Hard to see, the Dark Side is...

It's been sixteen years since we've visited Lucas' galaxy far, far away, but nothing has dampened the mystique or allure of the Star Wars phenomenon. Fans in the US lined up for days before the premiere; Tokyo fans promise to be almost as obsessed. Whether or not the flick lives up to its hype, one thing's for certain: George Lucas knows how to work the machine. TC's Los Angeles correspondent Wayne Karrfalt takes a look at the force behind The Force.


Star Wars, Episode I, The Prequel, Phantom Menace.

Never has a movie with so many titles been so eagerly anticipated. In Westwood and Hollywood, fans with no life at all started lining up a month before the picture opened to make sure to get a good seat. Star Wars is more than just a movie, they say, it's a faith, a religion, a beacon to help us navigate our course through the asteroid field that is life.

Please.

I hate to burst anyone's bubble, but Phantom Menace is essentially a kid's movie, with a more distinguished pedigree than most, and more special effects shots than you can shake Yoda's staff at. It's been wildly successful, and deservedly so. It's a helluva lot of fun. Yet even before a moment of footage was shot, Phantom Menace promised to be a landmark motion picture that would change things in the movie business, the way few have before it. It remains interesting for the precedents it has set - and broken.

Summer knights

"Trust Your Instincts, Luke."

George Lucas, the son of an office equipment retailer from Modesto, California, learned early on in his career the importance of taking control and keeping it. His second feature, American Graffiti (1973) was produced by Lucas' mentor Francis Ford Coppola, and shot on a shoestring budget of USD700,000. Paramount hated it and threatened to shelve the film. When the studio did release it, it went on to do gangbuster business - USD55 million in revenue for the studio. Lucas ended up with a paltry USD20,000 fee.

Lucas owns the entire spectrum of rights for the Star Wars franchise, and has leveraged it to squeeze as much back and front end money as possible out of every transaction Phantom Menace becomes involved in. Never has the writer/director of a film stacked the deck so much in his favor. He is an inspiration to entrepreneurial artists everywhere. How is it done?

Lucasfilm, George's San Rafael-based production company, financed the entire project in-house, budgeted at a modest USD120 million. (Lucas can afford it: Forbes pegged his pre-prequel worth at USD2 billion.) This enabled Lucas to employ 20th Century Fox as its worldwide distributor on a contract basis, paying Fox something like 5%-7% of the total gross. (Fox doesn't mind; it's a no-risk proposition. They only advance print and advertising costs, which will be recouped from the top.) That leaves only theatre owners to cut in. If Phantom matches Titanic's USD1.8 billion haul worldwide, Lucas could net USD800 million.

Lucas should net big royalties from video, pay TV and terrestrial TV, driving hard bargains in each window. Sources estimate Lucas will see some USD500-USD600 million from video sales, and another USD150 million or so in TV revenue.

Lucas was made a major shareholder in Hasbro in exchange for merchandising rights; he now owns 7.4% of the world's second largest toy maker. He is guaranteed an estimated USD500 million in royalties, even if they don't sell a doll. That's just the tip of the merchandising iceberg, which is the real cherry in all of this. (The Star Wars franchise has generated USD4.5 billion since 1977.) There are also Lego toys, T-shirts, video games, etc., ad nauseam. Merchandising alone could earn Lucas USD1 billion.

You get the picture. "It's really about money," Lucas told Premiere magazine. "Money is power." If that's the case, there's a new sheriff in town.

Darth: Minus the mask - and the attitude

"Use the Force, Luke."

As Martin Luther posted his demands on the door of the Castle Church in Wittenberg, Lucas used his clout to dictate a lengthy list of terms to exhibitors lucky enough to snag Phantom Menace. They give interesting insight into a studio's concerns at the box office. Fox even threatened to confiscate prints if any of the rules were broken. (Maybe they'd send storm troopers.) Here are a few of the conditions:

*Phantom must run on a theatre's biggest screen and cannot be moved without permission.

*In competitive zones, it must play on at least three screens.

*If it begins its run on two or three screens, it stays on those screens.

*Runs are a minimum of eight to twelve weeks.

*No passes will be honored for the first eight weeks.

*Paid on-screen ads will be prohibited for the first two weeks.

*No more than eight minutes of trailers will play before the pic. (Fox attached two minutes of its own trailers to each print.)

*No interlocking, or using one print for multiple screens, allowed.

*Payment is to be made within seven days for the previous week's receipts, instead of the customary 30-60 days.

The battle begins

"It's all around us, it binds us together."

Lucas and the marketing gurus at Lucasfilm and Fox have been brilliant in realizing that this film literally sells itself. Most studios fork over upwards of USD15-USD20 million in advertising to open a movie. Fox reportedly spent less than USD10 million initially. The real hype was paid for by the media itself. Stories in print, on television, and even in competing movie trailers about Phantom Menace made a much stronger impact than any paid ads could (New Line urged viewers, "If you see one movie this summer, see Star Wars. If you see two, see Austin Powers."). Lucasfilm refused to comment about its marketing strategy, but there are two aspects to consider.

Firstly, the industry learned an important lesson last summer when Sony Pictures went completely overboard hyping Godzilla. When it finally opened, backlash over the over-exposure combined with over-heightened expectations to seriously dampen the film's performance. Lucas and Fox were extra careful not to make the same mistake, holding TV spots two weeks after Phantom opened, and shrinking newspaper ads to a third of a page, if running one at all. Of course they had the luxury of facing no big opening films early on, but still. "There was a huge interest on the part of the readers and the press wanted to serve that," comments Andrew Hindes, senior reporter at Daily Variety, who broke several Star Wars stories that were picked up nationally, including Lucas' list of demands above. "Because of that interest and how global the press has become, there was a danger of inundating people. It gets to a point where people don't want to pay to see the film. The publicity machine was very conscious of overexposure."

Then there's the media, which nearly killed itself picking up the slack. Take it from a freelance writer; editors didn't want to talk to me this spring unless I had a Star Wars story to pitch. Sure, the release of the first Star Wars in sixteen years is a big story, but interest, and news, was carefully orchestrated and dispersed from up on high. According to Hindes, "The publicity machine was actually trying to slow the hype in this case - it was the media themselves that drove the publicity. Newsweek did a cover story despite not having cooperation with Lucas, which is unusual. The Lucas people limited interviews - in many ways there was a 'blackout' of information - but the press saw this as an 'event.' Anything was of interest and it took on a momentum of its own."

When Phantom Menace comes to one of a record 400 screens near you in Japan, don't expect the Holy Grail and you won't be disappointed. It's certainly worth a look or two. If you do find fault with George the artist, remember George the businessman, and marvel at the utter efficiency of this two-headed hydra. And if you don't get enough of Episode I, fear not. Episode II and Episode III are already in the works.

Battle Droids