Walt Disney’s enormous and ever-growing company has become one of the strongest power houses in business today. One of their biggest moves of recent years was purchasing Lucasfilm, and all of its properties, for a whopping $4 billion back in 2012. The big question for Disney now is whether or not they can make back that $4 billion. While it seems impossible, they are actually about halfway there.
Another notable thing about Disney’s business plan is their monstrous terms for being screened in movie theaters. Generally, a theater and the film’s distributor will split the revenue from the box office 50/50. This depends on every production, of course, and what the preset percentage is that the distributor demands. But for the most part, 50% appears to be the general average demand. Disney, however, is a completely different story.
For the previous two Star Wars films, The Force Awakens and Rogue One, Disney demanded that they receive 64% of the revenue. They also demanded that the films be screened in the theater’s largest auditorium for at least the first two weeks. The demand of having the largest auditorium for two weeks is actually something that Disney has done regularly, particularly with their other blockbuster hits like the Marvel films and Pirates of the Caribbean. This year, however, they are drastically increasing their demands to hopefully earn themselves top profit from The Last Jedi.
To start, they are increasing their revenue percentage to 65%, which is up 1% from previous years. While this doesn’t seem too terrible, it is actually the largest percentage a production studio has ever demanded for a film, and will continue to deter from the income theaters are receiving. For those who consider movie theaters to be a dying business, this could be very bad news.
Secondly, Disney is now demanding that The Last Jedi be screened in their largest auditorium for at least four weeks, as opposed to the usual two weeks. If a theater fails to reserve their largest auditorium exclusively for Star Wars, then they will be charged an extra 5% on their revenue, meaning they would now owe Disney 70% of the money made from The Last Jedi. While Disney is no stranger to making high demands at theaters, this change is certainly unprecedented and could mean bad news for many local theaters.
While larger chains like AMC and Celebration! will likely be unharmed by these monstrous demands, having a plethora of auditoriums in their theaters to screen other films and enough contingency in their budgets to survive the increase in Disney’s revenue percentage, smaller chains of theaters are likely to struggle. There are many smaller, local theaters who only have one or two auditoriums in their vicinity. This change of demands would mean that they would have to reserve one of those auditoriums for an entire month exclusively for The Last Jedi. If, in one of those last couple of weeks, audiences stop attending the screening of Star Wars, they would either have to continue screening it, while losing money from the lack of customers, or pay the additional 5% to Disney, which could be enough to bankrupt the theater.
This has led to many smaller chains or family-owned theaters to refuse to screen Star Wars: The Last Jedi this December, in order to maintain whatever profit they have at this point. It is a purely economical decision in order to keep their businesses alive. The bad news is that, with some of the smaller chains refusing to screen The Last Jedi, many Star Wars fans may have to make a journey to a larger-chain theater in order to see the cinematic experience for themselves.
While this will not personally affect me, seeing as I live in a larger city, I do understand how troublesome this could be for many families who do not have the urbanized benefits that I have experienced. Hopefully this does not become a regular occurrence for Disney, and that their later films will not have such high demands.
What are your thoughts on all of this? Let us know in the comments, and thanks for reading!
[Top Photo Credit: Lucasfilm]