Hey Execs, Fan Service Doesn’t (Automatically) Lead To High Returns
Image; Ubisoft
I had a thought recently while playing Star Wars: Outlaws (2024)— the open-world game developed by Massive Entertainment and published by the much-maligned Ubisoft. My player character was walking along the snowy mountaintop city of Kijimi, and she glitched into the space below the floor. She couldn’t get out, and at that moment, I thought: “How can a game this gorgeous play this badly?”
I had purchased Outlaws because I wanted to comment on it for this blog, but most gamers understandably didn’t give it that chance. The game only made one million sales in its first month. These lackluster results were hardly surprising if you were aware of the publisher’s deteriorating reputation among the gaming community and Ubisoft (at the time) deciding not to publish games on Steam, which couldn’t have helped its sales.
Yet Ubisoft seemed surprised by these results, writing in a financial statement that its sales numbers were well below expectations. It seems to me that this publisher expected that the Star Wars Intellectual Property (IP), by itself, would lead to a million-plus sales in the game’s first week, regardless of the overall playability and reception of the game.
In the current pop culture landscape, this seems to be the standard approach for a lot of media. There is this expectation that specific IP when paired with a heaping of “fan service” (i.e., crafting narratives to appease existing consumers), will guarantee a certain amount in sales.
However, in the current marketplace, where we are over-saturated with nerdy media, this couldn’t be further from the truth.
Disney’s Fan Service
Let’s zoom in for a moment on Star Wars. It’s easy to see this problem not just with Outlaws but with most recent Star Wars media. These are products that rely almost exclusively on fanservice, where in some cases, such as Ewan McGregor’s Obi-Wan Kenobi (2022) or Rosario Dawson’s Ahsoka (2023), the entire premise is built around a favorite character.
In many circumstances, these shows heavily spotlight moments that only fans of the existing media will understand. The Book Of Boba Fett (2021–2022) had entire scenes, such as Fett’s duel with Cad Bane, that would only make sense if you had watched the Clone Wars (2008–2014, 2020) cartoon. Ahsoka was effectively a sequel to the animated kid’s cartoon Rebels (2014–2018, 2020), which I saw and I still had trouble following the live-action show.
In fact, the current Creative Officer of Lucasfilm, Dave Filoni, who originally cut his creative teeth on Clone Wars, is said to be directing a movie that ties together all the disparate elements of the new Star Wars properties into one “cohesive” narrative.
That interconnectivity appears to be the content strategy for Disney’s Star Wars — and most likely the Mickey Mouse company more broadly — and I am not convinced it’s working. While these shows have generally received much attention in the zeitgeist — sometimes even critically when it comes to Andor (2022-present) and The Mandalorian (2019-present) — their overall profitability has been less certain.
A common issue I (and many others) have with streaming platforms or “steamers” is that viewership information is often not easily accessible, even to showrunners, so it’s difficult to know how much value is actually being generated — i.e., how many subscriptions these shows bring in. Reporting will claim (usually via third-party monitoring) that a show on Disney+ is highly viewed, but we have no way to confirm that.
Meanwhile, the Disney+ app — i.e., where these shows, as well as the likes of the Marvel Cinematic Universe (MCU) and others, are hosted — has hardly been profitable in the long term. Disney+, and the company more broadly, was in the hole by billions just last year. The company recently had to make drastic cost-cutting measures to get back into the black, and reining in Disney+ was a massive part of that equation. As Caroline Reid wrote in Forbes in April of 2024:
“In order to pacify disgruntled stockholders, Disney had to cut $7.5 billion of costs, including a lot of the exclusive streaming content it had commissioned. Despite this, Disney+ has burned up more than $11.4 billion of operating losses since it was launched and isn’t forecast to even make a profit until the end of the year..”
There were a lot of factors that contributed to that significant loss. The COVID pandemic, for one, led to a sudden surge and drop in subscriptions across the board and a shuttering of Disney parks.
However, one of the main factors was just the arrogance of senior leadership, thinking it could supplant existing competitor Netflix if it doubled down with its existing IP and outspent them. As Caroline Reid quipped in that same Forbes article: “Disney acted like it too was in this dominant position right off the bat.”
It spent a large amount of money on exclusive streaming content without mitigating the risks that come with that spending, and then when the rug was pulled out from under it, felt the ramifications.
Beyond Disney
Yet I want to be clear that this assumption many studio executives make that specific fan-favorite IP will generate a crazy return if they only pour enough money into it is not only coming from Disney but most of the major media conglomerates.
Take the example of Sony’s Ghostbusters: Frozen Empire (2024). It took in north of $200 million. This was roughly the same as its predecessor, Ghostbusters: Afterlife (2021), which eeked out a little more than 2.5% times its production budget — the industry standard for whether a film flops or bombs in the box office.
However, Frozen Empire was considered a flop because the company invested significantly more money in the title (around $100 million, as opposed to $75 million), meaning it would have to make a minimum of $250 million, or $50 million more than the first title did, to be considered successful. The distributor, Sony, specifically hoped that the increased budget, coupled with fan service that integrated the sequel with the older Ghostbusters IP, such as actors from the original film, would generate this return. In the words of Ryan Scott in Slash Film: “[Frozen Empire] was bigger and featured more nostalgic imagery to try and hook audiences.”
Yet those nostalgia hooks did not generate higher returns because that strategy does not work in our current media landscape. I would not use that assumption to greenlight an increased budget for a sequel or spinoff.
Warner Brothers' film Joker: Folie à Deux is another example of this. The original Joker, with a budget of around $55 million, was a runaway hit in 2019, meeting a worldwide box office return of over $1 billion. From a financial standpoint, it makes sense that a company would see that overwhelming return on investment and try to replicate that lightning-in-the-bottle success.
However, there was no game plan for the sequel. Director Todd Phillips had pitched Joker as a standalone story. So you had this very obvious problem of a series that earned acclaim for its story (it won two Oscars) struggling to deliver on its core selling point. To me, that kind of hurdle would justify a conservative budget. I might bump it to $65 million and push Phillips to focus more on the story. Instead, the studio gave the film a budget of $200 million, requiring it to make a minimum of $500 million to be considered a “success.”
Why would you make such a gamble when the whole point of the original’s success was that it was cheap to make?
And yet, that appears to be the strategy. Many media executives seem to be working on the assumption that a well-known IP, factored in with a consistent amount of fan service, will generate a guaranteed amount in returns, but if that strategy ever worked, it doesn’t now.
We have reached a point in the media ecosystem where so many existing properties are being retold and rebooted that it is difficult to imagine a nerdy IP just having automatic success in the box office or streaming landscape.
A cinematic conclusion
In general, when I complain about media being narratively bad, I often hear the argument that capitalism isn’t driven by art for art’s sake. “It’s important,” such critics say, “that these products make money first and foremost.”
If this analysis has shown anything, however, it’s that the people treating “art as a business” aren’t even good at it on those terms. Many firms appear to be overspending on popular IP to compete in a crowded marketplace, leading to a roulette wheel-like attitude regarding spending. They are betting all-in on a particular IP because they think it has a built-in type of financial return, and that’s faulty reasoning. The financial success of a piece of “content” has much more to do with marketing, narrative cohesion, and an intersection of other factors than just the popularity of a particular IP.
Sometimes, those are theoretically within a firm’s control and can be mitigated for (or not). For example, I loved the indie horror comedy Lisa Frankenstein (2024), but it did horribly despite its high audience favorables. Its failure has much more to do with its scaled-down marketing budget, critics hating it, its Superbowl Sunday weekend release date, and its limited theater release overall. It’s possible to overcome such hurdles through better scheduling and marketing, but there were probably other projects that Focus Features thought were worthier of its budget, making Lisa Frankenstein more of a calculated failure. Focus Features lost $2-3 million on the picture, which is small in movie terms.
Other times, though, success is not even in a firm’s control. The recent box office bomb Furiosa (2024) was well received by critics and audiences alike but only took in $173 million worldwide despite needing to earn over $400 million to be considered a success. The reasons for its failure have more to do with general consumer trends than anything specific about the film itself. As Jonathan H. Kantor speculates in Looper:
“Furiosa” flat-out bombed at the box office, possibly due to the recasting of the lead, the often poor performance of prequels, or the near decade that passed between the release of “Fury Road” and “Furiosa.”
The passage of time and widespread consumer conceptions about prequels are two factors that, from a marketing perspective, take a lot of work to control. And even then, sometimes, your audience still doesn’t see your film. It’s baffling that firms spend so much on these individual investments when the odds of success are approaching a flip of the coin.
Is that what good investing is?
I know many media executives have crafted formulas that predict that X IP with Y fan integration will generate Z revenue, but these formulas are nothing more than highly elaborate vibes. Studios would not be so easily overspending on projects if they had cracked the code on consumer preferences.
Human consumption is far less predictable than that — at least, this fan seems to think so.