minions Finance

The Profits of “Despicable Me 2”


Since the original release of Despicable Me, minions have taken the world by storm.Their eclectic, multicultural identity (best spoken by their French, Italian, English, and Spanish linguistics) isn’t a mere coincidence that the Despicable Me franchise would be an international favorite.

This universal favorite has actually become Universal Studios’ biggest cash cow. On Wednesday, August 21, 2013, NBCUniversal CEO Steve Burke announced that the most recent release, Despicable Me 2,  “is going to end up being the single most profitable film in the 100 year history of Universal Studios.” This was announced in a quarterly earnings meeting and said with high pride of Universal’s partner company, which animated the Despicable Me films, Illumination. From all of these announcements though, Mr. Burke left out the most important factor: the numbers!

Scott Mendelson of Forbes saw this coming back in July 2013. He also called the potential for this film’s success as a milestone for Universal’s partnership with Illumination among its animation competitors. Universal used this milestone as an opportunity to raise expectations of their new partnership with Legendary Films, but Universal will also need to focus on the opportunities with the Despicable Me franchise and Illumination discussed below.

Below is a chart showing the ten highest grossing Universal films. Among the data are the films’ release year and earnings grosses for domestic and foreign revenues. Grosses in bold are reflective of the majority share in domestic or foreign sales.

Movie Title

Release Year

Domestic Gross ($)

Foreign Gross ($)

Total Gross ($)

Jurassic Park

1993

 402,453,882

 578,000,000

 980,453,882

E.T.: The Extra-Terrestrial

1982

 435,110,554

 357,800,000

 792,910,554

Fast & Furious 6

2013

 238,486,620

 547,000,000

 785,486,620

Despicable Me 2

2013

 347,639,040

 435,200,000

 782,839,040

The Lost World: Jurassic Park

1997

 229,086,679

 389,552,320

 618,638,999

Despicable Me

2010

 251,513,985

 291,600,000

 543,113,985

Meet the Fockers

2004

 279,261,160

 237,381,779

 516,642,939

Bruce Almighty

2003

 242,829,261

 241,763,613

 484,592,874

Jaws

1975

 260,000,000

 210,653,000

 470,653,000

How the Grinch Stole Christmas

2000

 260,044,825

 85,096,578

 345,141,403

Source: Box Office Mojo. August, 23, 2013

As you can see, Despicable Me 2 finds itself in the fourth current position at $783 million, below Jurassic Park, E.T., and Fast & Furious 6. However, it should be noted that in less than a year, Despicable Me 2 and Fast & Furious 6 have earned revenues high enough to match those that the top two grossing films have accrued over twenty and thirty-one years, respectively. But this doesn’t adjust for inflation or take into account inflated 3-D ticket premiums. It is in this perspective that Mr. Burke phrases that Despicable Me 2is going to end up the single most profitable film.” This means that Fast & Furious 6 and Despicable Me 2 have only begun their revenue generation and will continue to generate profit as time unfolds. But why so much attention on Despicable Me 2 and not Fast & Furious 6? While revenues are exciting, profit is also a factor of costly budgets.

This chart below adds an additional analysis of profits after spending. Similarly, films’ total grosses are also displayed, but budget is deducted to assume a profit. A total profit was calculated from these top ten films to analyze these films’ share of profit among the “Top 10.”

Movie Title

Release Year

Total Gross ($)

Budget ($)

Profit ($)

Share of “Top 10 Profit”

Jurassic Park

1993

 980,453,882

 63,000,000

 917,453,882

16.42%

E.T.: The Extra-Terrestrial

1982

 792,910,554

 1,050,000

 791,860,554

14.17%

Despicable Me 2

2013

 782,839,040

 76,000,000

 706,839,040

12.65%

Fast & Furious 6

2013

 785,486,620

 160,000,000

 625,486,620

11.20%

The Lost World: Jurassic Park

1997

 618,638,999

 73,000,000

 545,638,999

9.77%

Despicable Me

2010

 543,113,985

 69,000,000

 474,113,985

8.49%

Jaws

1975

 470,653,000

 8,000,000

 462,653,000

8.28%

Meet the Fockers

2004

 516,642,939

 80,000,000

 436,642,939

7.82%

Bruce Almighty

2003

 484,592,874

 81,000,000

 403,592,874

7.22%

How the Grinch Stole Christmas

2000

 345,141,403

 123,000,000

 222,141,403

3.98%

Source: IMDB. August, 23, 2013

Here, Despicable Me 2 is shown to surpass Fast & Furious 6, earning a higher profit as a result of a greatly lower budget. Despicable Me 2 has earned a 90.29% profit margin in comparison to the 79.63% earned by Fast & Furious 6. Despicable Me 2 is also representative of 12.65% of profits earned from the top 10 films, earning $150 million over an average profit of $558 million.

Clearly, NBCUniversal is confident in the power that its minions can leverage over time. With confidence, however, must be continued effort in maintaining the power of the Despicable Me franchise. What’s available to the public are the following opportunities:

 

Sales Over Time

Despicable Me 2 is only positioned to grow over time, with sales from DVDs, consumer products and merchandise, and extensive licensing to toy and apparel designers.

 

Minions the Movie

People love minions enough for the franchise to make a film dedicated to the minions. This film may even give Despicable Me 2 a run for its money in the list of top 10 profiting films.

 

Animation Industry

Furthermore, in regards to the production of a Minions Movie, animation is slightly cheaper to produce: actors are paid less because physical acting is eliminated, a core team produces the film minimizing rotating crew, and technology used for animation is budgeted by the studio and not the film unless specialty equipment is required. This means an animated film, given a low budget, can potentially make a higher profit margin.

 

Universal Studios

NBCUniversal’s secret weapon, the theme park, is positioned to increase the franchise loyalty by creating a Despicable Me theme park ride. The company has also announced plans to increase and develop the diversity of rides to serve this franchise loyalty of its multiple film properties.

The truth lies behind the numbers. Despicable Me 2 is shown to have a strong introduction to the market, whereas continued effort in the franchise will serve the promised result of the film being the highest profiting Universal film.

What other opportunities do you see in favor of Despicable Me 2’s profiting position?

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