Star Wars Part II: How ‘multi-epic’ storytelling is reshaping franchise distribution
An already-cult armour, yet superbly revisited. Sandy, minimalist imagery embellished with first-class effects and dazzling explosions. A surprising alliance between a taciturn bounty hunter and an endearing orphan (The Child). The buzzing Star Wars series The Mandalorian, launched just over a year ago, already enjoys its very own mythology, both connected to and separate from that of its parent franchise.
Following the release of Season 2 in early November on Disney+, streaming guide Reelgood reported a “watch” market share of 5.7% for the opening weekend; the third-highest figure ever recorded (only Amazon’s The Boys Season 2 and Netflix’s Stranger Things Season 3 performed better). Over and above its audience and cultural success, The Mandalorian is a captivating subject for analysis, perfectly embodying the novel narrative and distribution models gradually being adopted by the world’s biggest media franchises. Let’s explore.
- Read below ➔ Star Wars Part II: How “multi-epic” storytelling is reshaping franchise distribution
- Read also➔ Star Wars Part I: How “multi-epic” storytelling is saving the galaxy
The platform to power the IP; the IP to power the platform
In Part I, I dissected how The Mandalorian — boosted by the launch of Disney+ — is enabling a vital model shift for the Star Wars franchise (from “multiplatform” to “multi-epic” storytelling). But if the birth of Disney+ might well be the rebirth of Star Wars, the franchise is, in return, significantly powering the platform.
The world’s biggest entertainment company has triggered a mighty virtuous cycle. In the Streaming Wars era (Netflix vs. Amazon Prime Video vs. Disney+ vs. Apple TV+ vs. HBO Max, plus the forthcoming launches of Paramount+ and Discovery+ etc.), coupled with the attention economy (blurring the lines between entertainment sectors; Fortnite as a direct substitute/competitor to SVOD), there is simply nothing like premium, highly-recognizable IPs.
According to Parrot Analytics, The Clone Wars and The Mandalorian are the most coveted original digital titles in the US (May 2020). In 2017, Amazon battled with Netflix to acquire the rights to produce a five-season show set in Middle Earth (Lord of the Rings’ universe). The total deal value, estimated at USD 250 million, nearly matches the budget of Peter Jackson’s three-movie saga. In the same vein, it was recently rumoured that Apple was willing to spend around USD 400 million to acquire the exclusive distribution rights for No Time to Die, the next James Bond movie (the attempt was in vain, though).
Observing the landscape taking shape, the crux of the Streaming Wars seems to be nothing more than the aggregation of premium IP. The Streaming Wars might rather be the IP Wars, in fact. And, in the underlying battleground, Disney+ appears to be more than well-armed. The Mandalorian may be the most expensive show ever, but both its tangible and intangible values are tremendous. Analytics company ANTENNA reported that, during Season 2’s opening weekend, Disney+ recorded 3.1 times more sign-ups than average.
The bottom line is that Netflix is simply not supercharged with IPs, while Disney+ is
So, are watchers loyal to Netflix, HBO Max, or Disney+? Not sure. Or at least, not yet. Are subscribers loyal to the universe and heroes of Stranger Things, Game of Thrones, and Star Wars? Indisputably. Comparatively, people go to theaters to watch a Fast & Furious movie, rather than a Universal movie — most of them are not even aware of the association. This basically explains Disney+’s massive subscriber growth which, in just 12 months, converted 86.8 million subscribers (!). Netflix’s growth rate for the same period is about 75% lower, despite having released more shows and, overall, benefiting from a significantly broader content library. The bottom line is that Netflix is simply not supercharged with IPs ( which its CEO Reed Hastings seems to be willing to remedy, favoring title impact over title count), while Disney+ is .
Last week on Disney Investor Day, analysts —who were waiting for Disney+ to announce its 2021 programming — were not disappointed. The entertainment giant publicized the launch of nearly 20 original digital titles, half of which were dedicated to the Star Wars universe (e.g. Season 3 of The Mandalorian and other series of the same budget profile such as Ahsoka and Kenobi). To feed its streaming plans, Disney indicated that it has earmarked a budget of 8 to 9 billion dollars per year for Disney+. The age of “multi-epic” storytelling is well underway.
If Disney seems to have been the first to exploit a direct-to-consumer (DTC) offering driven by “epic” content – although mostly series– two major phenomena are pushing the model to the fullest extent. The first (macro) is the COVID-19 pandemic and its monumental impact on media consumption habits (acceleration of “cord cutting”) and cinema exhibition. The second (micro) is the recent shocking announcement by AT&T/Warner Bros Pictures that its 17 blockbusters in 2021 will also, alongside theatrical releases, debut on streaming service HBO Max (yes, on the very same day!).
With such an unprecedented move, HBO Max, which so far has struggled to carve out its value proposition in the fierce SVOD market (38 million subscribers only; not even half that of Disney+), is questioning what everyone thought Hollywood was all about. HBO Max subscribers will have the luxury of choosing between going to the cinema or watching new movies from home — at no extra cost, and in 4K. The dazzling line-up is led by Wonder Woman 1984 (released this Christmas), and includes all DC and other anticipated splashy Warner hits (e.g. Matrix 4).
Beyond the countless side issues related to HBO’s profoundly disruptive approach (e.g. long-term fate of cinemas, backlash of talents and profit participants), “multi-epic” is seemingly transforming the paradigm on all fronts.
Breaking up Hollywood to rebuild media distribution
Recently, Disney reported an 82% decrease in its quarterly operating income, mainly as a result of COVID-19’s impact on its theme park division. For the entertainment giant, the only bright spot is DTC streaming, with Disney+ leading the way (see above). Recently, Disney announced the reorganization of its broad media, entertainment, and studio arms to put greater emphasis on its DTC business. Accompanied by several layoff announcements, the restructuring of its operating model logically follows the company’s strategy shift.
In a nutshell, Disney is removing content production from distribution to enable a more dedicated set up, where creators would produce and distributors would market. This sought-after flexibility is nothing less than the enabler of “multi-epic” storytelling, as outlined in Part I. Henry Jenkins recommended many years ago: “one must be able to break, dislocate, unhinge it so that one can remember only parts of it, irrespective of their original relationship to the whole.” Studios are now heading down this path. Earlier this year, NBCUniversal also announced the consolidation of its business roles under one executive, and its content ones under another.
Beyond orchestrating an overall narrative and defining content/format fit for every sub-story, studios can’t rely on pre-defined distribution playbooks anymore.
It needs to be acknowledged that not only do both activities require significantly different expertise, but also that complexity within each area is growing exponentially.
Beyond orchestrating an overall narrative and defining content/format fit for every sub-story (Part I), studios can’t rely on pre-defined distribution playbooks anymore. Not long ago, blockbuster were commercially activated in a very standardized way, which included teasing, theatrical pre-/post-launch campaigning (“prints and advertising”), box office revenue share (with licensed theaters), and retail distribution (content and merch). At each stage, established best practices were only refined incrementally alongside consumption behaviors and various small-scale opportunities. Same for TV series.
Entering the “multi-epic” era, the distribution variables are overwhelming:
- Is the debut theatrical or digital? Hybrid?
- If digital, is the movie/series distributed through an owned-and-operated platform (DTC), or rather licensed (B2B)?
- Beyond the content itself, how is the platform carrying it, in turn, distributed?
- Is the platform bundled with a linear cable TV network? Or unbundled (pure OTT)?
- Is the platform available through major connected TV and vMVPD platforms?
The more building blocks, the more shapes.
For instance, the forthcoming Wonder Woman 1984 will be available not only in movie theaters (B2B) and HBO Max proprietary app (DTC), but also through connected TV platforms such as Apple TV, Amazon Fire, AT&T TV, Chromecast Ultra, Android TV, Xbox, PlayStation, etc. (B2BTC). On top of these, Warner is trying hard to conclude a crucial distribution deal with vMPVD’s Roku, which has a strong penetration rate in US households (46 million accounts).
Despite these efforts, the current market does not (yet) allow the monetization of a $200 million blockbuster without the financial boost of theatrical windows. Thus, Warner is the guinea pig for the rest of the entertainment industry, sacrificing colossal box office revenues to lay the foundation stones for its long-term distribution strategy. And along the way, it’s trying to identify what its revenue model could be.
The complex, uncertain journey of “multi-epic” monetization
If the distribution models in the “multi-epic” era are numerous, so too are the related monetization levers. So far, the following models have been explored:
- B2B/theatrical distribution: box office (around 50% retained by theaters — e.g. Warner’s Tenet)
- DTC/B2BTC digital distribution: pay-per-view only, pay-per-view plus subscription-based (e.g. Disney’s Mulan), subscription-based only (e.g. Disney’s Hamilton and forthcoming Soul)
- Hybrid B2B/DTC: box office plus subscription-based (e.g. Wonder Woman 1984 and all 17 of Warner’s 2021 releases)
B2B/theatrical distribution has long proved its worth towards monetizing “epic” content, but this was before the pandemic. Last September, the theatrical-only release of Warner/ Christopher Nolan’s Tenet flopped, generating only USD 57 million in domestic gross, and USD 358 million worldwide (in comparison, Inception garnered 1 billion). So, is the B2B model lastingly or just temporarily broken? Only the post-pandemic world will tell. In the meantime, the direct-to-consumer model brings in tons of challenges, as well as opportunities.
Being super-premium and, thus, highly attractive, the content barely needs marketing from the platform. In this case, the content is, in fact, marketing for the platform.
Since the world’s biggest media groups have already — or are about to — launch their own streaming service anyhow, will help penetrate a highly-competitive market. If Disney had bet on The Mandalorian to drive Disney+’s subscription, it could also count on Mulan and Hamilton, whose launches were initially planned for theaters only. Naturally, both Disney+ and HBO Max removed free trials in order to impose at least one month of paid subscription for watching Wonder Woman 1984 or Hamilton. In the former case, Disney+ added 3 million subscribers in the 4-5 weeks following its release—what I would call a splash effect.
If many might churn back (the so-called “main-eventers” segment), some will stay, or return, too. Released on a regular basis, “epic” content thus acts as a powerful subscription accelerator. Splash after splash, the audience builds, new habits build, and, slowly but surely, the shift in model (recurring DTC subscription revenue) is realized. Financially, it can also be argued that “epic” releases cover a good part of platforms’ planned acquisition and retention costs. Being super-premium and, thus, highly attractive, the content barely needs marketing from the platform. In this case, the content is, in fact, marketing for the platform.
More than radically simplifying franchise marketing initiatives (from “prints and advertising” to push notifications), leveraging “epic” content to build a first-party scalable audience has several other benefits (this list is not exhaustive):
- Direct/deep understanding of consumers through data
- Augmented viewing experience through personalization (recommendation system) and immersive features (e.g. Amazon Prime Video’s X-Ray)
- Enhanced community building through interactive features (e.g. in-stream chat)
- Business model flexibility (subscription vs. pay-per-view vs. ad-supported which, with both volume and addressability, can represent a powerful stream)
- “Living” content ecosystem enabling special/promotional brand activations (e.g. Christmas edition, special offers)
- Brand building for studios which, in the past, were mostly B2B, non-consumer-facing companies
The above benefits balance the numerous challenges linked to DTC monetization. For instance, when audiences are used to “epic” content platform releases, will the splash effect still be sustained? Over time, this is likely to normalise. Indeed, removing theatrical windows might well deprive franchise owners of this event-like atmosphere, especially for movies and series that do not hold a built-in cultural appeal such as The Mandalorian.
All things considered, the bad news is the increased strategy and operating complexity (no replication; one content piece = one business case). Conversely, the good news is that, in the case of DTC, a studio like Disney controls the entire value chain and product lifecycle (from IP ownership to audience monetization), which gives unprecedented commercial freedom. Thus, it can be claimed that Hollywood’s business model exploration has only just begun.
The only certainty is the strategic importance for studios to operate their own content hub. While their activation is very much a variable geometry, a DTC platform represents a formidable instrument for optimization at both the distribution and monetization levels. Looking ahead, the question remains how to substantiate subscriber interest in a world where both attention and disposable income are under severe pressure.
A “Home of Star Wars” to achieve “multi-epic” long-term potential
With regard to subscription-based, platform-only distribution, two main models have yet been tested: “binge” release (all episodes released the same day e.g. Netflix’s Stranger Things) vs. weekly release (one episode released on the same day each week e.g. Disney+’s The Mandalorian). Once again, The Mandalorian embodies best practices. Not only does the format double revenue capture from “main eventers” (two months vs one month of subscription), but it also contributes to substantiating the hype over a longer period, as well as shaping firm consumption habits (e.g. Taco Tuesday -> The Mandalorian Friday).
Subtly, this new approach brings new, revolutionary business hypotheses to the table: if it has a stronger/longer impact on the studio’s core business, isn’t an “epic” series better than an “epic” one-off movie? This is precisely where the Mandalorian’s meteoric success calls the entire Hollywood value creation model into question (box office vs. customer lifetime value). Will Hollywood become a subscription business?
Naturally, “multi-epic” incremental content also exposes structural risks, i.e. consistency (how to keep Star Wars’ identity compelling across multiple formats and channels) and fatigue (how to maintain attractiveness when both exposure and access are drastically enhanced). After all, an IP is first and foremost a brand, for which fragmentation can also mean dilution. In his Masterclass, former Disney CEO Bob Iger precisely outlined the importance for franchise-based products to balance core (ensuring consistency) and adjacent (bringing freshness) values within each content piece.
The underlying vision would turn Disney+ into a fully-fledged narrative hub for Star Wars communities, carving out a rich cultural space dedicated to the franchise.
Adding to the storytelling challenge, Star Wars is, as already stated, also dealing with a platform challenge. According to ANTENNA, among The Mandalorian’s new subscribers in Season 2, 29% were in fact “resubscribers” (basically “main eventers”). For Disney+, the biggest issue now lies in durably retaining subscribers by making them adopt the platform as a product in its own right, rather than a gateway to content only.
Going forward, it is fair to envision Disney+ as the overarching “Home of Star Wars”, aggregating multiple services such as shows, movies, shopping experiences (e.g. Amazon Prime), comics (e.g. HBO Max), gamified VR experiences, video games — c.f. advent of cloud gaming — contextual content (e.g. heroes’ family trees), and fan-generated artwork. Despite the numerous legal and operational barriers to building such an ambitious IP powerhouse, the underlying vision would turn Disney+ into a fully-fledged narrative hub for Star Wars communities, shaping up a rich cultural space dedicated to the franchise. With the ability to regularly integrate “epic” content (e.g. The Mandalorian) to activate the whole thing.
In fact, crossovers are already at work within Disney+: Parrot Analytics recently showed that references linked to The Mandalorian’s storyline have propelled interest in The Clone Wars. And, at the same time, these have boosted platform usage.
Regardless of the broad media world reshuffling its distribution and monetization variables, narrative and platform integration are well and truly the key constants for the Star Wars franchise to unleash its full potential.
Franchise distribution over time:
Read also ➔ Star Wars Part I: How “multi-epic” storytelling is saving the galaxy
