Disney Remakes the Movie Studio

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From Iger's perspective, the beauty of controlling the rights to movies made by Spielberg, Pixar, and Marvel is that they become events in and of themselves, with lavish press coverage and Web chatter that all but guarantees a big opening weekend. "When you settle into your seat for a Marvel film, you know immediately it's going to be a fun ride," says Avi Arad, the former Marvel Studios CEO who produced Spider-Man and other films. Marketing is by far the fastest-growing expense for most studios: It can cost $50 million or more to open a major film. The prerelease buzz from a Spielberg or Marvel film could help rein in marketing costs at a studio that lost money in its most recent quarter.

If films by Disney's stable of brands become hits—and their track records are pretty good—they also will generate hefty revenues from DVDs, merchandise, and theme-park rides. Under the deal with Spielberg, Disney gets 10% of a film's revenues from its theatrical and DVD sales for distributing four to six DreamWorks films a year. It also gets first shot at the rights to sell toys, consumer products, and video games. (Theme-park rights are committed to NBC Universal.) Plus, Disney can package lesser films with the Spielberg or Marvel flicks and charge cable channels and foreign networks more to air them, says former MGM executive Sands.

No question, Iger's brand strategy will put Ross' diplomatic skills to the test. Soap bars and hand creams don't have egos or demand a cut of the profits. Spielbergs and Bruckheimers do. They also will be jockeying for attention and money. "There is only one July 4th, one Christmas," says a Hollywood veteran. "What do you tell Steven Spielberg when Disney gives the [opening] date he wants to Marvel? And what do you tell Bruckheimer when he hears that they've spent more to market a DreamWorks film than one of his?"

Clearly Iger believes the box office boost will be worth all the trouble. At a time when studios are reducing risk by making fewer movies, he is betting on household names with an established record of turning blank pages into billion-dollar franchises.

Grover is Los Angeles bureau chief for BusinessWeek.

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