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Pop culture franchise-building is the new normal in Hollywood. To understand why, let’s take a look at the box office figures for April and August.
Hot Results in the Dead of Winter
According to Box Office Mojo, U.S. theaters took in $739.5 million in April, up 71.2 percent over 2013 and the biggest haul since 2011, when “Fast Five,” “Rio” and “Hop” combined for just over $460 million of that month’s $956.9 million in grosses. In August, they earned $892.4 million, up 6.1 percent and the best performance in over 30 years. Franchise fans were the principal catalyst in each case. “Captain America: The Winter Soldier” (opened on April 4) and “Guardians of the Galaxy” (Aug. 1) were responsible for at least a third of domestic grosses in the months they opened.
Investors have benefited from the enthusiasm. In fiscal Q3 — the same quarter in which Disney’s (DIS) Marvel Studios released “Captain America: The Winter Soldier” — revenue in the Studio Entertainment segment grew 14 percent year over year. Operating income doubled. “Guardians of the Galaxy” could have a similar impact in the current quarter and in years to come, which explains why every major studio is working on franchises of their own.
4 Signs of a Franchise in the Making
Which will be successful? A lot depends on how each property is conceived and developed, say the four founders of Man of Action Entertainment. Duncan Rouleau, Joe Casey, Joe Kelly and Steven T. Seagle are responsible for the likes of “Ben 10,” “Generator Rex,” and Disney’s forthcoming animated feature “Big Hero 6.” In an open-ended interview at San Diego Comic-Con, they identified four characteristics shared by successful pop culture franchises, including the ones they’ve created:
- They break new ground. “Guardians of the Galaxy” makes stars out of a talking raccoon and a tree-like alien capable of speaking only one phrase. “Captain America: The Winter Soldier” turns a superhero tale into a spy thriller. And “Ben 10” — a $3 billion franchise that remains one of the most popular shows in Cartoon Network history — features a 10-year-old boy whose wristwatch-like device allows him to transform into different types of aliens. Franchises deliver something different in an entertaining package.
- A passionate visionary is behind the project. Anthony and Joe Russo are fans of the “Captain America” comics and had a specific idea for what they wanted to do with “Winter Soldier.” James Gunn read the tales of “Guardians of the Galaxy” long before making the film. George Lucas has spent most of his life shepherding “Star Wars.” Franchises can’t exist without passionate creators who want to see their work appear on the screen.
- They aren’t forced. All four founders of Man of Action Entertainment say they’ve been approached by studios to create new movie and TV franchises that tap into the zeitgeist. Usually, they decline and develop something different. As Seagle puts it, you can’t force a franchise. “Before ‘The Walking Dead,’ there were no zombie shows, and now there’s like 17 of them,” Seagle says. “You have to be the person that brings you the first zombie show. That’s why ‘Walking Dead’ is a phenomenon and the rest of them are lesser to not phenomenons, because they’re replicative.”
- They exist inside something bigger. Franchises aren’t skin deep. Kelly says that when he and his partners at Man of Action are approached to build something new, they begin with figuring out what they’d like to see and then build a world big enough to support multiple stories. “That’s what makes a franchise,” Kelly says. “You have legs because you’ve taken the time to build out a whole world.” Or, in the case of Marvel Studios, a universe. The 10 movies comprising the Marvel Cinematic Universe have generated nearly $7 billion in global box office sales since “Iron Man” first appeared in 2008. Sony (SNE), Time Warner (TWX), Twenty-First Century Fox (FOXA) and Viacom (VIAB) are in a race to cash in similarly. Only some projects will succeed.
“The key is making sure that what you make is something you love,” Seagle says. “And if it isn’t an international success, you still love it.”
Motley Fool contributor Tim Beyers owns shares of Time Warner and Walt Disney. Find him on Twitter as @milehighfool. The Motley Fool recommends and owns shares of Walt Disney. Try any of our Foolish newsletter services free for 30 days. To read about the power of dividends and our favorite high-yielding stocks for any investor, check out our free report.
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