Instant Analysis: Sony's "Angry Birds" Is a Surprise Hit

By Markets Fool.com

Sony Pictures' Angry Birds recently soared to the top of the U.S. box office, raking in $39 million during its opening weekend. As of May 25, that total has risen to $46 million, and its worldwide box office revenue has hit $158 million -- more than double its production budget of $73 million.

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Image source: Sony.

That impressive return was enough to knock out Disney's Captain America 3: Civil War, which topped the U.S. box office during the previous two weeks. The film probably won't face much competition until Disney releases Finding Dory on June 17. Angry Birds' box office performance will also likely guarantee a sequel and launch a lucrative new film franchise for Sony.

What does this mean for Sony?

Last year, Sony's film revenue rose7% to $8.3 billion, but operating income plunged 34% to $341 million. That bottom line decline was mainly caused by a drop in home entertainment revenues, weaker-than-expected theatrical performance from The Walk and The Brothers Grimsby, and tough currency headwinds. Those declines offset robust box office results from Hotel Transylvania 2 and Spectre. The Pictures business accounted for 12% of Sony's 2015 sales and 13% of its operating income.

For fiscal 2016, Sonyexpects revenue at its Pictures division to rise nearly 8% and for operating income to improve 12%. New films like the Ghostbusters reboot and the Magnificent Seven remake, along with new franchise entries like Inferno, Resident Evil: The Final Chapter, and Underworld: Blood Wars are expected to drive the unit's growth until the fiscal year ends next March.

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Sony has generally lagged behind Disney and other film studios when it comes to animation, but Angry Birds could help expand its slate of animated franchises. In August, Sony will take a bigger chance on R-rated animated comedies with Sausage Party.

Should investors care?

Scoring a box office success on a new animated film is a definite victory for Sony, but investors shouldn't overestimate its impact. Sony still has nearly 20 more films to release this year, and any of them could bomb or become a blockbuster. Sony's future growth also depends on a lot of other moving parts besides its movie business. Therefore, Angry Birds' success is good news, but it probably won't move the needle for Sony anytime soon.

The article Instant Analysis: Sony's "Angry Birds" Is a Surprise Hit originally appeared on Fool.com.

Leo Sun owns shares of Walt Disney. The Motley Fool owns shares of and recommends Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.