Bob Iger Dismisses Luck as Factor in Disney Box Office Success

18 May, 2016 By: Erik Gruenwedel

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With Walt Disney Studios’ Captain America: Civil War and The Jungle Book the top-grossing films through May 15 — for the second straight weekend — Disney’s movie operations are operating on all cylinders. The studio has been the fastest (along with Universal Pictures in 2015) to reach $1 billion in revenue at the box office.

While some might attribute the success to the fiscal largess of Star Wars: The Force Awakens, CEO Bob Iger said it involves more than just the fortunes of one movie.

Speaking May 18 at the 3rd Annual MoffettNathanson Media and Communications Summit in New York, Iger said that when he became CEO in 2005, Buena Vista Pictures was making more non-Disney movies than Disney-branded titles.

Iger said the return on invested capital (ROIC) for non-Disney titles was in the single digits, while returns on Disney-branded movies was much better. After acquiring Pixar Animation in 2006, followed by Marvel in 2010 and Lucasfilm in 2012, Iger says the ROIC on those brands is much higher than industry averages. 

Indeed, since the Pixar purchase, Disney has generated 28 theatrical releases across Pixar, Marvel and Lucasfilm that have generated an average box office return of $780 million each.

“If you look at the [ROIC] on those 28 films, [it] would make the rest of the industry look silly, like really silly,” Iger said.

The box office success has translated to home entertainment as well.

The Force Awakens and Pixar’s The Good Dinosaur are the top-selling packaged media releases this year, generating $151 million in combined revenue on more than 6.7 million discs sold, according to The-Numbers.com. Big Hero 6 and Inside Out ranked in the top-four last year, while Frozen and Marvel’s Guardians of the Galaxy dominated in 2014.

Iger said box office success involves more than just sticking a brand on a movie. It’s about “executing” against the brand — a bottom line the CEO said Disney has not always gotten right.

“We’ve had misses and will continue to, but we’ve had fewer misses because we’ve had just a tremendous attention to detail when it comes to making these movies good.”

While giving credit to senior management for preserving the individual cultures at Pixar, Marvel and Lucasfilm, Iger said a policy he implemented linking compensation throughout the company — including the studio — with ROIC has impacted productivity. He said basing bonuses on individual movie box office success against projections was unheard of in Hollywood. 

“It became a key metric … and we got very specific about it,” Iger said. “It created a focus obviously and an incentive.”

When asked if the studio has just gotten lucky, Iger disagreed.

“I don’t think 28 films at $780 million average global box office is lucky. If you make a really good film, it’s going to do well in today’s marketplace. If you make a bad film, it’s probably not going to [do well], because you can’t hide that anymore.”

 

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