Our real-world testing was highlighted in the Harvard Business Review
How blockbusters can crowd out product innovation
Going to the movies anytime soon? It’s a blockbuster summer. Get ready for one mega-contender per week through mid-August.
Potential tent poles notwithstanding, Hollywood looks like a dog’s breakfast straight out of Strays, the pleasantly raunchy Will Ferrell comedy batting cleanup in August. Box office is a shadow of its former self. Streaming services are retrenching or even closing up shop, taking giant spending pools with them. While Gen Z is not immune to the charms of traditional narrative storytelling, they are in deep with YouTube and TikTok. And don’t forget the writers’ strike and arch-nemesis AI.
What’s a studio to do?
Generate more hits with less risk. Obviously.
Hollywood has already reduced risk. The rate of big budget flops—$50M+ bets that tank—has declined since the mid-90s. The biggest driver of flop decline: more selective greenlighting.
The winners? Sequels, adaptations, anything with an existing franchise. And it’s all franchise: in 2019, franchise releases represented 83% of Hollywood wide-release worldwide box office, while non-franchise films made up 18%
Marvel, Star Wars, Fast & Furious, Harry Potter—the hits just keep coming.
But it might not last. There is a big debate about franchise fatigue. And the alternative, original movies, are riskier than franchises, since they lack a built-in audience.
While you may not be a studio executive, your business may face a similar challenge. Most companies have their own version of franchise fatigue. Line extensions, rebrands, and collabs can all breathe new life into old brands—for a while. But they’re no substitute for real innovation. Think of car companies playing catch-up on electric vehicles. Or apparel brands not seeing fast fashion on the horizon. Or Major League Baseball, now scrambling (with some success!) to spice up gameplay.
How do you maximize the value of old franchises while creating new ones? Many companies approach the problem organizationally. Some create an innovation or new venture arm, separate from the mothership, that owns most aspects of innovation. Others create a support unit to cultivate innovation throughout the rest of the organization.
No matter which type, the best of those units run experiments and teach others to do so, too. Companies like Booking.com run scads of experiments to drive growth in their existing franchises. Others focused on greenfield innovation run experiments to validate usability and demand for new products.
Most experiments for greenfield innovation do not take place on fully developed products. De-risking means testing early—at most an MVP and sometimes just a visualization of something labeled “in development.” Nobody wants to be Quibi, that short-lived product of Hollywood hubris, in which a fully-formed concept was launched with virtually no intel about its value proposition or usage. “We know nothing about how people will use this app,” Quibi’s CEO Meg Whitman said at launch. “We need some time to work out the kinks.” Criminy.
Don’t be a Quibi. Learn to experiment. Here are some types of experiments to consider:
A|B testing. Usually for optimizing something that exists and has traffic (a franchise!).
Minimum viable test. For testing the riskiest aspects of new products, especially complex ones.
Randomized introduction. Great for geographic rollouts of new things.
Heat-testing. What we do! Tests strategy for new products, product launches, and brand repositionings. Great for movies, too (wink, wink).
Hollywood, by the way, could learn a thing or two about testing with audiences much earlier in the development process, especially for original movies (“greenfield innovation”) that have a shot at becoming franchises. Our two cents: de-risk everything everywhere all at once.
