How Are Comcast’s Film Revenues Trending?

Comcast‘s (NYSE:CMCSA) subsidiary NBC Universal Studios is one of the largest film producers in the U.S. The company’s film revenues have fluctuated from $5.45 billion in 2013, driven by the extraordinary contribution from hits such as Despicable Me 2, to $6.36 billion in 2016. Film revenues can be fairly volatile, and generally depend on the company’s blockbuster film lineups. So far, 2017 has been a good year for the studio due to high-profile hits such as Fate of the Furious and Despicable Me 3. The revenues from the filmed entertainment division are unpredictable, as the company’s revenue per film has been equally volatile. Given the strong performance so far this year, we expect ths segment revenues to grow to around $8 billion this year.

*Projected

Going forward, we expect revenues to rise steadily and remain strong over the next several years, driven both by the studio’s increased focus on franchises popular in the international market, as well as an increase in the number of animated movie titles.

Focus on Franchises

Over the past few years, NBCUniversal has built a slate of movies that have done exceedingly well in the international markets. These series have given the studio a blueprint to replicate in the coming years. Universal continues to focus on international markets and is creating movies with popular international franchises, such as Fast and Furious and Minions. The first movie in the Pacific Rim franchise did well internationally, and the company plans to release the sequel in 2018. Universal successfully revived the fan-favorite Jurassic Park franchise with the massive hit Jurassic World, and a sequel is scheduled to be released in 2018. The studio also has other relatively lower-grossing franchise properties such as Pitch Perfect and Insidious, which have been well received at the box office. Universal Pictures is one of the biggest movie studios in the world and is likely to maintain its market share. While the movie business remains extremely volatile, the studio’s franchise focus should allow for more predictable revenues.

Focus on Animated Movies

There has been a growing demand for 3D and animated movies, and Universal Pictures can greatly benefit from this. 3D movies usually command higher ticket prices, which translates into higher revenues for the studios. Meanwhile, Universal has had success on the animated front, with its Despicable Me series grossing over $2.6 billion at the box office globally. Since the production costs for animated movies are generally lower than live-action blockbusters, it makes sense for Universal to enhance its focus on the genre. For example, the production budget for Sing was just $75 million, while it generated over $630 million at the box office. With this level of return on investment in mind, Universal is releasing a host of films such as Minions 2, Sing 2, and The Croods 2 in the coming years. This focus on profitable films and established franchises should provide some predictability for the company’s studio revenues going forward.

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