Wars movies volition generate $1.20 inwards additional revenue inwards streaming, slightly higher than historical numbers (1.14).
2. Toys/Merchandise: The Star Wars movies receive got historically generated $1.80 inwards revenues from toys/merchandise for every dollar inwards box business office revenues. Given Disney's prowess at merchandising, I would non endure surprised to run across this issue become up, together with I volition assume that each dollar at the box business office volition interpret into 2 dollars inwards merchandising revenues, a footling higher than the historical value of $1.80 per box business office dollar. Keep inwards heed that this franchise is a merchandisers' dream, amongst an almost endless potential for novel opportunities inwards the Expanded Universe.
3. Books together with eBooks: This is the flow that is peradventure most at risk, together with I volition assume that piece a agency volition endure found to conform the publishing flow to changing tastes inwards reading, the revenues from this books/e-books volition drib to $0.20 per box business office dollar (from $0.27, the historical number).
4. Gaming: In keeping amongst the history of Star War games, I am convinced that that games volition endure adapted non solely to gaming platforms (Xbox, Playstation together with Nintendo) but also to smartphones together with tablets. I volition move out the gaming revenues at $0.50 per dollar inwards box business office receipts.
5. TV Shows/Other: This is the 1 add-on where I volition assume a meaning improvement over historical numbers, every bit Disney, Netflix together with others abide by ways to conform the franchise to television receiver viewers. I volition assume that the revenues from TV shows volition increase to $0.50 per dollar inwards box business office receipts.

Download Spreadsheet

To approximate the franchise value, I used the operating margins of the motion-picture exhibit (20.14%) together with toy/merchandise businesses (15%) together with netted out taxes (at a 30% taxation rate), earlier discounting dorsum at a 7.61% cost of capital, the amusement sector average. (Disney volition in all likelihood license most of the merchandise, passing of the opportunity to others, but settling for a part of the operating income.) At to the lowest degree based on my projections, the value of the Star Wars franchise, if it tin maintain my estimated numbers (for add-ons) together with deliver at the box office, is almost $10 billion. The value is apparently a work of motion-picture exhibit revenues together with the add-on dollar values:

Not solely does that brand Disney's $4 billion investment iii years agone a real expert one, but whatsoever synergies that Disney tin gain inwards its other businesses (

Download Spreadsheet

To approximate the franchise value, I used the operating margins of the motion-picture exhibit (20.14%) together with toy/merchandise businesses (15%) together with netted out taxes (at a 30% taxation rate), earlier discounting dorsum at a 7.61% cost of capital, the amusement sector average. (Disney volition in all likelihood license most of the merchandise, passing of the opportunity to others, but settling for a part of the operating income.) At to the lowest degree based on my projections, the value of the Star Wars franchise, if it tin maintain my estimated numbers (for add-ons) together with deliver at the box office, is almost $10 billion. The value is apparently a work of motion-picture exhibit revenues together with the add-on dollar values:

Not solely does that brand Disney's 30/star-wars-battlefront/">Electronic Arts would retain the rights to create games for PCs together with consoles, piece Disney would retain the rights for other platforms. The collective revenues from all of these games betwixt 1977 together with 2015 is $3.4 billion.

Books: There receive got been almost 360 books, amongst 76 authors, inwards the Star Wars serial together with total sales receive got amounted to to a greater extent than than $1.8 billion. The staying ability of the franchise is backed upward yesteryear the fact that the firstly books were inwards impress inwards 1978 together with that at that spot receive got been at to the lowest degree x Star Wars novels a year, every twelvemonth from 1991 to 2014.

TV Series/Other: Given its success on thus many dimensions, it is surprising that the Star Wars franchise has non spawned a higher profile TV series. The longest lived TV series, Clone Wars, has had vii seasons together with a minute one, Star War Rebels, produced yesteryear Disney, has had 2 seasons. There receive got been periodic rumors well-nigh other TV serial inwards the works, amongst the latest 1 suggesting that Netflix is planning iii live-action series. 

The collective revenues from these add-ons brand the Star Wars revenue pie much larger than whatsoever competing motion-picture exhibit franchise:

Note that the motion-picture exhibit revenues inwards the tabular array are non adjusted to 2015 $, since the revenues from the add-ons are non available inwards electrical flow dollars. In the tabular array below, I scale the revenues from each of the add together -ons to the box business office receipts to acquire a mensurate of the value added from the balance of the Star Wars ecosystem:

In effect, for every dollar that Star Wars has made at the box office, it has generated 4 dollars inwards revenues from other sources. That issue is a conservative estimate, since at that spot receive got been undoubtedly others who receive got profited from the franchise unofficially (and illegally).

The New Series: Disney takes over

In 2012, Disney acquired the Star Wars franchise for $4 billion, from George Lucas, amongst plans to create iii to a greater extent than Star Wars movies. At the fourth dimension of the acquisition, I argued that it was a fair price, given Disney's history amongst developing, maintaining together with merchandising franchises, but had to depict on the potential for synergy to justify the number. With the unloosen of Star Wars: The Force Awakens just well-nigh x days ago, Disney seems to endure to a greater extent than than delivering on its promise, every bit the motion-picture exhibit has broken box business office records together with is on its agency to delivering a global box business office of $2 billion or more.

To the extent that this movie, similar its predecessors, volition generate add-on revenues, at that spot volition endure substantially to a greater extent than coin to endure made over the adjacent few years. The adjacent 2 movies are scheduled for 2017 together with 2019, together with at that spot volition endure iii spin offs inwards the intermediate years, amongst less ambitious budgets. After 2020, Disney's plans are non specific, but if the appetite remains, at that spot volition endure undoubtedly to a greater extent than movies inwards the pipeline. More importantly, the movies volition non solely exercise a novel base of operations of younger fans but augment the sales of merchandise, toys together with games inwards the coming decade. The revenues that would receive got come upward from DVDs together with video rentals volition endure replaced amongst streaming revenues together with at that spot volition undoubtedly endure games together with apps directed at smartphones, devices together with gaming systems. 

Valuing the Franchise

To value the franchise, I started amongst my estimates of worldwide box business office receipts for Star Wars: The Force Awakens and the subsequent movies inwards the series. Though, the firstly 2 weekends receive got blown away expectations (with the motion-picture exhibit making $1 billion), I volition approximate $2 billion inwards revenues, for each of the iii primary movies, together with one-half those proceeds for the spin offs, amongst an inflation adjustment of 2%.

As amongst the prior movies, the mass of the revenues from the franchise volition come upward from add-ons, together with inwards assessing the potential, hither are around of my assumptions:

1. Streaming: As viewers increasingly plow to watching streamed movies from services (Netflix, Amazon Prime) on their televisions together with devices, the revenues from streaming are chop-chop catching upward amongst box business office receipts for movies, together with yesteryear 2017, the total revenues from streaming are expected to plow over box business office revenues. I volition assume that each dollar inwards box business office revenues from the novel Star Wars movies volition generate $1.20 inwards additional revenue inwards streaming, slightly higher than historical numbers (1.14).
2. Toys/Merchandise: The Star Wars movies receive got historically generated $1.80 inwards revenues from toys/merchandise for every dollar inwards box business office revenues. Given Disney's prowess at merchandising, I would non endure surprised to run across this issue become up, together with I volition assume that each dollar at the box business office volition interpret into 2 dollars inwards merchandising revenues, a footling higher than the historical value of $1.80 per box business office dollar. Keep inwards heed that this franchise is a merchandisers' dream, amongst an almost endless potential for novel opportunities inwards the Expanded Universe.
3. Books together with eBooks: This is the flow that is peradventure most at risk, together with I volition assume that piece a agency volition endure found to conform the publishing flow to changing tastes inwards reading, the revenues from this books/e-books volition drib to $0.20 per box business office dollar (from $0.27, the historical number).
4. Gaming: In keeping amongst the history of Star War games, I am convinced that that games volition endure adapted non solely to gaming platforms (Xbox, Playstation together with Nintendo) but also to smartphones together with tablets. I volition move out the gaming revenues at $0.50 per dollar inwards box business office receipts.
5. TV Shows/Other: This is the 1 add-on where I volition assume a meaning improvement over historical numbers, every bit Disney, Netflix together with others abide by ways to conform the franchise to television receiver viewers. I volition assume that the revenues from TV shows volition increase to $0.50 per dollar inwards box business office receipts.

Download Spreadsheet

To approximate the franchise value, I used the operating margins of the motion-picture exhibit (20.14%) together with toy/merchandise businesses (15%) together with netted out taxes (at a 30% taxation rate), earlier discounting dorsum at a 7.61% cost of capital, the amusement sector average. (Disney volition in all likelihood license most of the merchandise, passing of the opportunity to others, but settling for a part of the operating income.) At to the lowest degree based on my projections, the value of the Star Wars franchise, if it tin maintain my estimated numbers (for add-ons) together with deliver at the box office, is almost $10 billion. The value is apparently a work of motion-picture exhibit revenues together with the add-on dollar values:

Not solely does that brand Disney's $4 billion investment iii years agone a real expert one, but whatsoever synergies that Disney tin gain inwards its other businesses (like this one) volition exercise to a greater extent than upside. As always, you lot are welcome to brand your ain assumptions together with revalue the franchise, using this spreadsheet.

An Acquisition Model that works?
I am non a fan of acquisition-driven growth, primarily because the procedure thus oftentimes leads to over paying for growth, but Disney may receive got found an acquisition model (albeit a express one) that industrial plant amongst its Star Wars together with Marvel acquisitions. In both cases, the companionship bought established motion-picture exhibit franchises together with has used its merchandising machine to generate value. Those results receive got already borne fruit amongst Marvel, peculiarly amongst the Avenger movies, together with nosotros may endure be seeing the beginnings of the Star Wars dividends this week. 

During the week, piece I was inwards the metropolis (New York), I saw at to the lowest degree iii Stormtroopers together with a Darth Vader on Times Square together with every shop that I went into had something related to Star Wars, on sale. If you lot are a Star Wars purist, appalled yesteryear the shameless merchandising of the movie, I am afraid that you lot ain't seen zip yet. If you lot are a Star Wars collector, together with yell back that you lot receive got the entire collection already (for you lot or your kids), hither is something for you lot to ponder. If you lot are a Disney stockholder similar me,  may the strength endure amongst you!

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Attachments

1. Star Wars: Valuing the Franchise (Spreadsheet)
2. Star Wars: Franchise Value Picture (jpg file)