{"id":36472,"date":"2013-02-26T10:54:42","date_gmt":"2013-02-26T15:54:42","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=36472"},"modified":"2013-02-26T10:54:42","modified_gmt":"2013-02-26T15:54:42","slug":"investing-in-oz-2","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/02\/26\/investing-in-oz-2\/","title":{"rendered":"Investing in Oz"},"content":{"rendered":"

By The Sizemore Letter<\/u><\/a> <\/p>\n

In the world of finance, \u201cInvesting in Oz\u201d is usually taken to mean investing in Australia.\u00a0 But with the recent interest in the 1939 classic movie The Wizard of Oz<\/i>, the phrase has taken on a whole new meaning.<\/p>\n

In 2013, Oz<\/i> is back in a big way.\u00a0 Walt Disney Pictures, a division of the Walt Disney Company (NYSE:$<\/span>DIS<\/a>)<\/b>, is set to release Oz the Great and Powerful<\/i> early next month.\u00a0 The movie\u2014which had a $200 million budget\u2014is a prequel to the original Wizard of Oz<\/i> and tells the story of how the Wizard, played by James Franco, originally got to Oz.\u00a0 The Wicked Witches of the East and West are, respectively, played by Rachel Weisz and Mila Kunis.<\/p>\n

But the Disney production is not the only game in town.\u00a0 Summertime Entertainment, which is privately held, is producing a $60 million animated telling of the Oz story with the working title Dorothy of Oz<\/i><\/a>.<\/i><\/strong><\/p>\n

\"Dorothy\"<\/a><\/p>\n

Dorothy Gale, voiced by Lea Michele<\/p>\n<\/div>\n

While the live-action Disney movie is getting more attention at the moment due to its imminent release, Dorothy of Oz<\/i> may end up being the larger money maker.<\/p>\n

The producers put together a cast that includes Glee<\/i> star Lea Michele as Dorothy, Dan Aykroyd as the Scarecrow, Kelsey Grammer as the Tin Man and Jim Belushi as the Lion.<\/p>\n

Smash\u2019s<\/i> Megan Hilty plays the China Princess, a new character not seen in the original Wizard of Oz<\/i>, and Martin Short, Oliver Platt and Patrick Stewart also have prominent roles as new characters.\u00a0 Much of the soundtrack is being recorded by singer-songwriter Bryan Adams.<\/p>\n

Paying actors to voice an animated character is cheaper and more time efficient than paying them to stand in front of a camera.\u00a0 But apart from having a production budget that is one fourth the size of Oz the Great and Powerful<\/i>\u2014and thus a much lower threshold for profitability\u2014Dorothy of Oz<\/i> could easily end up out-grossing its live-action rival.\u00a0 Animated movies perform almost unbelievably well at the box office.<\/p>\n

As NPR reported<\/a> last year, there have been 70 computer-animated movies produced since the launch of Toy Story<\/i> in 1995, and virtually all of them have grossed more than $100 million at the box office.\u00a0 Animated films are also uniquely well suited for sequels, which often perform better than the originals. \u00a0And Dorothy<\/i>, by the way, is the first of a three-part trilogy.<\/p>\n

To throw out a few examples you might recognize, the Shrek<\/i> franchise has taken in more than $3.5 billion, the Ice Age<\/i> franchise $2.8 billion and the Toy Story<\/i> and Madagascar<\/i> franchises $1.9 billion each.<\/p>\n

To put this in perspective, the entire Star Wars<\/i> franchise, spanning six major movies over 35 years, has grossed only $4.3 billion.\u00a0 The James Bond<\/i> franchise, which has spanned 23 films over 50 years and six actors playing the starring role, has grossed $6.1 billion.<\/p>\n

The children\u2019s movie industry also has excellent demographics in front of it.\u00a0 2007 was the largest birth year in U.S. history, even larger than the years of the post-World-War-II baby boom.\u00a0 Those children born in 2007 are now 5-6 years old and finally old enough to sit through a movie.\u00a0 They are also plenty old enough to nag their parents to take them.<\/p>\n

But this is just the tip of the iceberg in the business of animation.\u00a0 Though shrinking due to piracy and streaming services, DVD sales generally make up a large percentage of the total gross for a movie studio, and animated films tend to do particularly well in this area.\u00a0 Revenues from DVD sales are often higher than revenues from the box office for animated movies.\u00a0 Kids often re-watch their favorite movies multiple times per day, and a $15 DVD is often the cheapest babysitter a parent will find for their kids.<\/p>\n

And this is nothing compared to merchandising.\u00a0 If past animated films are any indication Dorothy of Oz<\/i> has the potential to generate toy and merchandise revenues many multiples larger than its box office sales.<\/p>\n

For example, five years after the 2006 release of Disney\u2019s Cars<\/i>, the movie had grossed $462 million<\/a> at the box office.\u00a0 But it had generated $8 billion in retail merchandise sales\u2014seventeen times the amount it earned in ticket sales<\/i>\u2014and this was before interest in the franchise was rekindled by the sequel, Cars 2<\/i>. New merchandise sales put the total well in excess of $10 billion\u2026and counting.<\/p>\n

Given the number of Lightning McQueen and Mater toys rolling around my house and the closet full of Cars<\/i>-themed shirts and jackets in my three-year-old son\u2019s room, I feel as though I have spent that much singlehandedly.\u00a0 And most American parents and grandparents feel my pain.\u00a0 (We didn\u2019t stop with Cars<\/i>, by the way. After Cars<\/i>, my son discovered Toy Story<\/i>.\u00a0 We now own at least four Buzz Lightyear action figures, among many, many others\u2026)<\/p>\n

The Cars<\/i> franchise was wildly successful, and not every animated movie can be expected to generate those kinds of returns. \u00a0As a case in point, consider the 2007 hit Ratatouille. \u00a0<\/i>Though it was popular at the box office, kids weren\u2019t exactly lining up to buy rat dolls after watching it.<\/p>\n

Still, The Wizard of Oz<\/i> is not Ratatouille.<\/i> Including its original books, it\u2019s been an American cultural icon for over a century, and its characters are highly marketable. \u00a0Dorothy<\/i> stands to profit handsomely from this.\u00a0 You don\u2019t need to look behind the curtain to see the potential for a boom in all things Oz.<\/p>\n

Note: To watch a preview of the movie and to get an early look at the virtual world planned, go to dorothyofoz.com<\/a><\/strong>.<\/em><\/p>\n

SUBSCRIBE\u00a0<\/a><\/strong>to\u00a0Sizemore Insights<\/em>\u00a0via e-mail today.<\/p>\n

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