Star Wars Drove Merchandise, Licensing Revenues for Disney in 1Q16



Disney’s Consumer Products and Interactive Media segment

The Walt Disney Company’s (DIS) Consumer Products & Interactive segment reaped the benefits of Star Wars: The Force Awakens. In fiscal 1Q16, this segment had revenues of $1.9 billion, up by 8% YoY (year-over-year) and this segment’s operating income increased by 23% to $860 million.

The success of the Star Wars movie resulted in the increased sale of Star Wars merchandise. It also resulted in an increase in licensing revenue for this segment’s Games division due to the success of the game Star Wars: Battlefront, which was developed by Electronic Arts (EA) for Disney.

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Fiscal 1Q16

Fiscal 1Q16 was the first fiscal quarter in which Disney reported the financial results for the combined business segments of Disney’s Consumer Products and Interactive Media. Last year, Disney had announced it would merge Disney Consumer Products and Disney Interactive, which would become Disney Consumer Products and Interactive Media.

As the chart above indicates, Disney’s Consumer Products & Interactive Media comprised 13% of the company’s total revenues of $15.2 billion in fiscal 1Q16.

Disney Consumer Products generates revenue through licensing deals with third parties for its characters. Disney Interactive develops and sells multiplatform games, subscriptions to online and mobile games, licensing content for Disney-branded mobile phones in Japan (EWJ), and online advertising and sponsorships.

Disney remains optimistic about Star Wars franchise

Disney stated at its fiscal 1Q16 earnings call that the company continues to see a “significant tail” from the sales of Star Wars merchandise in international markets. Disney noted that the company had significant sales of Star Wars merchandise in international markets, where the movie didn’t do strong business.

As a result, Disney has high expectations regarding its merchandise sales for Disney’s other Star Wars movies too, including Star Wars: Rogue One, to be released at the end of 2016, and Star Wars: VIII and Star Wars: IX, expected to release in 2017.

Disney makes up 0.85% of the SPDR S&P 500 ETF (SPY). For an investor interested in the information technology sector, SPY holds 3.9% of the sector. SPY also holds 0.18% of 21st Century Fox (FOXA) and 0.13% of CBS (CBS).

Continue to the next part of this series to learn how Disney plans to strengthen its brands.


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