New Star Wars Episodes Coming in 3D from Disney

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By Chris Chinnock

Business & Strategy – Yes, we got the headline right – from Disney. That’s because the Walt Disney Company has now agreed to acquire Lucasfilm Ltd. for $4.05 billion and create three new Star Wars episodes (7, 8 and 9). And they will undoubtedly be in 3D. The deal was announced October 30. Episode 7 will be released in 2015.

Under the deal, Disney will acquire ownership of Lucasfilm including its massively popular Star Wars franchise and its operating businesses in live action film production, consumer products, animation, visual effects, and audio post production. Disney will also acquire the substantial portfolio of cutting-edge entertainment technologies as well as the operating units Lucasfilm Ltd., LucasArts (video games), Industrial Light & Magic (special effects) and Skywalker Sound.

The acquisition combines two highly compatible family entertainment brands, and strengthens the long-standing beneficial relationship between them that already includes successful integration of Star Wars content into Disney theme parks in Anaheim, Orlando, Paris and Tokyo.

Lucasfilm joins a growing list of acquisitions that Disney has made in recent years including Pixar and Marvel.

In June, Star Wars director and Lucasfilm owner George Lucas announced his plans to retire, and named producer Kathleen Kennedy as chief executive of Lucasfilm, which he wholly owns. Once the Disney acquisition is complete, Kennedy will become president of Disney’s Lucasfilm unit and report to Walt Disney Studios Chairman Alan Horn.

The jewel in the crown of this acquisition is clearly the Star Wars franchise. Now, under Disney leadership, there is the opportunity to convert the remaining 5 episodes to 3D and produce the three new ones starting in 2015. Walt Disney chairman and CEO Robert Iger announced in a shareholder conference call that the studio also intending to release Episode 8 and Episode 9. “Our longterm plan is to release a new Star Wars feature film every two to three years,” he added, noting that the deal came with “an extensive and detailed treatment for the next three movies.”

While Star Wars is already a part of Disney’s theme parks, it is not unreasonable to expect greater use of the Lucasfilm assets across Disney’s theme parks, consumer products and digital platforms.

According to an industry source, the first six episodes are Lucasfilm assets, except for “New Hope” (episode 4) which Fox owned a small percentage of. However, contracts typically exist which give the studios “release rights” for the films in various markets. For example, Fox had the rights to release Star Wars on DVD or Blu-ray, but for pay TV, cable and the like, Lucasfilm owned all rights. This translates into allowing a studio to do the heavy lifting, marketing, promotions, negotiations with optical disc plants and distribution into retail — an area where Lucasfilm never built up the infrastructure.

Anything owned by Lucasfilm appears to now revert to Disney, including the rights to negotiate deals to close any remaining contracts with the other studios. For Indiana Jones, the ownership by Paramount is a little different, but again any ownership percentage in the movies would be Disney property as part of the deal.

Lucasfilm also owns properties like “American Graffiti”, “Willow” and “Howard the Duck.”

“I’ve always believed that ‘Star Wars’ could live beyond me, and I thought it was important to set up the transition during my lifetime,” George Lucas said in a statement.  “Star Wars will certainly live on and flourish for many generations to come.”

Disney is funding approximately half of the purchase price with cash and the rest by issuing 40 million shares of stock. The Boards of Directors of Disney and Lucasfilm have approved the transaction, which is subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act, certain non-United States merger control regulations, and other customary closing conditions.

You can watch Iger and Lucas’ official announcement of their deal below: