Imagine a World In Which Star Wars Never Existed

Members of the media are seen as Star Wars' movie character R2-D2 wearing a black bow tie glides down the red carpet for the
Members of the media are seen as Star Wars' movie character R2-D2 wearing a black bow tie glides down the red carpet for the wedding of Star Wars fans, Caroline Ritter and Andrew Porters, from Australia who are getting married at the forecourt of Hollywood's TCL Chinese Theatre IMAX in Los Angeles Thursday, Dec. 17, 2015. The new movie sequel “Star Wars: The Force Awakens” begins screening tonight. (AP Photo/Damian Dovarganes)

If the original Star Wars film had never happened, the entertainment industry would be in shambles, toys and games would be a minuscule industry, the publishing industry would in all likelihood be dead, many other industries from apparel to packaged goods would be struggling, and unemployment would be higher on a global scale.

Here's why.

George Lucas didn't just create a movie in 1977; he ushered in the modern day blockbuster era with a new, powerful playbook that all other entertainment executives and studios now follow. The original 1977 Star Wars film eventually grossed over $777 million worldwide and all of the previous six Star Wars films resulted in a total worldwide box office of just over $4 billion. But George Lucas didn't just create a film series, he created a new financial model that led to the modern day franchise. The retail value of the merchandise that Star Wars generated from the first six films is estimated to be five times its box office success, or roughly $20 billion. Until Star Wars, movies simply did not generate revenue beyond the box office, which is why 20th Century Fox allowed George Lucas to keep the rights to merchandise.

And so the 1977 Star Wars changed the calculus that goes into green-light decisions. Giving the thumbs-up these days has as much to do with the downstream entertainment and merchandise potential than it does with a movie's initial box office projection. In many cases, the theatrical release is a break-even proposition due to heavy production and marketing expenses. So a number of films, perhaps even those such as The Hobbit, Pirates of the Caribbean, and Despicable Me might have never been approved had downstream revenue sources been nonexistent. I was at a recent studio meeting where one story idea was preferred over another because the potential for merchandise was greater. That's standard today. It wasn't before 1977.

Consider even Toy Story 3; the film did about $1 billion in theaters worldwide, but its total retail take from all revenue sources was estimated to be roughly $10 billion. You gotta believe that this went into Disney's green-light decision.

This all began in 1977 with Lucas who discovered, either through brilliance or dumb luck, that an engaging imaginary world, with sympathetic characters we wish to emulate via their aspirations and possessions, and an emotionally powerful and relatable storyline, can translate into enticing toys and video games to play, emotionally fulfilling soundtracks to listen to, colorful iconography to wear, engaging books to extend the narrative, school supplies to indicate our interests, cool room accessories to reshape our environments, and even tasty food to consume. This playbook is evident in nearly every Disney film since the 1989's The Little Mermaid that ignited the Disney Renaissance, and is further evident in Harry Potter, Transformers, Avengers, Jurassic World, The Hunger Games, The Lego Movie, Guardians of the Galaxy and many more.

And so, had it not been for the 1977 Star Wars and the blockbuster playbook, the film industry would be struggling today. One study revealed that 5% of all films, most notably the blockbusters that successfully use the playbook, account for nearly all studio profits. The other 95% of films lose money or barely break-even. Said another way, most smaller films would not be made today were it not for blockbusters that fund them.

Had it not been for Star Wars, 20th Century Fox might not exist today. Due to the success of the original 1977 film, the company's stock price zoomed from a low of $6 in June 1976 to roughly $27 after the film. Revenues jumped from $195 million in 1976 to $301 million in 1977. Subsequent films in the franchise helped stabilize the studio's growth. That's quite a gift in an environment where studios have a habit of going broke or getting absorbed. (Note: Disney has the rights to the seventh film onward).

Had Star Wars and the blockbuster playbook never existed, Disney might be half its size...or less. There might have been no The Little Mermaid, no Mulan, and no The Lion King. It's hard to imagine that when Michael Eisner and Frank Wells joined The Walt Disney Company in 1984 that they did not have the Star Wars blockbuster playbook in mind. They saw a sleeping giant in Disney with great potential and a game plan created by Lucas.

Had Star Wars and the blockbuster playbook never existed, the toy industry would be a much smaller industry. Tent pole films keep the toy industry alive. Avengers. Frozen. Pirates of the Caribbean. Batman. Spider-Man and more all use the playbook. So, too, does Lego, which achieved great success through licensing movie properties like Star Wars and more recently created a highly success film of its own, The Lego Movie. Hasbro recently won the license to the Disney Princess line, all of which are derived from film properties, and combined will result in hundreds of millions of dollars into Hasbro's coffers each year.

None of which would exist without the playbook.

Had Star Wars and the playbook never existed, the publishing industry would be all but dead. For years, book publishers have been struggling to simply stay afloat. "Event films" have tossed them a lifeline of "Event Books". Even entertainment vehicles that began as books, Harry Potter for example, benefitted greatly by the movies that sold more books. The comic book end of the publishing industry greatly benefited as studios began to search for enticing stories that could be the foundation for a blockbuster franchise, which in turn would generate demand for more comic books.

Had Star Wars and the playbook never existed, the packaged goods industry and retailers would be smaller. A LIMA Study found that the global retail sales of all licensed entertainment/character-based merchandise from all sources was roughly $107 billion in 2014. With profit margins being razor thin in many businesses, a popular character on a cereal box can make the difference between success and failure.

Had Star Wars and the playbook never existed, worldwide unemployment would be higher. The percentage of company revenue that goes to labor costs averages between 10% to 30% depending on the industry. Assuming a 15% ratio, and applying that to the LIMA's study $107 billion in revenue, gives us labor expenses of $16 billion each year that are a direct result of entertainment/character-based merchandise. That equates to hundreds of thousands of jobs around the world. And this does not take into account jobs created due to other downstream revenue sources such as movie entertainment/character-based parades, musicals, theme park rides and ancillary products and services from downstream suppliers. On a worldwide basis, the 1977 Star Wars and its playbook, in the hands of so many studios today, results in millions of jobs. Had the playbook never existed, the Great Recession might have been the Great Depression II.

Yes...my numbers are rough "guesstimates", but the impact, whether you double the numbers or divide them by half is the same. The introduction of Star Wars and the blockbuster playbook, now used by all studios, has been immense. It's also possible that had George Lucas not hit on this game plan, that another creator would have stumbled upon it soon or later. But what if they did not? The world would be very different today.

And now Star Wars: The Force Awakens, is about to debut. Box office projections are staggering, and some estimate that the film might eventually bring in nearly $2 billion at the worldwide box office. But that's a tip of the franchise iceberg. The massive consumer interest, created by an equally impressive Disney marketing machine, will lead to an immense retail onslaught of toys, video games, fast food, apparel, soundtracks, publishing, and themed products in many aisles at the supermarket.

And the studio, theater owners, moviegoers, and employment statistics will be better for it. Much more so than had Star Wars never existed.