Why did Disney buy Lucasfilm for $4.05B?
With Disney’s purchase of Lucasfilm and its announcement of the continuation of the Star Wars franchise with movies 7, 8 and 9, a lot of fans have been questioning the ability of Disney to maintain the interest of the Star Wars fan base. After all, die-hard fans of the original trilogy were not too happy about the way in which episodes I, II and III were crafted and marketed. It would not be out of line to say that Disney could lose fans if episodes 7, 8 and 9 were poorly done. However, we can use network effects to explain why an original movie with rave reviews can have poorly done sequels and still maintain its fan base. Despite the almost preposterous amount of money changing hands, Lucasfilm is not taking the mickey out of Disney.
A few examples can help us ground the idea that fans still watch poor sequels of movies as long as the first one was good. Comparing movie ratings on the website RottenTomatoes.com, ‘The Matrix Revolutions’, ‘Pirates of the Carribean: Dead Man’s Chest’, ‘Spider-Man 3’ and even the newer 3 Star Wars movies are considered to be poor sequels to the originals (no offence to fans!). Yet the box office performance and revenue of the second sequel often outperformed the originals. Even after a bad second sequel, the third sequel still raked in just about as much as the original did. Why is this so?
When a new movie comes out, word about it spreads through information effects. Good movie trailers and official reviews entice a few people watch it at first. If it is good, they tell their friends to watch it too. If it is bad, they tell their friends to avoid it.
However, once a movie has established a fan base, there are additional direct benefit effects for fans who watch the sequels. Die-hard fans will watch it, good or bad, to have the personal satisfaction of proving that they are fans. Networks of fans will discuss the new sequel, whether good or bad, so that they can be included in group discussions. Even outside the network of fans, friends of such fans will ask these fans for their opinion on the new movie. The niche of being a fan gives them some importance in the group, which is a direct benefit for them. To maintain this niche they have to watch the movie and have an informed opinion about it. Additionally, in the case of Star Wars, the long gap between the older 3 and newer 3 movies means that the older generation of fans who watched the original trilogy when it came out probably took their children to the newer movies to get the whole family enthused about the Star Wars franchise. For all these reasons, once a movie has a firm fan base, it is almost guaranteed that they will make money off these fans with sequels.
The large, multi-generational Star Wars fan base may be skeptical about Disney’s production of new Star Wars movies, but they will watch these movies anyway. Disney probably recognizes this, and with a little effort to make Star Wars 7 a good movie, they will retain this fan base and possibly increase it by yet another generation of fans. $4.05B is not a goofy deal.
Source credits:
Picture: http://buzznet.com/~659de78
List of worst sequels: http://www.imdb.com/list/IbtiWxVSK64/
Box office information: http://en.wikipedia.org/wiki/The_Matrix_%28franchise%29#Box_office (The Matrix), http://en.wikipedia.org/wiki/Star_wars#Box_office_performance (Star Wars), http://en.wikipedia.org/wiki/Spider-Man_in_film#Box_office_performance (Spider-Man), http://en.wikipedia.org/wiki/Pirates_of_the_Caribbean_%28film_series%29#Box_office_performance (Pirates of the Carribean)
RottenTomatoes rankings: http://www.rottentomatoes.com
-asquirrel