Lucasfilm/’Star Wars’ acquisition gives Disney a bright digital media future

Disney’s purchase of Lucasfilm will bring the world at least three new Star Wars movies (Episodes 7, 8, and 9) and many new ways for the company to boost its digital media revenue.

During a call to investors Monday afternoon, Disney said it estimated that, had Lucasfilm produced another three movies between 2005-2012, each would have grossed $1.2 billion in revenue after box office, merchandising, licensing, and home video sales. That makes Disney’s decision to drop $4.05 billion on the acquisition less of a gamble. But if the movies will eventually recoup Disney’s initial expenses, the rest of Lucasfilm’s properties will translate into profit.

“It is a sustainable source of branded, high-quality creative content with tremendous global appeal that will benefit all of Disney’s business units and is incredibly well suited for new business models, including digital platforms,” Disney CEO Bob Iger said during the investor call.

The thing about the Star Wars universe alone is that it’s freaking massive. Our copy editor, Jason Wilson, joined me in frothing at the mouth when thinking about all the possible media properties that Disney could bring to life in cartoons, films, or TV shows or comic book form. Star Wars has hundreds of characters, many with their own epic tales created by novelists, comic book creators, and video game producers — and all with an official stamp of approval by Lucasfilm. The Extended Universe has many stories that you literally need a timeline to see how it unfolds, beginning 5,000 years before the first Star Wars movie hit theaters to about 140 years after the first movie, Star Wars: Episode IV — A New Hope.

And Lucasfilm has been really good at telling stories that span across books, video games, and comic books. For instance, Knights of the Old Republic originated as a video game, but it spawned a successful line of graphic novels produced by independent publisher Dark Horse. The same is true for many popular Star Wars novels, which Lucasfilm has spun off into their own graphic novels. The reason you don’t see these stories spill over into movies and TV shows is because it not only presents a higher risk of profitability but it’s also much harder to produce reliably. I suspect that’s why there are currently only two Star Wars cartoon series in production, The Clone Wars and the yet-to-air Star Wars: Detours.

Now that Lucasfilm has Disney’s vast resources (not to mention financing) at its disposal, more TV programming will undoubtedly stem from the popular books, comics, and video game storylines. These stories will also likely translate into mobile and social games — an under-utilized area for Star Wars by Disney’s standards — as well as a new stream of revenue for Disney’s digital and  home video sales.

Home video sales, as Disney said on the call, aren’t as high as they should be. And if you look at the company’s strategy, it’s concentrated on preserving that rather than translating it to the new digital marketplace. It’s the only major entertainment company that doesn’t use UltraViolet format for digital video sales, and Disney doesn’t license much of its content to streaming services like Netflix. I think this is really less about Disney fearing that digital sales will hurt physical sales and more about Disney thinking its content is strong enough to stand on its own.

That said, Disney needs more iconic content for its digital strategy to work, and Lucasfilm provides that.

Top illustration by Francesco Francavilla/Twitter; Bookshelf photo by Tom Cheredar/VentureBeat