The Economics of Media Franchises

Movie franchises are having a bit of a moment right now. Between Star Trek, Star Wars, J.K. Rowling’s Wizarding World, the Marvel Cinematic Universe, and the DC Extended Universe, it is almost impossible to escape movie franchises. And if you did not start all of these at the beginning, good luck catching up (take the Marvel Cinematic Universe for example; there are 17 movies already). The amount of time and money required to catch up on these franchises would be quite large. Say, for example, that the average length of a movie is two hours, it would take almost a day and a half (with no breaks) to watch all 17 Marvel movies.

It may be tempting to try to escape this onslaught by turning to books instead. However, franchises are prevalent in print as well. To name a few: The Wheel of Time, the Discworld series, the Oz books, and basically any mystery series. Even (or, perhaps, especially) children’s books are prone to franchising. Some examples: the Warriors series, the Nancy Drew series, The Babysitters Club series, The Boxcar Children series, and the Magic Tree House series.

Why are media franchises so popular? Of course there is nostalgia and sentimentality, but there is also an economic argument.

Franchises are low-risk, high-reward investments for producers.

Producers like franchises because they are a known quantity. If millions of people showed up to see the last movie in the franchise, it is fairly likely that millions will show up for the next one. Plus, when producers specialize, they are able to benefit from a concept known as learning-by-doing, in which a producer is able to become more efficient over time simply by gaining experience. For example, a company that specializes in making superhero movies will learn more about how to write better plots, create more effective trailers, and run more successful advertising campaigns. A publisher that specializes in mystery novels will learn to design more eye-catching covers and select and edit manuscripts that are more effective in their storytelling. Because of these factors, the costs to a firm of producing another work in their franchise will decrease as the franchise continues.

If, instead, the firm takes a risk on something new, there is no guarantee that they will get it right, and if they do their is no guarantee enough people will show up to make the investment worth it.

This is because franchises are also low-risk for viewers. The transaction costs a potential viewer incurs when determining whether a movie is worth seeing or a book is worth reading are lower for franchises; if, for example, the viewer has already seen one or more movie in a franchise, the need for that viewer to expend a lot of time and energy investigating the movie is fairly low. On the other hand, a movie or book not in a franchise may be more time consuming to investigate. The potential viewer would have to read reviews, find out whether anyone involved in the production (the writer, the director, the lead actors, etc.) have been involved with any other productions that person likes (or dislikes). Some people are very willing to take that risk (depending on the person’s level of risk aversion and expected value from works in franchises versus stand-alone works), but many people are not.

Taken together, this means that media franchises are here to stay.

Leave a Reply

Your email address will not be published. Required fields are marked *