In this segment of the Market Foolery podcast, host Chris Hill, Million Dollar Portfolio's Jason Moser, and Stock Advisor Canada's Taylor Muckerman parse the ticket sales numbers from last weekend, when "Coco" -- a clever Disney (NYSE: DIS) film about a young man who travels to the Land of the Dead to figure out why his family forbids its members from becoming musicians -- crushed all others at the box office. But even with that win, and the huge global numbers Justice League has racked up, the year is still looking tenuous for theatres and for Hollywood.
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A full transcript follows the video.
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This video was recorded on Nov. 27, 2017.
Chris Hill: Let's move on to some movies. Coco won the box-office weekend, displacing Justice League. Did you actually see this over the weekend?
Jason Moser: No, I haven't seen it yet. Read a lot of good things.
Hill: Well, plenty of people did, and I was struck by two things. One, that it took in just north of $70 million domestically, and two, that U.S. box office really needs to have one hell of a December if it's going to top last year's, because right now, the overall box office for the year is lagging -- and I think we talked about this a few weeks back. I don't remember what was the film -- maybe it was in the wake of Thor: Ragnarok, which had a really good opening weekend. But at that point in time, the movie theaters were still looking toward the other big blockbusters to come out, including Coco, Justice League, and of course the Star Wars movie coming in December. They really needed all of them to be huge hits. And it's amazing to say this, but Justice League has taken in nearly half a billion dollars worldwide at the box office, and it's still considered to be a disappointment.
Moser: Coco. Yeah, that's chimp's OK. So I think the interesting thing to me about Coco, and really any Disney movie, No. 1, it seems like, from what I'm reading here, this is one of the top four or five Thanksgiving releases of all time. That's amazing. The part that's really amazing is the list of the other three or four are also all Disney movies. So Disney has got this figured out. We're like a broken record. Every holiday season, it's the same thing, Disney knows what they're doing. They've timed this time.
And you think about what the subject matter is, what is it, Dia de los Muertos, that's the Day of the Dead. You wouldn't think that's necessarily the most romantic, cheery, 'tis the season to be dead? No, that's not how it works. But apparently, this thing reeled in a lot. And everything I saw on Twitter -- and it wasn't just kids; it was adults that I saw were seeing this movie that were just fawning all over it.
Hill: Adults without children.
Moser: Yeah. And adults with children. But that taps into an interesting point here. When you think about the population of the United States, it's something like 310 million. About 25% of that population are kids, 18 and younger. So maybe 20% of that is your real target audience for a movie like this. But that's 20%, and then you add in all the parents that are taking their kids to it, and then you add in the parents without kids, because they want to see a feel-good movie, and Disney and Pixar know what they're doing.
This is why, season in and season out, we can sit here and question the ESPN strategy all day long, but this is an example of why you can't count Disney out. We're talking about how we need more compelling movies for this to be a compelling season. Well, interestingly enough, I think Star Wars ought to be able to take care of that in December, and lo and behold, that's a Disney movie as well. So I think that more and more, we talk about a lot of the headwinds that cinema faces, and I do think it's not a very pretty picture for the movie theaters themselves. But I think when you are a content producer and you know what you're doing, and you just continue to execute year in and year out, as Disney does, this is why you can't count Disney out, because they continue to do this year in and year out.
And while the movie isn't their bread and butter, that's 8%-10% of operating income at the end of the year, but what they do with that content, the chain reaction that it starts, and it goes on for years. There was a Frozen short movie that was integrated into this release as well, which just keeps people coming back for more. So nothing surprising here. I haven't been to see it yet, but I imagine we'll take care of that in the next week or so.
Taylor Muckerman: As a consumer, I'm waiting for this whole cycle of sequels and sequel-sequels and sequel-sequel-sequels and comic books into movies to just run its course. I'm tired of it. As an investor, it works. But as a consumer, give me something different.
Hill: Well, and I think that's part of the advantage that Pixar has, in terms of their ability to toggle between the sequels that are safer bets in terms of box office --
Muckerman: Yeah. I mean, you have to have those.
Hill: So just in terms of Disney Pixar, 2017 is the year of Coco. It's also the year of Cars 3. So if you're a part of the brass, if you're Bob Iger, you're delighted that this original surprising story, as you said, Jason, sort of the surprising topic for a family movie, but you're probably delighted with this, but you're also pretty happy that this film's release is sandwiched between Cars 3 and Incredibles 2, which comes out next year.
Muckerman: Coco 2, November 2018.
Moser: I would imagine there's a character or two in this movie that they would be able to establish a series or spin off something from. I don't know if any of you saw the movie The Book of Life.
Moser: That was on the same subject. It was very, very well done. I really enjoyed the movie. I think it was Sony that did that. I'm not sure who did it. I don't know, but I don't believe it was Disney. As a matter of fact, I'm pretty certain it wasn't Disney.
Hill: It was not.
Moser: So I think it's a good example of, perhaps, looking at something that was done before and recognizing, while it sounds a little bit odd, it can really make for a compelling and heartwarming story, as it apparently did. But now, you look at Moana, you look at Frozen, you look at Coco, just through those three movies alone, we probably have another five years of sitting and talking about the sequels that all do so well.
We've seen some recent hubbub hear that there's a potential CEO replacement for Bob Iger. I know they're considering, at least, the gentleman who's been in charge of the parks, Bob Chapek. He's probably putting this guy in a pretty decent position to succeed if he's leaving with an arsenal like that. Right? I mean, all you have to do is get in there and execute and look at what's been done in the past and keep that ball rolling.
Again, this is the reason why you don't count Disney out of anything. This is the benefit of having that diverse model where you make money a bunch of different ways. Even though ESPN is your big money maker, that will become less and less the case, and they're showing that they can find other ways to fill the gap.
Hill: One thing before we move on, back in March, when I was in Austin, Texas, for South by Southwest, I got the chance to sit down with Steve May, who's the chief technology officer at Disney Pixar, and that was an episode of Market Foolery back in March 14. I will post that again on our Twitter feed and our Facebook group, because one of the things we talked about at the very end was Coco, and the work they did. It was a great conversation, because it's just fascinating to learn how tech departments work with directors to tell great stories. I'll post that again.
Muckerman: Is he in charge of movie tech? Or park tech as well? Because that new Star Wars hotel that's going to be totally immersive, I wasn't sure.
Hill: One of the things that we talked about was -- he's at Pixar, he's been at Pixar for a long time, so he's the chief technology at Pixar. But one of the things we talked about was how Disney has acquired all these studios so that he's able to connect with the CTOs of other Disney studios as well. So his counterpart at Marvel, his counterpart at Disney Animation, Buena Vista -- I think Buena Vista is still a stand-alone studio. Anyway, he's able to connect with all of them, whereas if it was from a different company, you have to sign nondisclosure, there's only so much you can share, that kind of thing. So they can all get together and share best practices in a way that they couldn't if they were working at different companies.
Chris Hill owns shares of Walt Disney. Jason Moser owns shares of Walt Disney. Taylor Muckerman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Walt Disney. The Motley Fool has a disclosure policy.