Disney's Frozen Is Still Young

Disney's Frozen Is Still Young

Source: http://movies.disney.com/frozen/games

Disney's Frozen has been a tremendous success, but that's old news, right? Wrong.

The big news is that Frozen recently surpassed $1 billion at the worldwide box office, and that it won two Oscars: Best Animated Feature Film and Best Original Song. While those are impressive stats, Frozen's success is just beginning, which means the potential for astronomical future profits for Disney.

An interesting trend
No past trend is guaranteed to repeat itself, but looking at historical trends is one of the best ways to determine the odds of future success or failure. Disney plans on making a sequel to Frozen. Given the original's extraordinary success, initial demand for the sequel is likely to be high. However, in order to deliver sustainable profits at the box office and in-home, the sequel must deliver high quality.

Disney has already stated that it won't rush into anything, indicating that it wants to get the sequel right. This is a positive sign. Frozen could easily go from a hit movie to an enormously successful franchise that will lead to several movies, massive merchandising opportunities, and future theme-park attractions. As far as movies go, there's a certain trend that tends to take place for animated movie franchises, and this trend is good news for Disney as well as Comcast .

Comcast's Universal Studios scored a big hit with Despicable Me. The original grossed $543,113,985 in worldwide box-office sales. Impressive, but nothing compared to the sequel, which amassed $970,761,885 in worldwide box-office sales. The third installment, rumored to be titled Minions, is set to be released on June 30, 2017. Since the third installment tends to be the peak for box-office sales for animated movie franchises, future potential is still high.

In regards to that trend, consider Ice Age's (20th Century Fox) performance at the box office. The original grossed $383,257,136 at the worldwide box office. Ice Age: The Meltdown grossed $655,388,158. Ice Age: Dawn of the Dinosaurs grossed $886,686,817. Ice Age: Continental Drift did $877,244,782. Notice the slight decline for the fourth installment.

DreamWorks Animation's Shrek saw the same trend. The original grossed $484,409,218 at the worldwide box office. Shrek 2 grossed $919,838,758. Shrek the Third grossed $798,958,162. Shrek Forever After grossed $752,600,867. Once again, notice the decline in box-office sales for the fourth installment. Fortunately for DreamWorks Animation, How to Train Your Dragon 2 will be released on June 13, 2014 and is still likely to be on the upswing. Considering that the original grossed $494,878,759 at the worldwide box office and sequels tend to perform much better, potential is high.

Future potential
If the original Frozen did $1 billion at the worldwide box office and animated sequels tend to perform better than the original, then the potential is very high for Disney. Also consider that recently, the third installment has been the peak, giving Disney even further profit potential.

Even if the sequel and a potential third movie don't meet expectations, it's already a near guarantee that Disney will make a strong merchandising play based on Frozen characters. Furthermore, the brand will be strengthened by a future Broadway show. If Frozen can be as successful as The Lion King on Broadway, then it will be a home run. Frozen's musical aspect gives it a chance to even outshine The Lion King on Broadway.

Other factors to consider for Frozen's future potential: video-on-demand, streaming, yet to be released in Japan.

Successful companies know how to brand well, and not many companies are better at this than Disney. Once it has a winner, it will maximize that brand's potential. Investors have an opportunity to go along for the ride.

The Foolish takeaway
Frozen grossed north of $1 billion at the worldwide box office, but that might just be the beginning. Given the recent trend of animated film franchises peaking at their third installment, there's a lot more room to run. Also consider merchandising, in-home entertainment, Broadway, and Disney's ability to maximize a brand's potential. Please do your own research prior to making any investment decisions.

Will the entertainment king also win in this arena?
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The article Disney's Frozen Is Still Young originally appeared on Fool.com.

Dan Moskowitz has no position in any stocks mentioned. The Motley Fool recommends DreamWorks Animation and Walt Disney. The Motley Fool owns shares of 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.

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