– By Katherine Sanderson –
This is the third article in a six-part series (The first and second covered Marvel, while the fifth and sixth will cover ‘Harry Potter’). For each brand, the first article will cover the corporate strategy that initially launched them, and the second will cover how they expanded the brand, with marketing partnerships, consumer products, and themed entertainment.
With Solo: A Star Wars Story having been released last weekend, marking the 11th feature film to come from the franchise, Stars Wars continues its reign as one of the most recognized and enduring entertainment brands in the world. Star Wars holds a Guinness World Records title for the “Most successful film merchandising franchise”. In 2015, the total value of the Star Wars franchise was estimated at US $42 billion. With Disney’s purchase of Lucasfilm in 2012 for over $4 billion, with more films in the pipeline and lands planned for Disney theme parks, it seems the Star Wars franchise will not slow down anytime soon. But how has Star Wars continued to connect with audiences for 40+ years? And can it continue its success?
As with my previous articles about Marvel Studios, I believe there are four areas of business that a global entertainment brand like Star Wars had to conquer in order to make the jump from film franchise to global brand: 1.Corporate Strategy 2. Marketing 3. Consumer Products and 4. Themed Entertainment.
This article will cover Star Wars’ initial corporate strategy involving the original trilogy of Episodes IV, V, VI.
Of the three franchises we’re covering in this series, I believe Star Wars may have been the weakest in the beginning. As much as I’d love to tell you that 20th Century Fox had this covered, they didn’t realize they had a hit on their hands until it was almost too late. There is actually not that much information about their early business strategy, I believe because it didn’t really exist. By The Empire Strikes Back, both Lucasfilm and Fox were beginning to get it, but still scrambling to support this new sci-fi fantasy genre they had created. And by Return of the Jedi, it seemed they had figured it out.
But to Star Wars’ defense, it was the first of its kind, becoming a film franchise that warranted an unprecedented amount of consumer products and fan conventions, and infiltrated pop culture immediately. There were a few key decisions early on that helped set up the Star Wars brand. Many of these decisions followed major mistakes; as such, we’ll cover both these mistakes and the lessons that were learned, and how they prepared the franchise for the future.
- Making Young Audiences and Toys a Priority
Stars Wars revolutionized consumer products for feature films. Sure, Disney had previously had some success with toys and merchandise based on feature films, but Star Wars made it a major stream of revenue. As the previous VP of Advertising said in an interview, “For Hollywood, the millions of dollars Star Wars was raking in set a clear pattern. If you wanted to make money (which is what Hollywood is all about), Star Wars had clearly pioneered a method of reaching its fans. First, pick a film aimed at a young audience who will buy merchandise.” Previous to Stars Wars’ release in 1977, toys were really only based on television series, as they were not a one-time event, but could go on for years, constantly reminding the children to buy more toys.
But George Lucas was sure that his film could sell merchandise, especially toys. But when he started asking major toy companies like Hasbro and Mattel, they told him they were too late into production, shopping for deals only six months before, as Lucas had been trying to protect the secrecy of the production designs and costumes. For production needs, usually toy companies would be notified two years before release date. But 20th Century Fox found a small Cincinnati toy company called Kenner that wanted to step up to the task. Although they were asked six months before, and struck an official deal only one month before the release. But by December 1977, for the Christmas season, the coveted character action figures still weren’t ready, so the company started engaging in a process called ‘label slapping’, where you take toys already in existence, and just put a Star Wars label on them. They also created ‘Stars Wars Early Bird Package’ which promised children that they would be the first to receive the figures. In Spring of 1978, they toys were finally released, and for the next few years, they were making 22 million figurines per year.
- Copyrighting… Then Merchandising
Charles Lippincott became the VP of advertising, publicity, promotion and merchandising for the Star Wars trilogy prior to the first film. In an interview with The Drum, Lippincott said that upon receiving the first script, which he “read overnight”, he was enthused about the project because he was “a true fan boy, a die-hard science fiction fan and comic book collector.” He then proceeded to copyright all the words, characters, etc. simply because he had seen the problems Star Trek had had where the copyright weren’t clearly owned, and according to Lippincott, this lack of preparation created “a void where fans began to manufacture goods or use Star Trek’s characters and ideas in their own works”. He didn’t want this for Star Wars.
To prevent this, Lippincott copyrighted everything he could think of, saying “If it was possible to copyright a paper clip I would have. Folks at Fox thought I was crazy…” Once he felt that they were secure legally, he moved on to merchandise, having the books and comics out before the release of the film, and after it opened, had posters, costumes and clothing. But they didn’t stop there. They started merchandising Super 8mm clips, albums, and fast food giveaways, which was quite extreme for a feature film in the 1970s and 1980s. But despite their extensive copyrighting, Lucasfilm still got into legal battles with the Ideal Toy company over their STAR-team toys, and also took on merchandise from other sci-fi brands, like Star Trek and Battlestar Galactica, that appeared too similar to their products.
- Allowing Unauthorized Publicity
With all this copyrighting, you would think that unauthorized publicity would be something that they didn’t want. And they certainly didn’t… at first. The November 1978 issue of Vogue, according to the book How Star Wars Conquered the Universe, featured “Threepio cuddles up to a couple of models in pelts, while Vader looked sternly at a couple more, and Stormtroopers tried to strong-arm fur-wearing women.” On the Donnie & Marie show, there were cantina aliens and roller-skating stormtroopers, and on Bob Hope’s Christmas special, Mark Hamill came in costume to his annual Christmas special. But as other franchises like Harry Potter and Marvel would learn, fans are the lifeblood of a franchise’s operations, and allowing those fans to express their love of the brand is key.
George Lucas understood this need for fans to interact with his franchise. In 1980, Mad Magazine wrote a parody in their latest issue called “The Empire Strikes Out”, and immediately was told to cease-and-desist by Lucasfilm’s legal department. Ironically, the legal department in Los Angeles hadn’t even consulted Lucas, who was in northern California, on this action, and Lucas had already sent Mad Magazine a letter expressing his admiration for their creativity. Lucas has frequently endorsed other Star Wars-inspired spoofs and parodies, as long as they were not directly profiting.
- Creating Skywalker Ranch
If you know anything about George Lucas, you would know that he is not your typical Hollywood player. He does not indulge in an extraordinarily extravagant lifestyle, but rather keeps his life relatively normal (even with his current net worth of $5 billion!) He built Skywalker Ranch in Northern California because he couldn’t stand the Los Angeles entertainment culture, and wanted the freedom to create his films outside of their parameters. What most don’t know is that in the late 1970s, after the release of the first Star Wars film, Lucas split Lucasfilm between northern California (creative) and southern California (business). The LA-based operations, nicknamed ‘The Egg Company’, has been lost to history, not because it wasn’t successful (by the time The Empire Strikes Back was released, their dividends from investments left them with an annual overhead of $5 million) but because it didn’t match what Lucas believed Lucasfilm should represent.
But by the early 1980s, he realized splitting operations had been a huge mistake. In northern California, Lucasfilm employees was penny-pinching, reminding employees to turn off lights when not in use, and not even indulging in minor purchases like an electric pencil sharpener. Meanwhile, in Los Angeles, CEO Charles Weber was spending money like there was no tomorrow, insisting on diversifying the company further. Keeping to typical Hollywood culture, all employees drove luxury cars, wanted to update and expand their office space, and were soon requesting a private cook for their office. It was too much. Following the holiday season, 46 of 80 employees were asked to leave (with the remainder extended an invitation to move up to Skywalker Ranch!) To this day, Lucasfilm headquarters is located in San Francisco, with Skywalker Ranch just a few miles north in Marin county, far away from the craziness of LA.
The immediate success of Star Wars caused both 20th Century Fox and Lucasfilm to learn a lot, fast. And despite their early mistakes, they adapted quite quickly, identifying what tactics were most effective in implementing their strategy to handle an international franchise. These early lessons learned have no doubt led to their continual success, and set a standard for future franchises.
Check out the next article, How Star Wars Became a Global Brand – Part 2!
About the Author
Katherine Sanderson currently resides in Los Angeles, CA. Originally from Colorado, she graduated with a BA in English from Santa Clara University in 2014, and is an alumna of the JPCatholic MBA program (Class of 2016). Her professional aspirations are in children/family entertainment, especially animation.