Will Nintendo Replace Disney/Pixar? + AI Replaces Influencers?
The Flash bombs + It's Kraven time!!!
The Agenda:
Opinion
Will Nintendo Replace Disney/Pixar? [Hollywood, IP, Gaming]
The Flash bombs, too. [Hollywood, IP]
AI could replace influencers… and actors? [Hollywood, AI, B2C]
Universal made a ton of $ from premium video-on-demand (business case study!). [Hollywood, Tech, B2C]
It’s Kraven time! [Hollywood, IP]
Final Fantasy, Mortal Kombat, Street Fighter: How gaming successfully evolves IP. [Gaming, IP]
Influencers become video game publishers. [Gaming]
YouTube gets into gaming. [Gaming]
Saudi Arabia to become a $38B gaming capital. [Gaming, IP]
A look into the toy industry via Hasbro. [Toys, IP]
Beyoncé causes inflation. [Music]
Monday Motivation
Embrace what you don’t know. (Sara Blakely, founder, Spanx)
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Opinion
Hollywood
Will Nintendo Replace Disney/Pixar? [Hollywood, IP, Gaming]
Major Disney and Nintendo news collided this past week! And it got me thinking about a scenario where Nintendo and its parties actually replace Disney as the de-facto leader in animated IP.
Of course, that’s an extreme situation, and Disney appears to be taking a course of action it has determined will right its ship. Last week, I brought up the challenges at Disney, which also includes the underperformance of recent Disney and Pixar films. The company’s CFO left, and now so has the Chief Diversity Officer. Perhaps related to that is the mermaid-sized elephant in the room. Maybe Grace Randolph had the best comment about this, that representation in Disney IP has been heavy-handed, and that representation that fails commercially isn’t good representation, since it hurts those groups. Like I said previously, creative writing 101: Don’t be preachy.
Pixar, which is owned by Disney, isn’t faring any better. Lightyear underperformed last year, and now Elemental looks to underperform as well. The Town podcast had a recent episode about Pixar, “Has Pixar Lost its Magic Touch?” discussing the issues. You learn a lot about the inner workings of Pixar, and I wanted to highlight a three key issues: 1) higher Pixar production costs bc of no outsourcing (~USD 200M budget for typical Pixar movie vs. ~USD 100M for Super Mario and Spider-Verse each), 2) more competition, and 3) changing audience tastes, which I will talk more about in a sec.
As all of this is happening, Nintendo, which Disney’s own CEO Bob Iger congratulated after the massive success of The Super Mario Bros. Movie, made some shocking moves this past week. The game- company-that-is-transforming-into-an-IP company announced new Mario games that appear to build on the momentum of the Mario movie and expand into new audiences, and may be running up against Disney/Pixar:
Super Mario Bros. Wonder: A new 2-D side-scrolling game like the New Super Mario Bros. series, which has historically outsold many of Nintendo’s 3-D offerings, but with some important differences:
More dynamic animation! I can’t help but speculate that Nintendo game devs collaborated with Illumination, the animation studio behind the Mario movie, for this game. So the transition from watching the movie to playing the game approaches seamlessness.
Mario transforms into an elephant. Not him wearing an elephant suit, he turns into an actual elephant. OK that sounds silly, but this is really important IMO, as I will explain below.
Princess Daisy is a playable character for the first time in a mainline Mario game! Also really important, please read on.
Super Mario RPG remake: A surprise remake of the famous 90’s role-playing game (RPG) that was a collaboration between Nintendo and Square Enix (Final Fantasy) before they famously broke up. It looks like, after almost thirty years, both parties have moved closer together to remake the game. Why now, all of the sudden? I think one reason may be the popularity of the RPG genre (Pokémon, Genshin Impact, Diablo, etc.) in mobile gaming, which is the largest market of gaming revenue-wise (est. 50% total FY22 rev.). Within mobile gaming, RPG is a top earner. It might be that Nintendo wants to expand to this lucrative audience, and woo it into buying its Switch gaming console.
Untitled Princess Peach Game: A new game with Princess Peach as the main character, maybe for the first time since 2005’s Super Princess Peach. Again, why now, after almost twenty years?
IMO, Nintendo is aggressively expanding its audience. I mentioned the lucrative mobile RPG crowd above. And with Mario turning into an elephant that to me looks suspiciously like Bing Bong from Pixar’s Inside Out, it seems that the company looks to expand into the market for very young children.
And above all, Nintendo is actively courting the young girl demo, a market Disney has had a leadership position in with its “Disney Princess” line. I previously highlighted that the Mario movie gave, as close as possible, a definitive origin story for Princess Peach, and now it’s clear why this was done. Get young girls emotionally engaged with the movie, cross-sell games made for them, featuring Nintendo’s own princess line. First with Peach and now Daisy, and then Rosalina and… Pauline? And maybe the company will create even more characters for this target demo.
So - Nintendo is moving into the traditional markets of Disney/Pixar, by way of going cross-platform from gaming into animation. I think Nintendo’s serious about this - the company nominated Illumination CEO Chris Meledandri to its board of directors, immediately lending Nintendo a core competency in animation. Meanwhile, Disney historically hasn’t been able to launch a successful in-house gaming operation. In 2019, Iger even said Disney has no intention of returning to in-house game dev. But maybe that’ll change going forward in our bold, new, cross-platform era.
Before wrapping up, I wanted to discuss changing audience tastes. Obviously, as an IP creator and the founder of an IP startup, I’m excited about this. IMO, this is a direct result of the twin forces that are affecting global business and society in general, which are 1) globalization (more competition), and 2) technological advancement (lower barriers to entry for said competition). It’s not just Disney/Pixar vs. Dreamworks anymore. With so many competitive choices, it’s not a surprise audience tastes are evolving. Also, people like things that look cool. I’ve talked at length about how anime is in Mario/Nintendo’s DNA (I mean, Demon Slayer recently took over Times Square!), and also, look at the groundbreaking animation of Spider-Verse.
[The bar is set higher, so the product must be better; Evolving the IP; Cultural globalization.]
ABS.
The Flash bombs, too. [Hollywood, IP]
It looks like The Flash, a superhero multiverse movie that also features Michael Keaton’s Batman, is bombing. To be fair though, some are calling this summer “The Summer of Flops”, Spider-Verse aside. There are several potential reasons as to why The Flash underperformed, but, as much as The Flash deals with timelines, I want to highlight star Ezra Miller’s own timeline of controversies. Yikes. Which brings me to:
AI could replace influencers… and actors? [Hollywood, AI, B2C]
The WSJ recently published the article “Influencers Don’t Have to Be Human to Be Believable”. Basically, consumers may be willing to believe virtual influencers when their endorsements are based on facts. So there may be a potential market for virtual influencers, and, while I don’t think human influencers will be replaced, I think competition is just going to get fiercer, especially if actors compete more closely with influencers in the scenario of Hollywood using more AI.
Speaking of which, I wonder if Ezra Miller’s behavior potentially influencing The Flash’s underperformance (see above), along with on-screen villains maybe being actual real-life villains (Jonathan Majors, Tenoch Huerta) is further impetus for Hollywood to adapt AI in lieu of solely relying on actors. Per the Strikegeist interview with an Apple TV+ exec:
“And in a larger sense, the technology is even a bigger issue for actors. Imagine being able to crank out episodes of Wednesday for 20 years without anyone aging? Or having a computer capture someone's voice and use it for decades without any additional compensation? That's very real and it troubles me that we're in the Wild West part of this process. “
Just FYI, signs of this are already happening: James Earl Jones signed off on Disney using his voice for AI Darth Vader. Anyway, if producers can create a blockbuster movie without the unpredictability of some stars’ divo/diva/divx, or worse, behavior, I can see the appeal of this. I also wonder if the threat of AI is one reason why some gaming influencers are becoming video game publishers (see below).
Universal made a ton of $ from premium video-on-demand (business case study!). [Hollywood, Tech, B2C]
Listen up, people! A great business case study right here! The NYT reported that Universal has made more than USD 1B in less than three years with a brand-new strategy, and a new market! Introducing premium video-on-demand. Digital rentals (at a higher price) only 17 days after movie theater release! With no real cannibalization of movie ticket sales! BTW Super Mario made a ton of money here, too. Distribution strategies are key!
[Artisanship at scale; Premiumization.]
It’s Kraven time! [Hollywood, IP]
The tech-company-turned-entertainment-IP-company known as Sony debuted the trailer of a movie about Spider-Man’s enemy, Kraven. According to the trailer: the movie, starring Aaron Taylor-Johnson, Russell Crowe, and Aaron Taylor-Johnson’s abs, is about this guy Kraven, who gets bitten by a radioactive lion, which grants him the power to throw bear traps at people’s faces and bite their noses off.
OK in all seriousness, I’m down to watch Kraven the Hunter if it’s good. Sony’s in an interesting situation re: the Spider-Man IP film rights it bought from Marvel when Marvel went bankrupt in the 90’s. While it is working with Marvel to have Spider-Man himself appear in the Marvel Cinematic Universe, it’s own recent Spider-Man movies are featuring less of Peter Parker (or Peter B. Parker) and more of Miles Morales. It was even apparent to me that Across the Spider-Verse barely ever showed the original, iconic Spider-Man suit! Curious to see what Sony does going forward, but in other Sony news, it removed El Muerto, also about a Spider-Man villain, off its release schedule.
Gaming
Final Fantasy, Mortal Kombat, Street Fighter: How gaming successfully evolves IP. [Gaming, IP]
I’ve talked quite a bit about evolving the IP and Hollywood’s struggles in doing so, but the gaming industry seems to lead the way here. Aside from Nintendo, we have recent new games based on established IPs that have taken steps forward but still continue to please audiences:
Square Enix just launched Final Fantasy XVI, which marks a major departure gameplay-wise, and so far reviews have been good.
Square Enix also announced the next chapter in its Final Fantasy VII remake series, Final Fantasy VII Rebirth (Elena!). The remakes have made massive changes to the story, but it looks like fans are on board.
The new trailer for Mortal Kombat 1 - I think this is the second time the entire story continuity has been revamped? - dropped, and fans sound excited.
Street Fighter 6 was released - not only evolving the gameplay itself, but also emphasizing a new generation of main characters, though keeping the older ones around as well. Reviews and sales have been good!
I would say that, despite all the drastic changes in the games above, the core of the IP remains the same - they give audiences what they want and stay true to the characters.
[Evolving the IP.]
Influencers become video game publishers. [Gaming]
According to Bloomberg, some gaming influencers are looking to become video game publishers to diversify revenue streams. Given everything I wrote above, I see it as a way to differentiate themselves (esp. if closer competition with actors occurs) and move up the value chain. But most of such ventures historically haven’t worked out so well.
YouTube gets into gaming. [Gaming]
Influencers? Gaming? YouTube itself is getting into gaming! According to the WSJ, it’s testing simple online games.
Saudi Arabia to become a $38B gaming capital. [Gaming, IP]
USD 38B to make Riyadh a gaming capital. Also, Saudi has significant investments in other game companies, including Nintendo, in which it is the largest outside shareholder. The CEO of Saudi’s Savvy Gaming Group mentioned working with these companies and developing IP together. After all, the country’s stake in Nintendo turned out to be a really good move.
[The importance of IP in the digital economy.]
Toys
A look into the toy industry via Hasbro. [Toys, IP]
The WSJ had an interview with Hasbro CEO Chris Cocks, and, among other things, the trend of “kidults” was highlighted, with demo over-18 accounting for 40% (!) of annual revenue. Cocks said it could be 50% of rev. in five years! Cards (Magic: The Gathering, Pokémon, etc.) and action figures with IP tie-ins are popular with adults. After all, there’s one super-rare Magic card based on The Lord of Ring’s “One Ring” that’s worth over USD 2M.
Music
Beyoncé causes inflation. [Music]
Apparently, a lot of people in Sweden wanted to see her perform live. See? People will spend $ for live, human performances. The chairman of United Talent Agency even said recently that "The live music business is off the charts[.]"
Monday Motivation
"Embrace what you don't know, especially in the beginning, because what you don't know can become your greatest asset." (Sara Blakely, founder, Spanx)
Since we’re talking about princesses, and Business Princess Lixue has made an appearance, I thought it’d be nice to have a quote from a successful female entrepreneur. Sara Blakely/Spanx’s story is absolutely nuts - taking a massive risk, quitting her job, investing her life savings, doing the research, grinding like hell… really inspiring! Keep an open mind, whatever you do!
GO FOR IT! REACH YOUR GOAL!