Why alienating fans is a risky move

So we’ve talked a lot over the past few years about this huge cultural shift happening in the American entertainment industry. More of a culture war as many folks, including myself, have defined it. There’s roughly two factions out there battling it out over the future of popular media. One side wishes to redefine it to push political narratives. The other side, the long time fans, want entertainment to return to its golden age from the late 70’s to the early 2000’s. So who’s really in the right here. More importantly, who should Hollywood and the broader industry be focusing on?

This whole conversation started when I was watching some YouTube videos about Lucasfilm firing Star Wars actress Gina Carano. The former MMA fighter had compared the current political climate in America to 1930’s Germany. She has also been accused of being anti-trans for refusing to put gender pronouns in her social media bios. Something which rustled the jimmies of a lot of people on the political left, including many Hollywood elites. Elites such as Kathleen Kennedy, the head of Lucasfilm. After a successful “cancel” campaign by Twitter users, Carano was turfed from the Mandalorian. Not only that, but her popular character, former Rebel shock trooper Cara Dunn, was also also wiped from the series. Disney even had her toys pulled from shelves.

Now, Lucasfilm had already been locked in a cold war with a sizable chunk of the fandom, ever since the disaster that was The Last Jedi. Now that war has suddenly turned hot. Outraged fans took to Lucasfilm’s YouTube channels to heavily ratio videos and post comments in support of Carano. An Oscar video honouring women in Hollywood, presented by Kennedy herself, also received the same treatment. Kennedy is an outspoken feminist, and fans were quick to point out the hypocrisy she was displaying for firing a strong woman.

So circling back to that YouTube video. One comment I read was critical of the reaction, stating that fans will complain now, but will forget about it in a couple months. Then they’ll go back to lapping up whatever garbage Disney decides to dump in the trough. And, well… they aren’t wrong. When people are very passionate about a property, it’s amazing how much abuse they’re willing to take. I’ve made similar remarks about the gaming community. However, this is only true to a point.

Disney has made it very clear that they want to cater to the more politically sensitive social justice crowd. They may not have gone full in on that yet, but this is where their products are ultimately heading. Numerous Lucasfilm employees have also been adamant that they do not want or need the old fans anymore.

Whenever one of these scandals breaks, most fans ultimately do stay on board. This is what these big companies are counting on. But a few will tap out. They leave and never come back. Now, that wouldn’t be an issue if they’re gaining more new customers to replace the old ones who have left. The problem is, they aren’t.

You see, no two customers are the same. You have high value ones, and low value ones. A high value customer is one who is more likely to spend large amount of money on your products. They also tend to be loyal customers who are willing to evangelize the brand. That is, passionately promote it to people within their social circles. Low value customers meanwhile aren’t all that interested in spending a lot of money on a particular property. They have low brand engagement, and are less likely to convert to loyal customers. So how does this factor into a business?

Say you’re running a car rental agency. You have a local farmer that rents a truck every week like clockwork, versus a walk-in who’s only renting the cheapest car available. Trucks generally cost more to rent than cars. Now, say that farmer calls to reserve that same car for the same time. Who are you going to focus your efforts on? Sure, you could give the walk-in the royal treatment in hopes that they’ll rent more vehicles down the road. That might pay off. You now have two loyal customers. However, the more likely event is that this walk-in doesn’t have much need for rental cars. Since they didn’t bother to reserve, this rental is probably a one off. Maybe they’re someone from out of town who can’t plan a vacation. You could treat them with the highest priority, but they probably won’t be back regardless of the level of service provided. However, if you give the farmer’s reservation away, a car they presumably needed for something specific, they’re likely going to be very cross and take their business elsewhere.

There’s a fundamental rule in business which states that once you break the trust of a loyal customer, they’re extremely difficult to win back. They can also convert into your most ardent brand detractors. So if you’re going to take that gamble to try and win over a new clientele, you’d better be damn sure you have all your cards in order.

So how’s this working out for Star Wars? Well, even if you completely disregard the outrage from the fandom online, you can’t ignore the finances.

Merchandise sales tend to be a strong indicator of how people feel about an entertainment property. Generally, Star Wars merchandise isn’t selling. Especially items specifically pertaining to the Disney era. Prequel and OT stuff still does okay, but even sales of those are sluggish compared to 10 or 20 years ago. Supply is outstripping demand, so many toys are ending up either ending up at recyclers, or in the bargain bins of discount retailers. Something you never saw during George Lucas’s tenure as head of the IP.

Box office sales have also been trending downwards, with steep drop offs going into each film’s second week. Of course this doesn’t even touch on the dismal sales figures for the High Republic media project. The Mandalorian, meanwhile, seemed to turn things around. But any hope of it becoming their next golden goose has been quickly taken off the table.

What this tells us is that, while the social justice demographic generally approves of the changes Disney is making to the franchise (or says they do), they’re not following through on this economically. They’re not converting into high value customers. Disney is not only losing more high value customers than they’re gaining, but also aren’t gaining enough lower value customers to offset these losses

This is the essence of the “get woke, go broke” phenomenon we covered a couple years back. Now, I think you’ve already figured out that I strongly disagree with the current social justice fad. Its divisive, hate filled, and totalitarian rhetoric has only served to erase decades of societal progress. From a strictly business perspective though, they aren’t and never really were interested in supporting these properties. To them, they’re just a means to an end. Even if the product is changed to meet their demands, they don’t support it financially. Well, I’m sure there are some that do, but it would seem they’re firmly in the minority.

Now, a few of the more outspoken members of the Fandom Menace think that Carano’s firing will be what kills Disney. That’s pretty unlikely. While they have been dealing with major financial issues due to the CCPVirus, they’re still an utterly massive company, with loads more IP beyond Star Wars. However, Lucasfilm’s failure to make a decent return on their investment certainly isn’t helping matters. As one YouTuber put it, the scandals have become more entertaining than the movies.

Unless Lucasfilm changes its course, that is firing Kennedy and promoting Dave Filoni to take her place, the company will continue to slowly trend downwards. Bleeding off its fandom with each successive scandal until there are no more high value customers left. Essentially death by a thousand cuts. This is basically what happened to the American comic book industry. And Doctor Who. And Star Trek.

It’ll be interesting to see how this situation plays out. Especially now that the SJWs have scored an empowering win, and are now looking to go after Rosario Dawson. Not to mention Carano’s interview which allege some rather cult-like behaviour with Kennedy’s faction behind the scenes at Lucasfilm. But when it comes to Star Wars, I’d like to quote another sci-fi icon, “he’s dead Jim.” At least maybe it’ll give other entertainment companies some pause should they start heading down the same path.