Producers Continue To Lean Toward The Film-Franchise Industry

From hardcore, decade-long film favorites such as “Harry Potter,” “Lord of the Rings,” “Star Wars” and “Pirates of the Carribean” to more recent, kid-friendly productions like “The Incredibles” and “Wonder Woman,” these box-office hits have enticed viewers year after year. After the first, second and third Harry Potter films were released, fans took comfort knowing that there was another movie on its way, and many chose to read ahead in the book series. McDonald’s had “Pirates of the Caribbean” and “The Incredibles” toys in their Happy Meals. Children engage with these promotions long after they have seen a movie. The franchise-film industry offers satisfaction for fans beyond the closing credits, and franchise films are mutually beneficial for the film industry, as there is more financial stability in the border appeal and larger built-in fanbase.   

A History of the Film Franchise Model 

Much like the franchise business that has permeated America in restaurant chains, health and wellness businesses, cleaning and home services and many others, the franchise film industry uses innovative marketing and the cultivation of anticipation, established value in other domains, branding, intellectual property, creative talent and investment in production value. 

Alan Horn, current Chairman of the Walt Disney Studios, is often referred to as the man responsible for “drafting the blueprints for what [became] Warner’s primary operating strategy — focusing on effects-filled event pictures, or ‘tent poles,’” according to a New York Times piece from 2011. Horn’s strategy allowed a single motion picture to thrive both in the U.S. and internationally, and since then, most major studios followed suit and have embraced the film franchise concept.

The Predictability of the Film Franchise Model 

In 2015, when "Star Wars: The Force Awakens" crushed box office records with $238 million in sales, a group of analysts from the hedge fund Citadel shared their thoughts on the Disney-owned movie franchise.

Citadel’s Joe Pasqualichio, when asked what impact flops had on movie studios, revealed a great deal about why many studios are starting to pursue the franchise path. 

“There's a saying in Hollywood that ‘nobody knows nothing,’” said Pasqualichio. “So it's really hard to predict what's going to resonate with the public and what's not. I think a studio would probably be happy batting .500 on hits and misses, but it's really important to get the big bets right. Above all, this industry is going to continue to get more global. The focus is going to become more on what does the Chinese consumer want, what does the Latin American consumer want? A truly global blockbuster requires very high production value, very recognizable IP, and a plot that appeals to the entire globe.”

Pasqualichio acknowledged the checks and balances that come with the industry, citing that the much-anticipated “John Carter” had an approximate production budget of $250 million but lost around $200 million. “Harry Potter” however, grossed $7.7 billion over the course of its eight-film run. 

“Box office flops are going to come up from time to time, but your big bets — and especially the ones with IP backing them — should be enough to cover them,” explained Pasqualichio. “And that's why you're seeing studios move towards IP and franchise films like the ‘Harry Potter’ series. Those big hits will be able to absorb the losses from the ‘John Carter’s. Today more than ever, we're seeing this blockbuster strategy at studios where they rely on really big, tent-pole films — like the “Star Wars” movies — to generate sufficient profits that cover all of the misses and make the overall slate profitable.”

The most recent franchise film success was in December 2021, when Sony's Spider-Man Universe media franchise, in conjunction with Marvel Entertainment, released “Spider-Man: No Way Home.” 

Sony's Marvel franchise sequel has raked in $609.9 million in profits so far in its three weeks since release, ranking the film number 10 of all time in North America. Worldwide, “No Way Home” has made $1.37 billion, a total that ranks it above "Black Panther" and makes it the number 12 highest-grossing film globally. 

With the impressive surge in profits from the franchise-film industry and a better understanding of audience and film reception, more studios will likely lean into this venture. More film fans will get more of the movies they love in 2022 and beyond, and with that love, the film industry will receive more of the profitability it desires.