Sunday, January 10, 2016

Derived Demand in the Star Wars Economy


Star Wars, The Force Awakens, has its own outsized economic effect. As of today, the Disney movie has exceeded $1.7 billion in global box-office revenue. It's currently the third-highest-grossing movie of all time. And the film hasn't been in theaters for a month yet. Even in China, where the older Star Wars movies are not pop culture icons, this new movie debuted with record revenues.

Of course, demand for movie merchandise is generally based, to a large extent, on the movie's popularity. In the case of Star Wars, merchandise tie-ins may very well have their own ultrahigh trajectory. Why? Because Star Wars is a long-established franchise with two generations (or more) of fans. It's become an evergreen franchise in most markets, independent of any new movies. Months before the new movie opened, Force Friday brought adults and children into toy stores for Star Wars merchandise, old and new, even when they were not sure who the new characters actually were.

Current day fans are incredibly vocal on social media about their likes and dislikes. On opening weekend, fans tweeted nearly 5 million times about the movie. Many blogged and tweeted about the news that Rey, the new female lead played by Daisy Ridley, was left out of the Hasbro Monopoly game (an error being corrected). Search for the hashtag WheresRey and you will see the comments. Derived demand is a force to be reckoned with in the Star Wars economy.

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