4.1- Star Wars vs Marvel, Cinematic Universe Wars:
how Star Wars faked it and Marvel nailed it (plus invented the GigaHit)?
You’re on Episode 4.1 from “Resurrecting Star Wars: a broken cash cow”.
A 500-hour analysis of 19 franchises with 140 movies, proving why Star Wars lost out on +$20 billion (and how Disney can fix it). See Episode List
HELLO THERE! WELCOME TO EPISODE 4.1
- Turns out Cinematic Universes are 7x more profitable than trilogies, so Star Wars tried to create one.
- Whereas Star Wars failed at it, Marvel thrived and created a new class of movie, the GigaHit. Find out how they did it!
SO FAR, WE’VE FOUND OUT:
Star Wars would take 8–20 years to reach break-even using a trilogy model (even with Stories), because trilogies are limited by nature. That’s why Star Wars needs to create a Real Cinematic Universe.
[PREVIOUS ISSUE]
WHAT SHOULD DISNEY ASK NOW?
This episode will explore and validate:
=> Why did the Star Wars new “Universe” not perform well and why did the Marvel Cinematic Universe break records?
In order to answer this question we first need to answer:
- THE 3 MOVIE RELEASE MODELS:
what are the different types of cycles a franchise can use to release movies? - THE MOVIE SERIES AND THE SUPERHIT:
why can this release model generates 2x more than a Trilogy? - THE (REAL) CINEMATIC UNIVERSE AND THE GIGAHIT:
why this model reinvents cinema and generates 7x results?
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1. THE 3 MOVIE RELEASE MODELS:
what are the different types of cycles a franchise can use to release movies?
As determined in Episode 3.2, Star Wars needed to leave behind the original Trilogy release model if it wanted to reach break-even on their $4b within a payback period of 8 years.
The challenge lead to the question, which movie release model should Star Wars evolve into?
Seeing the success of Marvel Cinematic Universe (MCU), Disney decided to replicate it. They created the Star Wars Cinematic Universe. But did they?
The problem was, they did so only in name. They did little else to replicate the structure that Marvel created, and was responsible for their success.
The question that follows is then, what types of release models are their available for movie studios, and what are the characteristics and benefits each of them have?
The 2 axis for modeling Movie Release cycles
First let’s position all 19 movie franchises upon the Movie Release Model Canvas:
The 2 main axis that define the format in which the narratives has been released are:
- Is there Narrative Open or Closed?
Does the franchise have a limited number of movies that upon final released closes the narrative? Or is the narrative ever expanding? - Is the Narrative Linear or Layered?
Does the franchise linearly follow a story-line through each consecutive movie? Or does it separate into different branches that intertwine?
By clustering them further we can see there’s 3 major types of franchise release types:
The movies included in each model are:
1) The Trilogy:
They’ve been already covered in detail in Episode 3.4.
Examples:
- Lord of the Rings
- The Hobbit
- Jurassic Park
- Men in Black
- Planet of the Apes (new)
- The Dark Knight
- Toy Story (update: transitioned into a Movie Series in 2019)
2) The Movie Series:
The storyline is either extended from a successful movie trilogy or a successful closed-loop story like a book series. The regular lifetime is 4–9 movies.
Examples analyzed:
- Transformers
- Harry Potter
- Pirates of the Caribbean
- Terminator
- Indiana Jones
- Twilight
- Hunger Games
3) The Cinematic Universe:
The storyline is either an extended successful trilogy/movie series, a linear open-loop story with no foreseeable end or a combination of movie series interlinked together. Lifetime can be as long as 56 years.
Examples analyzed:
- Marvel Cinematic Universe
- James Bond
- Fast and the Furious
- DC Universe
- Mission Impossible
Which Movie Release Model is more financially viable?
Calculating the total average revenues of the best performing release cycle models of the 20 franchises above, it can be seen how the Cinematic Universe performs much better than any of the other models, and not only because they contain more movies.
So if Star Wars evolved from the original trilogy model into another, they’d get the following improving returns:
- Movie Series:
Increased overall capacity for generating box office revenues by almost 2x. - Cinematic Universe:
Increase overall capacity for generating box office revenues by almost 7x.
Let’s look deeper into the specific characteristics that define each model and the specific benefits they bring.
2. THE MOVIE SERIES AND THE SUPERHIT:
why can this model generate 2x more than a Trilogy?
To better understand the performance of Movie Series, let’s plot the gross revenue by movie of 6 successful franchises that follow that release cycle model.
As seen below, a Movie Series will break the global maxima that Trilogies have:
When executed successfully, a Movie Series increases the franchise’s Gross Revenue by 2x because:
A- Increased utilization rate and lifetime revenue with lowered decay rate:
As additional movies are released, the lifetime revenues are extended. But more importantly, the proven source material reduces the viewer drop-off and the lower decay rate maintains the franchise profitable for longer.
B- Dampened risk of individual movie failure:
If a movie in the middle of the series doesn’t perform as well, the whole franchise doesn’t suffer as much as a trilogy and the next movie can still perform very well.
C- Leveraged production costs:
As the studio creates more films they reuse much of the costs associated with infrastructure and technology investments. Thus the return on investment increases the longer the franchise runs.
D- Compound narrative interest ending with a franchise finale SuperHit:
If the movie series has 1 continuous narrative, where a continued storyline with the same characters and world are built, the last movie in the series will generate a SuperHit; a movie that performs exceedingly better with +20% to +40% higher box office better ie. Harry Potter, Twilight.
The movie series finale draws massive attention as it closes the narrative loop. This success can be attributed to a sorts of Zeigarnik effect.
(Note: this doesn’t seem to be true for non-sequiturs narratives, ie.The Hobbit, Fantastic Beasts and Where to Find Them)
3. THE CINEMATIC UNIVERSE AND THE GIGAHIT:
why this model reinvents cinema and generates 7x results?
To better understand the performance of the Cinematic Universe, let’s plot the gross revenue by movie of 5 successful franchises that follow this release cycle model.
Opposite to the Trilogy and Movie Series that still have decay rate, the Cinematic Universe (if executed correctly) actually grows in revenues the longer it goes.
The cinematic universe acts as an open-looped and layered extension of the movies series. So it benefits from all the same advantages but strongly amplified:
- Increased utilization rate and lifetime revenue with lowered decay rate
- Dampened risk of individual movie failure
- Leveraged production costs
- Compound narrative interest ending with a movie series finale MegaHit and a cinematic universe “finale” GigaHit
But if the Movie Series and the Cinematic Universe share the same core principles, then how is the Cinematic Universe almost 4x more profitable than the Movie Series?
Interlinking several movie series with a MegaHit and finishing with a GigaHit
The real game changer that allows the cinematic universe a 7x multiplier is the compounding investment of viewer interest that builds through a continued multi-layered high quality narrative leading to a MegaHit, and then a GigaHit.
The Cinematic Universe in effect is a combination of several Movie Series interlinked together. Because of the continued compounding of the narrative, instead of a SuperHit, they experience a MegaHit, ie. a SuperHit that is significantly bigger.
Breaking down the MCU into cohorts or phases, it can been be seem that new cohorts generate increasing box office traction resulting in several movies being over $1b:
Each new MCU Phase drives significant growth in revenue. And more importantly, regardless of the increasing number of movies in each phase, the average and the median also increased significantly:
- Phase 1 to Phase 2: revenue growth of 29% and median growth of 34%.
- Phase 2 to Phase 3: revenue growth of 135% (due to more movies), but also a median growth of 35%.
The massive amount of growth can be really appreciated in the graph below.
So the driver of growth is not only the number of movies within each MCU phase, but something else is driving the overall average and median upwards with each consequent movie, helping the Cinematic Universe perform over 2.2x better than the Movie Series model and 7x better than the Trilogy Model.
The key drivers driving this growth are:
1) An open mega-narrative made of interlinked movie series
Marvel’s overarching narrative has no clear end in sight, it’s open ended. But it’s made up of movie series (episodic storylines with beginning and end) that are interlinked to continue expanding the franchise lifetime. As of today, there’s 3 distinct closed-loop movie series which Disney has named Phase 1, Phase 2 and Phase 3.
2) A MegaHit that raises the median/movie for the next phase
The payoff for the movie series is the MegaHit, a SuperHit with an even higher performance. The performance of the MegaHit is so high that it raises the median baseline performance for the next movie series, resulting in higher totals.
Each MCU phase has its own Movie Series finale that draws even more massive attention as the narrative compounds and brings not only narrative loop of that Phase to a close, but the next chapter of the open Mega-Narrative. Here the Zeigarnik effect is incredibly powerful.
3) A GigaHit that concludes the whole Mega-Narrative
Following the same principles of Movie Series such as Harry Potter, Hunger Games or Twilight, the Mega-Narrative Finale is broken down into 2 movies. So for MCU Phase 3, the MegaHit is followed by another movie. Powered by gigantic Zeigarnik effect, it generates such drawing power from spectators that it generates a never seen before kind of movie, the GigaHit.
The performance of these special movies generated by the compounding of narrative is gigantic:
- The SuperHit:
Grossed between $900m — $1.5b, performing between 21%-28% higher than the average movie in the Movie Series that had grossed between $700m and $1.2b. - The MegaHit:
Grossed between $1.4b — $2b, performing between 75%-212% higher than the average movie in the Movie Series that had grossed between $549m and $931m. - The GigaHit:
Grossed between $2.7b, performing between 200% higher than the average movie in the Movie Series that had grossed between $549m and $931m.
The following graph illustrates the gigantic difference in performance generated between the SuperHit, the MegaHit and the GigaHit.
CONCLUSION
To increase the global system performance and reach break-even with The Sequels, Star Wars had to leave the Trilogy release cycle model behind.
With the option of choosing a Movie Series or a Cinematic Universe, they chose to create the latter as it generates 7x vs the Trilogy model.
The problem is they didn’t really design a Cinematic Universe, although they called it one. They just shortened the years in between each trilogy movie from 3 years to 2 years, and introduced disconnected stories in-between.
A real cinematic universe display an open-looped mega narrative that’s made of several interlinking Movie Series that are connected by a conclusive movie that brings all narratives together in a widely successful MegaHit ranging from $1.5 to $2 billion.
In similar fashion each interlinked Movie Series has a conclusion, the overall mega narrative has a final movie that brings the whole Saga to a close, the GigaHit. A movie that performs 4x what regular movies do.
This unique phenomenon invented by Marvel, it has broken all records to become one of the highest grossing movie of all time with $2.7 billion, inventing a new way of creating hits never seen before.
The design of Marvel’s universe not only allows them to drastically increase more revenues by releasing more quality movies, they also dampen the risk of a potential failed movie and leverage production costs.
So what else did the MCU do exactly right to achieve such results? Was it just luck? Definitely not, the framework was carefully designed for success.
All in the next issue!
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[NEXT ISSUE]
4.2- Designing a Winning Cinematic Universe:
How Marvel adapted Lucas original narrative model and destroyed Star Wars?
