How Are Comcast’s Film Revenues Trending?

Comcast‘s (NYSE:CMCSA)  film revenues, which are generated by its 100% owned subsidiary NBC Universal Studios, have been wayward in recent years. They increased from $4.05 billion in 2011 to $5.54 billion in 2013, primarily driven by the  extraordinary contribution from Despicable Me 2. There was a dip in revenues in 2014 as none of the studio’s movies did too well on the box office. However, revenues jumped to $7.29 billion in 2015 owing to the success of Furious 7, Jurrasic World, Minions, Fifty Shades of Grey and Pitch Perfect 2. This year hasn’t been too good for the studio, due to high profile flops such as Warcraft, Jason Bourne and The Huntsman: Winter’s War. In light of this weak showing,  we expect revenues to fall to $6.49 billion.

Going forward, we expect revenues to rise steadily and cross $8 billion over the next six to seven  years, driven both by the studio’s increased focus on franchises popular internationally and by an increase in the number of animated movie titles.

Focus on International Markets and Films with International Following

The most pleasing part of Universal’s success is that the studio has a blueprint to replicate in the coming years. It is building up brands keeping the future perspective in mind. Universal continues to focus on international markets and is creating movies with popular international franchises, such as Fast and Furious and Despicable Me. The first movie in the Fifty Shades franchise did extremely well and the rest are expected to follow suit. Universal successfully revived the fan-favorite Jurassic Park franchise with the blockbuster hit Jurassic World and a sequel has been green-lit with a 2018 release date. The studio also has other relatively lower grossing franchise properties such as Pitch Perfect, Jason Bourne, Neighbors, Ted, The Purge, Snow White and the Huntsman, etc. Universal Pictures is one of the biggest movie studios in the world and is likely to maintain its market share. The movie business is unpredictable, but with new editions of successful franchises lined up, we can expect some success for the studio in the future.

Focus on Animated Movies

There has been a growing demand for 3D and animated movies and Universal Pictures can greatly benefit from this. These movies usually command higher ticket prices and this translates into higher revenues for the studios. Universal has already had some success on this front with its Despicable Me grossing close to $550 million at the box-office, and the movie’s sequel Despicable Me 2 reaching almost $1 billion globally. The future installments in the franchise are also expected to do well. And since the production cost for such movies is lower, as compared to regular movies, it makes sense for Universal to enhance its focus on this genre. The production budget for Despicable Me 2 was merely $76 million, while its CGI-loaded (i.e., Computer Generated Image-loaded) movie Warcaft cost $160 million. Better returns on investment for animated movies should provide Universal enough incentives in the future to explore this arena.

See our complete analysis for Comcast

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