Riddick’s Success Shows NBCUniversal’s Low Risk Way Of Gaining Market Share

by Trefis Team
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Quick Take

  • Van Diesel’s Riddick tops the North American box office on a quiet weekend. The low budget film was a safe play for Universal Pictures.
  • Universal Pictures now leads the box office market share ahead of Disney and Time Warner.
  • The strategy of focusing on its international franchise to target international audiences appears to be working well for the media giant.
  • The movie business does not contribute much to Comcast’s overall earnings, which are primarily driven by pay-TV and broadband business.

Comcast’s (NASDAQ:CMCSA) Riddick led North American box offices on a quiet weekend. [1] In the light of Van Diesel’s international popularity and a thrifty $38-million budget, extending the Riddick series was a safe gamble for Comcast’s Universal Pictures. The company now tops the global box office with 17.1 % market share ahead of Time Warner (NYSE:TWX) and Disney (NYSE:DIS). [2] Riddick took first place in U.S. and Canadian theaters to give Universal Pictures its eighth No. 1 opening of the year. Universal’s outing with Diesel looks to be paying off well given the success of Fast and Furious 6 earlier this year.

See our complete analysis for Comcast

Universal Pictures Leads The Box Office

Universal has been riding high on the success of its movies this year. While Fast and Furious 6 has grossed over $750 million, Despicable Me 2’s total grossing has been over $830 million so far. [3] [4] The recent release of Van Diesel’s Riddick has collected $26 million in the opening weekend and is expected to perform well especially in the overseas markets. [5] Universal now tops in 2013 rankings with $1.32 billion in total grossing.

The movie business contributed around 8% to Comcast’s revenues and around 1.5% to its operating income in the first half of 2013. The business posted losses during the same period previous year. Comcast is in the middle of a turnaround and is focused on international franchisees. The company has been targeting the international box office, which make up 70% of overall theatrical revenues. So far this strategy looks to be working out well for Comcast.

Reliance On Franchise

Universal Pictures has some critically acclaimed and popular franchises to its portfolio, including Jurassic Park, Fast and Furious, Bourne and The Transformers. Earlier in July this year, the studio inked a 5-year deal with Legendary Films. While Universal will market, co-finance and distribute Legendary films, the latter will expand its intellectual properties into Universal’s theme parks (See – Comcast Eyes More Theme Park Attractions With Legendary Films Deal). Legendary’s first big project with Universal Pictures may be Dracula, which is expected to release on August 8, 2014. Further, it may co-finance the Universal’s big budget and much-awaited Jurassic Park 4, which will begin production next year. [6]

What Is Movie Business For NBCUniversal?

Comcast’s Filmed Entertainment division includes production, acquisition, marketing and distribution of movies and stage plays worldwide by Universal Pictures. The movie studio is a part of NBCUniversal, which accounts for 25% of Comcast’s value. For the first six months in 2013, the filmed entertainment division’s revenues were $2.6 billion. While the movie business accounted for more than 20% of revenues for NBCUniversal in the first half of 2013, it contributed only 7% to the operating income due to the higher marketing costs involved in the business. [7] We estimate full year revenue of $5.6 billion for Comcast’s movie business as the studio will have few more releases later in the year. However, even if the movie business manages to outperform and clocks in more than $6 billion in revenues, it will have a minimal impact on Comcast’s stock price.

The company’s movie business is also linked to its theme park business. While the theme parks help in marketing Universal’s movies, popular franchises find their way into the theme park. The theatrical business by itself depends on the audience’s response to the movies. R.I.P.D. for instance was a disappointment for Universal this year and didn’t even earn half of its budget pack.

It is understandable that a studio cannot deliver 100% hits. Some projects make money and some lose money. Overall things look very encouraging for Universal Pictures this year and it will be interesting to see if studio manages to end the year with highest market share, given the tough competition from Disney and Time Warner. Disney’s Thor – The Dark World and Warner Bros’ The Hobbit – The Desolation of Smaug are the popular titles that will release later this year.

Understand How a Company’s Products Impact its Stock Price at Trefis

  1. ‘Riddick’ Wins Slow Movie Weekend, The Wall Street Journal, Sep 8, 2013 []
  2. Studio Market Share, Box Office Mojo []
  3. Fast and Furious 6, Box Office Mojo []
  4. Despicable Me 2, Box Office Mojo []
  5. Riddick, Box Office Mojo []
  6. Dracula’ Eyed as Legendary’s First Film with Universal Pictures, Variety, Aug 29, 2013 []
  7. Comcast’s SEC Filings []
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