How Disney is Selling ‘Star Wars’ on YouTube

It’s easy to measure how the “Star Wars” franchise has performed in theaters – just add up the box office receipts, as Hollywood has been doing since the days of Charlie Chaplin and D.W. Griffith (“The Birth of a Nation”), and you’ll see that its taken in nearly $6.4 billion worldwide.

But how is “Star Wars” faring on YouTube, where millennials and Gen Z spend hours entertaining themselves and researching potential purchases, as well as posting self-made videos?

To find out, Disney enlisted ZEFR to do a study. It revealed that between August 2015 and August 2016, fans posted over 838,000 pieces of “Star Wars”-related content on YouTube adding up more than 2,296 per day and nearly 96 per hour. “Star Wars” content created by fans also scored impressive numbers, racking up more than 16.3 billion views in the same year-long period, which is the equivalent of everyone in the world watching at least two user-generated clips.

Those YouTube numbers are important to Disney because it’s using the platform – and its users – as a key component in its “Star Wars” merchandising strategy.

On Sept. 4, 2015, well ahead of the December opening of its franchise reboot “Star Wars: The Force Awakens,” Disney unveiled its new lineup of “Star Wars” merchandise – including including top toys from licensees such as Hasbro and LEGO – with “Force Friday,” an 18-hour, global unboxing event live streamed on YouTube, spanning 15 cities and 12 countries, that featured top digital stars from Disney’s Maker Studios division.

“You had a major retail promotion going on concerning part of the toy line, two and a half months before the film launched. That’s outside the realm,” said Marty Brochstein, SVP of industry relations & information for LIMA (the International Licensing Industry Merchandisers’ Association). “For most tentpole movies, the consumer products get to the shelf generally about six weeks ahead of the movie launch date.”

Disney’s outside-the-box YouTube global unboxing proved to be a big success. According to market research firm NPD Group, in the immediate wake of Force Friday, Star Wars merchandise had weekly sales that were six times its recent average, and it went on to become the #1 toy property of 2015, with $700 million in sales.

This year, Disney staged another merchandise rollout on YouTube, this time in anticipation of “Rogue One: A Star Wars Story,” opening today. It kicked off in August with the debut of a series of fan-made animated shorts on the Star Wars YouTube channel. They were produced through a competition staged by creative network Tongal, which had creators pitch, write and direct original stop-motion shorts starring key toys from the new line from Hasbro, LEGO, FUNKO, JAKKS Pacific, Mattel and Disney Store.

It was followed by a global #GoRogue fan content contest launched on Sept. 30, which called on creators across gaming, lifestyle, comedy and family verticals to make videos featuring characters from the new movie. More than a dozen Maker Studios creators also participated in the project, including Action Movie Kid, Chris Pirillo and My Froggy Stuff.

Disney’s massive, highly orchestrated product rollout for the new “Star Wars” films is light years away from the stunted campaign staged for the first film in the franchise.

When “Star Wars” opened in May 1977, it was not picked to be a giant hit. Science fiction was not considered a bankable genre and, worse yet, the film had no stars, unless one counted sixty-something Alec Guinness, best known for his Oscar-winning turn in “The Bridge on the River Kwai” twenty years earlier.

So perhaps studio 20th Century Fox and toymaker Kenner can be forgiven for being woefully unprepared for the holiday demand for “Star Wars” toys. Instead of finding Han Solo action figures and model Millennium Falcons under the tree on Christmas morning, kids tore off the wrapping to discover Early Bird Certificate Packages, a cardboard slat featuring photos of “Star Wars” toys, “Star Wars” stickers, a “Star Wars” club membership card and a postage-paid mail-in order card good for four action figures (Luke Skywalker, Princess Leia, Chewbacca and R2D2), to be delivered an unspecified number of months later.

But in spite of its fumbled launch, “Star Wars” merchandise proved to be a game-changing juggernaut.

“That movie really is looked upon as the launch of the modern movie licensing business, to where, by the early early ’90s, the prospective amount of consumer products business you could do became part of the financial equation as to whether or not a movie would be greenlit,” said Brochstein.

In the nearly 40 years since the original “Star Wars” was released, licensed merchandise from the franchise has grossed more than $12 billion. A healthy portion of that money has gone to original “Star Wars” writer/director George Lucas. Fox owned the first film, lock, stock and sprockets, but the studio let Lucas retain the sequel rights – an indication of how low expectations were for the film — and he used it as leverage. When it came time to negotiate with Fox for what became 1980’s “The Empire Strikes Back,” Lucas asked for and was given the merchandising rights to the franchise in exchange for letting Fox distribute the next two sequels, while he retained ownership of the negatives.

The money from the “Star Wars” merchandise enabled Lucas to ambitiously expand his production company Lucasfilm, which spawned successful VFX (Industrial Light & Magic) and sound divisions (Skywalker Sound), helped pioneer nonlinear editing systems (EditDroid and SoundDroid), and incubated Pixar (founded in 1979 as the Graphics Group in Lucasfilm’s Computer Division). It also made it possible for Lucas finance the first three “Star Wars” prequels released by Fox.

Eventually, “Star Wars” would provide Lucas with a cushy retirement. In 2012, Disney bought  Lucasfilm for $4.05 billion and announced an ambitious slate of “Star Wars” sequels, as well as plans to add Star Wars Lands to its theme parks.

And what of Fox, which traded the “Star Wars” merchandising away to Lucas? It still owns the rights to the first film (a.k.a. “Episode IV – A New Hope”).