The following is an open letter to Rich Ross, Chairman of Walt Disney Studios, regarding John Carter. It is a sincere request for Disney senior management to address in a public and meaningful way the many questions that remain unanswered concerning Disney’s handling of the the marketing and release of John Carter. Readers are invited to use the comment function to ask their own questions and leave comments.
Rich Ross, Chairman
Walt Disney Studios
500 South Buena Vista St.
Burbank, CA 91506
Dear Mr. Ross,
On March 20, 10 days into the theatrical run of John Carter, Walt Disney Studios issued the following statement:
“In light of the theatrical performance of John Carter ($184 million global box office), we expect the film to generate an operating loss of approximately $200 million during our second fiscal quarter ending March 31. As a result, our current expectation is that the Studio segment will have an operating loss of between $80 and $120 million for the second quarter. As we look forward to the second half of the year, we are excited about the upcoming releases of The Avengers and Brave, which we believe have tremendous potential to drive value for the Studio and the rest of the company.”
Predictably, in the days since the statement was released, the headlines concerning John Carter have declared it a “Mega-bomb”, effectively branding it the “biggest flop in cinema history”. For fans of the film who have been following developments closely, this was the final step in a series of hard-to-understand aspects of Disney’s handling of this release.
As a fan of the movie and a Disney shareholder, I am troubled.
The Timing of the Statement
A key question concerns the timing of the statement, which was made only 10 days into the theatrical run at a point when the film had only harvested approximately 55% of its likely Box Office Gross receipts. Clearly an official statement branding the film as the “biggest flop in cinema history” would have a chilling effect on box office receipts for the remainder of the theatrical run. Disney offered no explanation as to why this brand-damaging statement needed to be made at such an early juncture.
My own reaction was that such an announcement made so early in a film’s theatrical run was unique . My reaction was shared by respected film journalist Sharon Waxman, who wrote in The Wrap:
I can’t think of a similar announcement for a single movie in recent history. In fact, most studios try to bury losses for individual pictures in their financial statements. And they always argue that long-tail revenue streams mitigate a weak box office.
Although Disney offered no explanation for the timing of the announcement, logic suggests that if questioned about it, Disney would argue that public company disclosure obligations require it. If so, then logically one would expect to find similar statements by Disney during previous “flop” situations. With this in mind I studied available public record documents regarding Mars Needs Moms, Prince of Persia, and The Sorcerer’s Apprentice — all films which may be considered “comparables” and all of which resulted in write-downs. Mars Needs Moms in particular seems quite a bit worse than John Carter — for example, after 10 days John Carter had earned $184m and Mars Needs Moms after 10 days had earned $19M – a difference greater than the difference in budgets of the two films. But I found no evidence of a similarly timed “bomb” announcement for Mars Needs Moms or any of the other comparables. Can you explain this? Specifically — why was it only John Carter that warranted such an announcement, made at such an early point when so much of the revenue was yet to be collected? Have I missed something? Are there in fact equivalent announcements and I’ve just not been able to find them?
And one more point — anticipating the argument that disclosure required it, as most Wall Street analysts pointed out, motion picture revenues account for only 7% of Disney’s total operating revenue, and with John Carter a subset of that 7%, the rush to announce John Carter as the “biggest flop in cinema history” becomes even harder to understand.
Why was this in the best interests of the film, its stakeholders, and Disney shareholders?
Why was this situation so different from all the others?
How would you respond to critics who say the statement unnecessarily damaged the financial interests that Disney has an obligation to protect?
Any film is a brand, and it is undeniable that by issuing a statement causing the film to be branded “Biggest Flop in Cinema History” at a point when much income remained uncollected and in play, Disney damaged that brand and lost income for the film and the company. This damaged the economic interests of the film, including all royalty and equity participants in the film. Given the fact that in other situations no such devastating, brand-killing, income suppressing statement was made, can you help us understand — what was the intended benefit to stakeholders in the film? How did stakeholders — particularly those who have a royalty or equity stake in the performance of the film — benefit from the announcement?
The Marketing Debacle: Why, with investment so high, was audience awareness so low?
Consider the following quote from Michael Cavna in the Washignton Post — which echoes a widely held sentiment among film journalists:
John Carter” may go down as one of Hollywood’s biggest movie flops ever. But it should rightly go down as one of the town’s biggest marketing flops ever……At least you can see some of the $250-mill on the screen. But the $100-mill should be reported to the LAPD as missing — filched clean from the company vault. It appears to have gone up in smoke as fast as honesty, loyalty and weed among the arrested-development characters on “Entourage.” How else to explain the lack of a coherent and effective promotional campaign?
What is your explanation of the spectacular failure of Disney marketing? Disney approved an astronomically high production investment — yet the marketing was lackluster and not only failed to convince audiences to patronize the film –it failed to even create awareness at a level commensurate with the level of investment Disney had made in the film.
Let’s think about that for a second. In marketing terms — first there is “creation of awareness”, and then “conversion of awareness to trial”. It is within the studio’s power to make the first step happen — to create awareness–while it is the public who decides whether or not they are willing to convert that awareness to “trial” (in this case viewing of) the movie. Disney knew its first task was to achieve a very high level of awareness in order for such an expensive film to have a chance at profitability–yet the final tracking figures show that Disney fell quite short in generating awareness, achieving a level not at all commensurate with the financial model dictated by the budget that was approved by Disney management.
How does Disney explain this failure to create simple awareness of the film? And what is the explanation as to why for this film, with its massive budget and thus massive box office requirement, the marketing effort did not include any of the usual brand-building merchandising and cross-promotions that consumers expect from Disney. Where were the Woola toys? The action figures? The cross-promotional tie-ins? The licensing?
As a fan of the film and Disney shareholder, I am having a hard time understanding how to reconcile the approval of a huge production investment on the one hand, and the failure to do the things necessary to achieve awareness at a level that would “give the film a chance” on the other.
As I’m sure you know, there is a substantial body of thought that by the time the film had reached its release phase, you and other senior managers had essentially given up on it. Your failure to even create adequate awareness lends credence to these accusations. In other words, you had predetermined it would flop and chose not so throw ‘good money after bad’ by creating strong awareness. If indeed this was your strategy — why now own it and admit it? And if not, how do you explain the failure to create simple awareness?
Why was there an absence of course correction when it became apparent the marketing wasn’t working?
After the creation of awareness comes the hard part of marketing – convincing audiences to convert that awareness into interest so they will go see the movie in theaters. Disney’s performance in this regard was generally rated as extremely lackluster. My questions do not concern the original strategy, even though I consider that strategy to have been flawed; rather I am troubled by the inflexible and monotonous nature of a campaign that seemed to be completely unresponsive to the growing body of evidence over a course of many weeks–evidence that clearly showed that the campaign was not working.
The main advertising spend for the campaign began in earnest with the release of the theatrical trailer on December 1, 2011, followed by the airing of TV spots beginning in mid-Decmeber 2011, approximately 12 weeks prior to the release of the film. As of mid December when the TV spots started, John Carter was lagging behind the March competition (Lorax, Hunger Games, Wrath of the Titans) in a wide variety of measures of audience interest: Twitter and Facebook followers and activity, movie message board activity, blog comments, etc. Not only was the volume of “chatter” for John Carter low — but the positive/negative ratio was not good.
Clearly, then, it was critical to see what would happen when the initial salvo of nationwide TV ads began — and these began in mid December and continued steadily through the holidays. If these ads and the other elements of the promotion were working, one would expect to see a corresponding surge in activity in the areas mentioned above –but no such surge occurred. The activity increased, but only slightly, and by mid January it was clear that the advertising spend that was the most important part of the marketing campaign simply was not working. Criticism of the TV spots was being heard — the “shock and awe” strategy implicit n the ape-jumping, CGI heavy (and story/character light) campaign was not generating interest and there were a wide variety of measurable statistics available to Disney that showed this.
Why did nothing change?
It is my understanding that properly managed theatrical campaigns regularly reassess and adjust based on audience reaction — yet as observed from the outside, it seemed that Disney never adjusted the campaign in any substantial way.
Why did the all-important TV spots (which can be quickly edited and deployed) never qualitatively change in spite of a mountain of evidence that it wasn’t working? What would be your comment to observers who contend that Disney’s failure to react to the tepid response to the marketing strategy, and failure to at least try other themes and avenues, constitutes a failure of professional responsibility to the film and its stakeholders to effectively market the film in which such a large investment had been made?
What will Disney do to repair the legacy of the film — a legacy which its own action damaged?
Prior to Disney’s “megaflop” announcement most analysts believed John Carter was headed for global box office receipts of approximately $300m. Now, due to the negative impact of your announcement and the subsequent negative worldwide press coverage, it seems more likely that number will be less. Even at the reduced Global Gross, John Carter — Disney’s self-branded “Biggest Flop Ever” — will earn global box office receipts that are higher than many well-regarded science fiction and adventure classics of the last two decades including Total Recall ($267m); The Fifth Element ($263M); A.I. ($235m); Crouching Tiger, Hidden Dragon ($213m); Braveheart ($210m) Sleepy Hollow ($206M); and King Arthur ($203m). Other older sci-fi classics such as Blade Runner (opening weekend $6.1m) and 2001 Space Oddysey ($59m Gross) met with an initial critical response that is similar to that given John Carter – yet are remembered today as classics. There are many, myself included, who feel that John Carter deserves to be remembered (and to live out its earning cycle which will last for many years) in such a pantheon of titles, and not as the part of the pantheon where your actions have placed it — alongside Ishtar, Heaven’s Gate, and Mars Needs Moms.
The question, then, is: What will you do to ensure that the legacy of the film is fairly and accurately upheld? To the fans of the films, to the film-makers who toiled with great heart and imagination for four years; to the fans and family of Edgar Rice Burroughs, it seems that a terrible injustice has occurred and we are anxious to know what Disney will do to correct it. As a Disney shareholder I am also concerned that you take steps to rehabilitate the image of the film so that it’s longterm earnings flow is not further compromised. What are you going to do about this?
Mr. Ross, you and Disney have been entrusted with two things that many of us consider to be quite precious: First, you have been given stewardship of a beloved literary property that has been in print continuously for 100 years and changed the lives of scientists and storytellers from Carl Sagan to James Cameron, Ray Bradbury, Arthur Clarke, George Lucas and others. Second, you have been given responsibility for the fate of a film directed by one of our most creative and talented film-makers — a film that has clearly been made with great passion and heart and is a vibrant, luminous imagining of a strange, compelling world that has intrigued imaginations for a century.
There is a widely held perception that Disney’s performance to date in handling these two precious properties Disney has let down all of those who have a stake in the outcome of this project. Your answers to the questions I have posed will help us better understand the decisions you have made, and your plans for the future of the film and the literary property embodied in that film.
I sincerely hope you will offer the public answers to these questions I have asked.
A Fan of Edgar Rice Burroughs, Andrew Stanton, and JOHN CARTER OF MARS