The force is strong in Walt Dis­ney Co.

Houston Chronicle Sunday - - BUSINESS - By Tali Ar­bel

NEW YORK — Walt Dis­ney’s $4 bil­lion deal for Lu­cas­film and “Star Wars” just keeps get­ting bet­ter for the House of Mouse.

The com­pany is bank­ing on the lat­est in­stall­ments, “The Last Jedi” in De­cem­ber and a Han Solo movie in May, to drive peo­ple to the­aters. But that’s far from the end of mon­ey­mak­ing op­por­tu­ni­ties from Han Solo, R2-D2, Kylo Ren and Rey.

Dis­ney has drawn big prof­its from the strength of its TV chan­nels — namely ESPN — but that growth is chal­lenged as more peo­ple dump cable sub­scrip­tions. As peo­ple turn to re­place­ments such as Net­flix, Dis­ney hopes to lure them with a stream­ing ser­vice planned for 2019. “Star Wars” movies will be a big part of that.

Dis­ney also wants to squeeze cash from “Star Wars” fans in the form of toys, theme park vis­its and ho­tel stays. Movie money

Dis­ney, in fact, is dou­bling down on “Star Wars.” Dur­ing a con­fer­ence call with an­a­lysts this past week, CEO Bob Iger said the com­pany is plan­ning a brand-new “Star Wars” tril­ogy as well as a “Star Wars” se­ries for its Dis­ney stream­ing ser­vice com­ing in 2019.

“Star Wars: The Force Awak­ens,” re­leased in De­cem­ber 2015, pulled in more than $2 bil­lion in world­wide ticket sales, trail­ing only “Avatar” and “Ti­tanic” as the best-sell­ing the­atri­cal re­lease ever (with­out ad­just­ing for in­fla­tion). It also bumped up home en­ter­tain­ment rev­enue from DVD sales. “Rogue One,” last year’s in­stall­ment, made over $1 bil­lion in global box­of­fice rev­enue.

“The Last Jedi” will con­tinue from where “Force” left off. Michael Nathanson of Mof­fet­tNathanson has a “some­what con­ser­va­tive” es­ti­mate of $1.9 bil­lion in box-of­fice haul for the film. He also ex­pects the lat­est “Avengers” in­stall­ment to bring in $1.3 bil­lion.

Big-bud­get, se­quel-gen­er­at­ing movies de­liver big wins for stu­dios. In fis­cal 2016, when Dis­ney re­leased “The Force Awak­ens,” the stu­dio’s profit was $2.7 bil­lion. That’s ex­pected to fall this year and jump back up to $2.84 bil­lion in 2018, thanks to “The Last Jedi” and sev­eral Marvel movies. The open­ing week­end of “Thor: Ragnarok” has al­ready out-earned its 2011 and 2013 pre­de­ces­sors. Other parts of em­pire

Dis­ney is fun­nel­ing its movie hits to other parts of its em­pire to help it make money re­peat­edly from its in­tel­lec­tual prop­erty.

For ex­am­ple, “Star Wars”-themed ar­eas at Dis­ney­land in Cal­i­for­nia and Dis­ney’s Hol­ly­wood Stu­dios in Florida will open in 2019.

“They’re huge and I think very ex­cit­ing in terms of how we’re us­ing tech­nol­ogy to create re­ally in­ter­est­ing at­trac­tions and ex­pe­ri­ences,” Iger said.

The com­pany is also plan­ning a “Star Wars”themed ho­tel at Walt Dis­ney World in Florida. Dis­ney touts it as an “im­mer­sive” ex­pe­ri­ence; guests will be able to dress up as their fa­vorite char­ac­ters.

Dis­ney is mak­ing other big in­vest­ments in its parks, too, as it races to catch up with Uni­ver­sal’s enor­mously pop­u­lar Harry Pot­terthemed ar­eas.

An­a­lysts ex­pect mer­chan­dise rev­enues to get a bump in fis­cal 2018; Nathanson cites the “Star Wars” and Marvel movies, as well as “Frozen” com­ing to Broad­way, as driv­ers.

The movies will also serve as a lure for Dis­ney’s stream­ing ser­vice, which will con­tain hun­dreds of movies and thou­sands of TV episodes and shorts. Pixar, “Star Wars” and Marvel films will be in­cluded along with Dis­ney-brand video. Dis­ney’s deal with Net­flix is ex­pir­ing and won’t be re­newed, mak­ing the new ser­vice the exclusive on­line home for much of Dis­ney’s prime con­tent.

Mor­gan Stan­ley es­ti­mates that the ser­vice can, after a decade, be­come a nearly $5 bil­lion-a-yer­oughly 30 mil­lion sub­scribers. (Net­flix’s stream­ing rev­enues for just the last nine months were $8.1 bil­lion, with 109 mil­lion sub­scribers.) Dis­ney will lose out on hun­dreds of mil­lions from Net­flix when it pulls its movies, and UBS es­ti­mates that it needs 32 mil­lion sub­scribers for the app just to break even. Dis­ney has not an­nounced pric­ing.

Dis­ney also plans an ESPN stream­ing ser­vice for next year, which won’t air the same sports as its chan­nel — but one day might. ESPN, long its cash cow, has been los­ing sub­scribers as at­ten­tion shifts on­line.

In­dus­trial Light & Magic / Lu­cas­film via As­so­ci­ated Press

This scene is from the up­com­ing “Star Wars: The Last Jedi,” ex­pected in the­aters in De­cem­ber. Walt Dis­ney is also plan­ning a new “Star Wars” tril­ogy.

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