Last week, fellow Seeking Alpha contributor Steven Mallas made the case that Disney's (NYSE:DIS) move to push Star Wars: Episode VIII out to December 2017 from its original May 2017 release could be a mistake.
Mallas argues that the later release date "doesn't make sense since summertime is a potentially bigger box-office period," instead suggesting that Disney should launch Episode VIII within the same month (May) as the next installments of Guardians of the Galaxy and Pirates of the Caribbean.
To be fair, I really like Steven's work, as it has a fun tone, ruffle feathers and raises several points that many investors don't consider. For instance, I liked his article, 5 Things Disney's Thomas Staggs Must Consider When He Is CEO, (such as selling ESPN and buying Dreamworks (NASDAQ:DWA). Spoiler alert.
But I disagree that all three films should be launched in the same month.
If Disney's executives think it's best to move Star Wars from May to December, and leave the spotlight for Guardians and Pirates, then by all means, that is likely the best move. I, being the minuscule shareholder and stock commentator I am, am not about to disagree with CEO Bob Iger & Co.
Let's Get to Facts
Let's start with the first presumption that Disney is simply shifting around the release dates to best accommodate its slate of films. It does give the team more time to work (roughly seven months), and at least by my thinking, gives them more time to make a better movie.
I would rather have Disney come out with a movie that blows the hinges off the door than one that is "just okay."
While I would agree that launching a movie in the summer rather than December is generally more favorable, consider that Star Wars will likely do just fine no matter what time of year it's released. Star Wars: The Force Awakens has grossed nearly $2 billion worldwide, and this provides further confirmation of why moving the film from May to December should be of little concern.
Think of it like this: Most everyone who's going to see Star Wars, is Going. To. See. Star Wars. It doesn't matter if it's May, December, February, whatever. But, on the flip side, it may matter when Pirates or Guardians is released.
Putting them essentially head-to-head-to-head doesn't make sense. Why have all three compete when you can have just two - Guardians and Pirates - do their best to clean up the summer revenues, then let the big dog - Star Wars - come in and finish it off?
|Film||Domestic Grossing||Worldwide Grossing||Release Date|
|Pirates of the Caribbean: Dead Man's Chest||$425M||$1.066B||2006|
|Guardians of the Galaxy||$333M||$773M||2014|
|Star Wars: The Force Awakens||$879M||$1.94||2015|
These three films raked in roughly $3.78 billion in box office sales - that's a lot of money coming out of consumers' pockets. To spread it out over one year makes more sense to me, rather than cramming it all into one month, hoping that none of the three movies - which will probably bring in $4 billion in ticket sales that year - significantly lose market share to one another.
To me, the risk of consumers getting movie fatigue - not even including competitors' films - outweighs the reward that they will go on a movie-viewing, Netflix (NASDAQ:NFLX)-like binge and watch all of Disney's new movies that month. Best case, they see all three movies - like they likely would anyhow - while worst case leaves Disney's revenues sagging at a time when concerns are swirling over cable-cutting and ESPN worries.
Another huge selling point is the holidays. Do you think more kids will get Star Wars toys surrounding a May release, or in a super-marketing surge headed into the Christmas holidays and December movie release? I would presume the latter, and that's another reason why it makes sense to release the movie in December.
Disney has no need to try and set a monthly box office record or perform a makeshift channel-stuffing of blockbuster hits all crammed into one month.
Management's job is to extract the most dollars it can from its sales in a given year. Likewise, their job isn't to experiment and gamble with its biggest movies and see how it goes, especially since there is no visible high reward to counter the high risk in this scenario. I must ask, where is the monstrous upside that makes taking such a risk worth it?
I see none.
Disclosure: I am/we are long DIS.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.