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'Iron Man 3' Scores Big and Disney Can't Be Happier

'Iron Man 3' Scores Big and Disney Can't Be Happier
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Employees at the Disney (NYSE: DIS) corporate headquarters will see a lot of smiles on Monday. Iron Man 3, starring Robert Downey Jr. and Gwyneth Paltrow, entered the record books for the second largest grossing weekend behind The Avengers.

How big was it? Early estimates came in at $175.3 million on Sunday—a huge haul for the third installment in the Iron Man franchise. Worldwide, it has already earned $623 million.

Let’s put this into perspective. The budget for the movie was around $200 million. That means that after only one weekend, Disney is up supposedly $423 million (keep in mind marketing costs, gross shares with theaters, complicated revenue sharing formulas). Iron Man 2 made $629 million but its first weekend haul was only $128 million domestically or 40 percent of its total domestic sales.

In comparison, The top grossing film, The Avengers, also a Disney movie, went on to earn $1.5 billion worldwide.

For movie studios, the period between the first weekend of May and Labor Day is similar to the November and December season for retailers. 40 percent of the movie industry’s profits come from the summer season.

The Superman reboot, Man of Steel is one of Warner Brothers’ (NYSE: TWX) summertime gambles while Paramount hopes to score big with the second in the modern Star Trek series with, Star Trek Into Darkness. Each of the studios are betting big money on these films with budgets of $175 million and $185 million respectively.

Disney, Paramount, and Warner Brothers may be competing for moviegoers’ business, but they all know that when one movie does well, it builds momentum for the industry.

As reported by the New York Times, Greg Foster, chairman of Imax Entertainment, said, “When the opposite happens they don’t see trailers, they start to forget how exciting the theatrical experience can be, and it’s that much harder to sell tickets.”

With the success of Iron Man 3 and the hype surrounding other big-budget releases this summer, the industry hopes to regain lost ground. So far in 2013, ticket sales for the United States and Canada total $3.1 billion—a year over year decline of 11 percent.

Disney will report earnings this Tuesday where investors hope to hear news that will add to the already 50 percent gain the stock has seen over the past twelve months.

Disclosure: At the time of this writing, Tim Parker had no position in the above mentioned stocks but does love him a good 'Iron Man' flick.

Posted-In: Earnings News Guidance Dividends Retail Sales Events Global Econ #s Best of Benzinga


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