When The Walt Disney Company (NYSE: DIS) acquired Lucasfilm in 2012 for a whopping $4 billion, neither investors nor diehard fans Star Wars could have predicted just how well the company would succeed in breathing new life into the then 35-year-old franchise. The last chapter in the space opera was released in 2005 to maudlin reviews, and none of the prequel installments were as well received as the originals. Ardent followers pilloried the second trilogy, leaving many to believe the best was in the rearview mirror for the series.
The debut of Star Wars: The Force Awakens in 2015 put those fears to rest. The film generated more than $2 billion in ticket sales, placing it third on the list of all-time worldwide box office, behind only Avatar and Titanic.
Continue Reading Below
The latest installment, Star Wars: The Last Jedi, has stirred controversy among fans and critics alike, with many viewing the latest chapter as a dismal failure. I disagree and believe the truth is much more nuanced.
Everybody likes a good story?
Part of the controversy surrounding Star Wars: The Last Jedi is the seeming disconnect between critics and movie-goers. The movie met with widespread critical acclaim and achieved an "A" grade from CinemaScore, the same ranking received by predecessors Star Wars: The Force Awakens and Rogue One: A Star Wars Story. The film garnered a 90% critic's score on aggregation site Rotten Tomatoes, though the audience rating on the same site gave the production a dismal score, currently at 49%. What caused the gaping disparity?
A report by Quartz examined assertions made by a disgruntled fan who claimed to have used bots to post negative reviews, essentially gaming the system to bring the movie's audience score down, though some have disputed that assertion.
Others have claimed the disparity was inevitable at some point. The movie is a fan favorite in a realm where expectations can sometimes trump movie quality.
It is also important to note that while Star Wars: The Empire Strikes Back is now universally regarded as the best movie in the canon, when it first debuted in 1980, it was as divisive as The Last Jedi is today. The movie was derided at the time, as many fans disparaged it as an unacceptable sequel, and numerous critics climbed onboard.
The numbers tell the tale
Consumers tend to vote with their wallets, and perhaps the best indicator may be the box office results themselves. Star Wars: The Last Jedi became one of those rarified movies to breech more than $1 billion in ticket sales, one of only 32 movies to achieve that distinction thus far. It currently ranks No. 12 in terms of worldwide gross, generating over $1.2 billion in box office thus far -- less than a month after the movie's release. We are still weeks (or perhaps months) away from knowing the final tally, but the movie is already a success in terms of box office receipts.
Only time will tell. History will judge whether the latest installment in the Star Wars saga is a worthy chapter to its predecessor. The important takeaway for investors, however, is that it continues the streak of winning fare generated by Disney's various studios, which shouldn't be underestimated.
Disney's studio entertainment division is becoming an increasingly important component of the company's financial success. For the fiscal year that ended on September 30, 2017, the studio's segment contributed 16% of Disney's annual operating income, compared to just 7% five years earlier.
For Disney investors, this movie is an unqualified smash hit.
Find out why Walt Disney is one of the 10 best stocks to buy now
Motley Fool co-founders Tom and David Gardner have spent more than a decade beating the market. (In fact, the newsletter they run, Motley Fool Stock Advisor, has tripled the market!*)
Tom and David just revealed their ten top stock picks for investors to buy right now. Walt Disney is on the list -- but there are nine others you may be overlooking.
*Stock Advisor returns as of January 2, 2018
Danny Vena owns shares of Walt Disney and has the following options: long January 2018 $80 calls on Walt Disney. The Motley Fool owns shares of and recommends Walt Disney. The Motley Fool has a disclosure policy.