Walt Disney (DIS 1.14%) has a well-told story when it comes to success with TV and movie franchises. From The Muppets and Toy Story to Marvel and Star Wars, the company controls a vast bank of connected properties and characters, giving it ample opportunities to create a variety of content and tie-in products. For example, 2015’s Star Wars: Episode VII: The Force Awakens grossed more than $2 billion at the worldwide box office, while Star Wars toys generated nearly $760 million in revenue the following year.
Netflix (NFLX -0.50%) owns only a fraction of the intellectual property based on Walt Disney characters. Netflix has a line of Stranger Things products and mobile games, but the company is still relatively new to the franchise space and all the opportunities it represents. However, with Netflix Originals like last year’s Army of the Dead and recently released The Gray Man, Netflix is beginning to build its own cinematic universes.
With this in mind, there’s a lot Netflix can learn from Walt Disney about building profitable brands that fans fall in love with.
Audiences like straightforward stories populated by diverse characters
At the core of many Walt Disney movies and TV shows is a simple premise: the good characters are trying to outdo the bad. It’s been a part of the company’s narrative DNA since 1938’s Snow White and the Seven Dwarfs and is still at the core of nearly every Marvel and Star Wars property (the Avengers taking on Thanos, the Jedi taking on the Empire, etc.).
Furthermore, Walt Disney has also come to understand that while the motivations of heroes and villains need not be complex, it is good business to present diverse characters on screen. In 2018, Hasbro produced more toys to accompany the release of Black Panther than any other Marvel movie centered around a single superhero. See the article : Netflix: The 43 best movies to watch. The toymaker said it ramped up production after the film’s release to meet demand.
Expansive mythologies provide scope for an array of new movies and shows
Walt Disney has tapped into the literal galaxy of Star Wars characters to create a number of new shows and movies over the years. From 2016’s Rogue One to The Mandalorian a few years later, Walt Disney has developed entirely new story threads that, while connected to the original Skywalker Saga, are still standalone entertainment in their own right. And with each new property comes the possibility of even more products and spin-offs, like the upcoming Andor and last year’s Book of Boba Fett.
It’s OK to reset if things aren’t going well
Perhaps the biggest threat to any successful franchise is that the stories and characters can become stale, causing fans to lose interest. Read also : Why Netflix split this season from ‘Stranger Things’. 2014’s X-Men: Days of Future Past made an estimated $746 million in worldwide box office receipts, while 2019’s X-Men: Dark Phoenix pulled in just over $252 million.
While X-Men is a Marvel property, Walt Disney did not control the film or television rights during the development of either project. However, Walt Disney is now overseeing X-Men and has announced that he will reboot (or resurrect) the franchise with a new show tied to X-Men: The Animated Series, which debuted in the 1990s.
Netflix has many opportunities ahead
Walt Disney has been around for close to 100 years. That’s a lot of time to build and acquire brands, learning what works and what doesn’t along the way. So while Netflix is entering the franchise space much later than Walt Disney, that doesn’t mean this streaming service’s stock can’t follow the template that’s been set.
To investors, Netflix has shown signs that it understands many of the aspects that have helped Walt Disney get to where he is: The aforementioned Stranger Things features a diverse cast and apparently focuses on good versus evil. The streamer followed up Army of the Dead with Army of Thieves, a prequel centered around a minor character from the initial film. And Netflix has also signaled that it is serious about animation by acquiring the Animal Logic studio.
With this in mind, it’s possible that Netflix may soon have some formidable – and very profitable – franchises that could give Walt Disney a run for their money.
Tom Wilton has business dealings with Netflix, but has no financial position in any of the stocks mentioned. The Motley Fool has positions and recommends Netflix and Walt Disney. The Motley Fool recommends Hasbro and recommends the following options: January 2024 $145 Long Calls at Walt Disney and January 2024 $155 Short Calls at Walt Disney. The Motley Fool has a disclosure policy.
Tom Wilton has business dealings with Netflix, but has no financial position in any of the stocks mentioned. The Motley Fool has positions and recommends Netflix and Walt Disney. The Motley Fool recommends Hasbro and recommends the following options: January 2024 $145 Long Calls at Walt Disney and January 2024 $155 Short Calls at Walt Disney. The Motley Fool has a disclosure policy.
