What Toy Story 3's Success Means for Movies
Hollywood's breathing a big sigh of relief: people will, indeed turn out en masse at theaters this summer.
Disney/Pixar's "Toy Story 3" blew past expectations and brought in $109 million at the US box office.
Sixty percent of the movie's gross was from 3-D screens, which charge $3 more, on average, per ticket.
The question is, what impact will this movie really have on Disney and other studios?
The box office faces some very tough comparisons — last year U.S. ticket revenue grew 10% over 2008. This year, thanks in part to this past strong weekend, the box office is up about 4 percent over last year. MKM Partners analyst Eric Handler breaks it down for me, saying that pricing is up 5% to 6% over last year thanks to that $3, 3-D premium, and that attendance is down about 1% to 2%. The box office has little chance of recreating last year's revenue gains, but after this weekend there's no longer fear that numbers would plummet off a cliff. And once people turn out en masse, they're more likely to come back to theaters, thanks in large part to the impact of trailers.
So what does it mean for Disney?
"Toy Story 3" is Pixar's biggest opening weekend, cementing the studio as an unstoppable force: every single one of its 11 films has topped the box office its opening weekend. And since it takes three to make a trend, Disney is officially on a hot streak: Toy Story 3 gives Disney the three biggest opening weekends of the year. The two other big debuts -- "Alice in Wonderland" and "Iron Man 2" — are also the biggest-grossing movies of the year. No matter that "Toy Story" and "Iron Man" come from studios Disney acquired; drawing on the value of Pixar and Marvel characters is part of Disney's strategy.
The stronger performance at the box office, the more "Toy Story 3" will positively impact Disney's other divisions. The bigger a movie, the more consumer products sell. The company predicted $2.4 billion in retail sales of "Toy Story 3" toys this year, which translates into more than $200 million in licensing revenue. If the film continues to outperform expectations we'll see if those numbers get even bigger.
And Disney's success should actually benefit rival studios.
Standard & Poors Equity Analyst Tuna Amobi says this weekend's results prove the appeal of 3-D is intact, despite the disappointing performance of DreamWorks Animation's"Shrek Forever After" . This will help upcoming animated 3-D films like "Despicable Me," from Universal , which doesn't have much name recognition. Even the movies coming out this weekend, Sony's "Grown Ups,"and Fox's "Knight & Day" should benefit from the moviegoers exposure to signs and trailers at theaters this past weekend.
But the studio best positioned for the rest of the year seems to be Warner Brothers. Its bringing one of its most popular franchises — Harry Potter — into 3-D for the first time this fall, and if "Toy Story 3" is any indication, it'll be huge. Also, Warner Brothers is releasing a Christopher Nolan sci-fi action flick in July called "Inception." Hollywood insiders are buzzing that this will be *the* breakout hit of the summer. Last year it was "The Hangover," also from Warner Bros. and this year we haven't had one yet. "Toy Story 3" gives hope that consumers will turn out and pay up if the content delivers.
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