George Lucas in 1977 took a $500,000 pay cut on Star Wars in a deal to keep the merchandise rights for the movie.
Before that, he only had two mass distributed movies.
First was THX1138 “the reason THX sound systems got that name”, which has Robert Duvall and failed.
Second was American Graffiti, which has Ron Howard and was the most successful George Lucas movie on a budget to box office example, making 140 million on under $800,000.
Lucas despite success wasn’t able to get a deal which would let him keep any equity in the franchise.
Something kind of crazy, but actually the norm.
Sylvester Stallone
Never owned even 1% of Rocky.
Francis Ford Coppola
Never owned 1% of The Godfather.
Jerry Seinfeld
Owns residuals, but zero equity in the actual brand of Seinfeld.
Lucas apparently pushed for merchandise after meeting with Alec Guinness, who’d later play Obi Wan.
He said he’d do the role under two requirements.
- He wanted a cut or the merchandise, because he compared it to Star Trek and heard about toy sales there.
- He wanted his character to be killed, so they’d not get him back for a sequel.
Lucas cut his salary for merchandise and when Christmas came, he cashed in hard on it.
Amusing thing was he just went to tons of toy manufacturers and told them to make random alien toys that they’d just put the Star Wars logo on.
Didn’t have any design or even a connection in the movie.
Fun fact, the most popular one ended up being a soldier with a rocket backpack called Boba Fett. It ended up nearly 50 years later becoming the highest selling character in the franchise and ended up in the movies.
But the big point was the deal they made with Kenner Toys, which sold over 300 million units from 1978-1985 of the toys.
The first Christmas, they weren’t able to meet the demand and opted to do Christmas IOU cards.
Basically gave kids cards of the toys they’d eventually get, parents bought and the promise was they’d get Star Wars toys later on.
It shockingly worked and they didn’t notice any hesitance in sales.
There are two reasons this is something to think about.
Supply issues
A lot of electronics, clothing and toy companies are having issues this Christmas, due to supply issues and shipping.
There also are always natural problems with companies unable to hit deadlines.
Bringing back what George Lucas did for some games, toys and even products for adults, may be a good idea.
Potential startup
Interesting thing is while things normally get cheaper during the holidays, a lot of products in the toy, game and clothing category actually drop way more the weeks after Christmas.
For more budget friendly people, a business could likely be setup buying products at lower prices, being counted on to eventually be shipped post Christmas and the company actually buys later on after sales hit.
Could in some cases lose money, but certain product categories, especially fads, end up dropping 30%+ in January during some cases.
Writing this, because I always found that story of Lucas becoming an eventual billionaire off giving kids IOU’s kind of funny.
That said, good lesson.