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The Netflix Paradigms: Part 2

Read Part 1 here


(The Merchandising Mindset)

In my earlier article, I talked about how Disney was exemplifying a not-so-new paradigm for making blockbusters. I called it the merchandising mindset…or the Theme-Park Mindset. Most studios actually have it. Disney has simply taken it to overdrive lately.

I love watching movies at the cinema but it’s no secret that I do not believe the cinema as a first-window platform is viable long-term.

Photo of a cinema at night
Photo by Nathan Engel on

Before the age of streaming, the best-known way to make big money from your movies was to make sure that as many people saw your film as quickly as possible. After a limited window of diminishing returns, the movie would then be released via ancillary sources like home video. This paradigm, while still bringing in billions of dollars a month worldwide, is already, in my opinion, outdated. More importantly, it is wasteful.

A movie that costs $200 million to make might cost another $150 million to market. Such a movie would need to make double this combined budget to be profitable…because roughly half of that money goes to the cinemas who feature the movies. To be fair, thanks to vertical integration (and maybe some creative accounting), that money might not be completely lost to some studios who own their own theater chains, or their own PR firms, or subsidiary production outfits. Sadly, the half that goes to the theaters is still not enough to keep them solvent. If it were, my guess is theaters wouldn’t resort to insanely marking up their food/snacks. When I take my nuclear family to see a movie, it could cost us an additional $30 for food if both adults only have a small bite. That’s $30 that could instead be funding filmmaking (or curing world hunger). Not that the cost of tickets is anything to sneeze at for a family of four. With Netflix, said family essentially pays the price of one ticket…only once a month!

happy family sitting and looking at a laptop
Photo by August de Richelieu on

If families are cautious about spending, they become choosy about what film they go to see at the cinema. I’m convinced that the pressure this puts on studios (making them increase the spectacle in their outputs) will only keep getting stronger. Such pressure on studios means they greenlight movies from a position of fear. They stay safe and formulaic in their approach. They milk a franchise until it’s a rotting corpse. Or (once in a while) when they dare to do something different, they panic and start to meddle with the creative process at the faintest sign of bad weather.

I was (and still am) convinced that Disney has found a way to divert that pressure by focusing on merchandising. Buying ready-made hugely-performing franchises with insane merchandising potential (Pixar, Star Wars, Marvel). These are properties that made Disney a lot of money outside the cinemas. Cars 2 is Pixar’s worst-received film yet Disney greenlit Cars 3. Why not? By the time Cars 2 was released, the darn franchise had already made over 10 billion (yes, with a “b”) on merch! That’s like 2 billion dollars per year. Yes, Disney doesn’t own that whole pie (manufacturers also get their cut) but that’s still a lot of pie to go around.

Toy cars from Disney Merchandising
Photo by Pixabay on

I started to see these films as 90-minute commercials for the loads of toys and theme park rides Disney would sell (same way I see many movie theaters simply as large ‘TV’ screens installed to keep popcorn buyers happy). However, in spite of how much of a behemoth Disney had become, and how relatively less dependent on the cinema revenue they were, they still seemed to put enough thoughtfulness into their movies. Zootopia and Black Panther are examples of films that are kiddie fare on the surface but managed to make really poignant commentary under the hood. Kevin Feige could have taken the easy route of rehashing only the elements that people loved in the Marvel Cinematic Universe (MCU) films. Instead, he’s gone out of his way to make them movies of different subgenres such as spy thrillers, space operas, period dramas, heist films, and whatever that Ragnarok thingy was.

I projected that both Netflix and Disney would keep taking risks, such as Disney hiring relatively obscure directors based on their unique vision and potential rather than their pedigree. Compare this with a ‘scared’ studio like Warner Bros depending solely on Zack Snyder and Marvel rejects (that was harsh, I know. Patty Jenkins, Joss Whedon, and James Gunn are insanely talented directors…but work with me here).

I also projected that those risks would bring huge dividends. Marvel is making 2-billion-dollar movies now! They’re more than offsetting the duds…I think.

In 2019, Disney is releasing 5 movies each with a potential to make at least 1 billion worldwide this year (Avengers 4, Toy Story 4, Lion King, Frozen 2, Star Wars 9), two of which have the potential to make up to 2 billion! This is assuming that Captain Marvel, Dumbo, Aladdin are all going to miss the mark (sorry Artemis Fowl, the law of averages says no billion dollars for you… though I’ll be more than happy to eat crow…fowl…if it happens).

I’ll be more than happy to eat crow…fowl…if it happens)

Disney is making more and more money every year with fewer and fewer movies. Only one of their 10 movies for this year is not an intended blockbuster.

My prediction was that the only studios that will get away with producing blockbusters would be the ones that depend heavily on merchandising. While Disney is widening the gap and Universal (another studio with theme parks and recent acquisitions) is the clear runner up, the other studios have a good number of blockbusters under their belt so my prediction hasn’t necessarily started to come true just yet…unless you count the sale of Fox to (you guessed it) Disney! Now, I also warned that the risks and reward would continue to increase until a bubble bursts. Disney spent quite a fortune on Fox. This year, they’re releasing many movies expected to make a billion dollars. It sounds like a bubble could be around the corner. I suspect Disney might survive such a bubble better than any other studio as long as the bubble doesn’t also erode the brand trustworthiness. I predicted that Mary Poppins Returns would blow Aquaman out of Atlantis based on Disney’s pedigree and what I thought was their moving a Star Wars movie away from December to make space for Poppins (oh, also, the DCEU’s previous lackluster outings didn’t help dissuade me).

I wonder how many more Mary Poppins (Poppinses?) and Solos and Nutcrackers Disney can get away with. Could Dumbo and Aladdin also flop? What if people skip Captain Marvel in their impatience to see Thanos?

They’ll see Thanos! Thanos and all the 2 billion green ones minted out of his purple behind. Yes, but what if all these properties somehow cannibalize each other and don’t make the billions we’re expecting? Okay maybe not this year…but something has to eventually give right? I guess even if something does give, Disney will be positioned to recover from it as long as they don’t buy Paramount pictures in the same year or something. Disney will need to spend their gazillions wisely.

That brings me to my next issue… …to be continued. Update: Since time of writing, Disney has added another movie to its lineup for 2019 and it has moved Artemis Fowl to 2020. Next:

Part 3: Netflix vs Disney (Netflix vs Other Streaming Platforms)


OlaWale Ajao View All

Artist who loves spreadsheets.

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