Blog Post

Disney avenges traditional media models

Outside its Burbank headquarters, consumers may be cutting cords, eschewing traditional release windows and sharing pretty much everything digital.

But on Tuesday, traditional media was still working out quite nicely for the Walt Disney Company (s DIS). The conglomerate posted a 21 percent uptick in profit to nearly $1.1 billion, driven by such ol’ fashioned media forces as ESPN multi-channel carriage fees and theme park attendance.

Disney’s Q2 performance was so strong, it overcame an $84 million hit to operating income rendered upon it by one of the the worst flops in motion-picture history, sci-fi epic John Carter.

And it didn’t even include the biggest box office opening ever for a film, the Marvel Comics-adapted Avengers, which has grossed more than $702 million since it was first released internationally on April 25.

At least for one weekend, the old theatrical model worked just fine

Faced with ongoing declines in domestic movie attendance, notably among young adults, as well as ebbing DVD revenue, Hollywood’s majors have been forced to re-consider the scale of movies like The Avengers, which costs around $220 million to produce and well over $100 million to market worldwide.

They’ve also had to consider that a growing number of consumers simply won’t go to a multiplex to see a movie anymore, and that maybe a better way to go would be offering these folks an on-demand home-viewing option concurrent with or even before theatrical premiere.

But in just 72 hours, The Avengers seems to have disproven the notion that such old-Hollywood recipes as big-name directors and stars, mixed with hundreds of millions of dollars in TV advertising, can’t get a critical mass of consumers together in a dark room anymore.

The Avengers didn’t just break the movie business’ domestic box office opening record, it obliterated the mark, besting the $169.2 million grossed in the first three days last year by Warner Bros.’ final Harry Potter film with a mind-blowing $207.4 million performance.

About half of the audience was younger than 25, and about 20 percent was in its teens.

The Avengers also negated the notion that audiences are rejecting sequels and remakes based on recycled intellectual property … and that Disney’s $4 billion purchase of comic-book publisher turned production company Marvel in 2009 was a bad idea in the first place.

Released over the last two years under Marvel’s distribution relationship with Paramount, Iron Man 2 ($623.9 million in global box office), Thor ($49.3 million) and Captain America: The First Avenger ($368.6 million) provided set-up for last weekend’s record-breaking Avengers performance, introducing audiences to obscure comic-book characters and priming them for a big, ensemble-cast event that would feature all of them.

Disney and Marvel plan to keep going back to the well, of course: In addition to an Avengers sequel confirmed Tuesday, Disney has third Iron Man film slated for next May and a second Thor movie set for November 2013. Another Captain America movie is scheduled for 2014.

Look for all of these movies to be available exclusively in theaters before they arrive in your home.

3 Responses to “Disney avenges traditional media models”

  1. Stanford Crane

    “Content is and always be king of the media jungle” quoting a famous phone hacker. To today’s narrow-minded VCs that means only online content. If you have broadcast or live content that doesn’t count, except in Disney’s case. As soon as investors enable new studios, with delivery channels abounding, the real media revolution will take place, but for now, VCs are stuck in tech-land.

  2. EthicalFan

    They are arriving in people’s homes just fine. Home video revenues are down 25% from $26B in 2006 (1 year after the first BitTorrent search engines) to $18B in 2011. ethicalfan dot com. millions of copies of DVD quality Ghost Protocol were downloaded while in the theaters prior to its legal DVD and streaming windows.