“This year, Disney will again become the only studio in history to reap $7bn in worldwide box office receipts… And Disney makes 8 to 10 films a year; some big studios make two dozen.”
Thread on how $DIS is able to make so much $ out of so few films. 1/7
barrons.com/articles/how-b…
Thread on how $DIS is able to make so much $ out of so few films. 1/7
barrons.com/articles/how-b…
In 2018 over 800 movies were released in the US but just 15 of them made up 44% of domestic box office receipts. People talk about 80/20 but in cinema in 2018 it was more like 90/10. 
And the skew is getting more pronounced. Ten years ago, when The Dark Knight was released, the top 15 films made up only 34% of box office receipts. 3/7
There’s a demand side factor to this. Too much choice, so we watch what everyone else is watching. There’s also a supply side factor through scale benefits. For a high budget film, distribution & marketing can be 1.5x production costs, but for a low budget film they are 3.0x. 4/7
Disney doesn’t shun diversification completely. Rather than diversifying risk across movies as other studios do, it diversifies across channels: parks, cinema, TV. Streaming is the latest iteration. 5/7
Bottom line is that in a slate of any eight films, one will be a flop (<1.5x budget), two will be monster hits (>4.5x budget) and five will be decent hits. This is better than the industry which according to Iger “operates with a single-digit return”. 6/7
@peterthiel has said of the VC industry: “investors who understand the power law make as few investments as possible”. Disney shows that it’s the same in film. 7/7
cc. @trengriffin @patrick_oshag @ReformedBroker @barronsonline
cc. @trengriffin @patrick_oshag @ReformedBroker @barronsonline
