You're looking in the wrong place for the next big IP

Hello everyone, welcome to Edition 112!

It’s now just over two weeks until we get to see many of you at SEG3 London! If you fancy attending the in-person version of this newsletter, and being alongside marketing and innovation leaders from across sports, entertainment, gaming, music & lifestyle, put June 18-19 in the diary.

*And don’t forget, as a subscriber to this newsletter, you qualify for 20% off your pass with the code TS3R20.

Now, getting back into it.

Today, I’m heading into the Backrooms to look at a new IP development strategy, why it’s such a good thing for the film industry and what IP holders can learn from it.

Plus Speed Reads of:

I wrote last week about being a champion of the cinema experience, which I now reflect on with a bit of irony, given I spent my Saturday watching a series of YouTube clips of flickering yellow hallways and VHS aesthetic shots.

Yes, I’m talking about Backrooms! This is a genuinely exciting moment in cinema, not just because it’s a triumph at the box office (again, I am all for films that keep cinema doors open). It also shows that there’s still space for new creatives with genuinely interesting ideas and unconventional methods to find a path to ‘traditional’ success. 

One of the great claims of social media is that it will ‘democratise’ the world - art, in particular. I think this claim is slightly overblown (TikTok has a prudishness-problem, for one), but some points stand, namely: You don’t need to go to a fancy film school to make a successful movie, and Backrooms has proved just that.

But there is way more to this than a Gen Z ‘rags to riches’ (or YouTube to Hollywood) story, and there are still elements that demand caution. Backrooms isn’t exactly the sign of an entirely turning tide, although it isn’t alone. YouTuber Markiplier's horror film Iron Lung, adapted from a video game and set in a submarine, was independently released and took over $50m worldwide

What these films prove is there’s room for new approaches to how we develop and nurture great stories. (And, of course, make money from, and with, them.)

Backrooms started as a single photograph on 4chan in 2019: an abandoned office space, mustard-yellow wallpaper, fluorescent hum, accompanied by some anonymous copywriting that became its own mythology. It grew into a YouTube series created by a then-16-year-old named Kane Parsons, who built entire environments from his bedroom using free 3D software. That series pulled over 200 million views. A24 came calling, and Parsons, now 20, has directed the Hollywood adaptation of his series, making him the youngest director to helm a global number one film of all time.

The opening weekend grossed $82 million, marking A24's biggest debut ever. 86% of the audience was under 35, and 44% were under 21. 

These numbers are, firstly, great (we love people going to the cinema!) But what makes them more compelling is that over half of them cited A24 and the Backrooms universe itself as their primary reason for attending. They were there to see a world they loved in a different format. 

A24 have done a great job at cultivating their own ‘aesthetic’, one that transcends the films, directors, cast, and writers themselves. It doesn’t mean every film they make fits that aesthetic, or is a success, but it becomes a cultural signifier of what a cinema-goer can, at least loosely, expect.

Combining that with a pre-established world, and forking out hard-earned money on cinema tickets feels more like an exciting celebration (and a way to support your favourite content) than a risky spend on two hours of your life you will never get back. 

I am always reticent to use the word pipeline, even though we use it all the time, because not only does it strip all artistic work of its human touch, but also because it’s very linear.

The traditional film financing and development model is built around this linear pathway: you develop IP inside a studio, you control who sees it and when, and you spend on marketing to build awareness. But films like Backrooms show there’s another way to develop and find stories.

In the case of Backrooms, the IP was discovered, grown, tested, and proven across multiple formats: from 4chan lore and YouTube shorts, to Roblox games and TikTok, where Backrooms-themed clips have 30 billion views. That all happened before a single dollar of production budget was committed. By the time A24 greenlit the film, they weren't investing in an unknown quantity; they were acquiring a pre-sold, culturally embedded concept with a devoted audience that had already done years of community building on their behalf.

As we covered in Edition 105, the most resilient brands today are being built from subcultures outward rather than mass audiences inward. In the case of Backrooms, a niche internet horror community became the proof of concept for a widely attended feature film.

There’s an inherent tension here for existing IP holders who are, understandably, excited and worried about what fan reinvention can mean for their IP. Parsons didn't ask permission from a franchise team to make a series of films based on a still, because there wasn't one to ask. The IP grew organically, in part because there were no guardrails, no brand team, no licensing restrictions to navigate. Now, perhaps ironically, there will be.

We talk about this a lot. Pre-existing properties have the infrastructure that protects them. Brands are now putting specific ones in place to encourage creators to play (such as Banijay and Olympique de Marseille, who built tools to engage creators and leverage their content, as we’ve covered before).

It’s a bit repetitive, I know, to hear us talk about this again, but it’s a point worth repeating because the area around all of this is still so grey. Fans will build around your IP, or from details of your IP that you didn’t even know resonated. As we mentioned in Edition 63, the brands that will win long-term are those that can distinguish between infringement and participation, and build different responses to each (the Spotify and UMG deal is another example of brands working with creators rather than litigating against them).

→ The takeaway: Your IP will be in Roblox, on TikTok, in fan-made YouTube shorts, whether you architect it or not. Backrooms is a deeper manifestation of this, and shows that there is even more to develop when it comes to existing IP if you can tap into the right creator at the right time.

No! (Sorry!) This isn’t to say that anyone can create a Hollywood film out of a series of YouTube shorts. Kane Parsons is a talented creative who transitioned from amateur auteur to fully fledged director. His skill and vision, the found footage aesthetic, the specific dread of liminal spaces, were key to the success of the Hollywood version of his story.

Parsons got the deal he did because A24 understood that what made Backrooms work was inseparable from who made it. If you remove Parsons from it, you have a yellow corridor with no soul. This logic applies to any IP built from a specific creator's voice: the brand and the person are not separable, which changes the negotiating position for studios looking to develop stories this way.

For creators, the strategy is to think about your content as having enough lore depth that it becomes a world, not just a thing on the internet i.e. TikTok clips can be an entry point, YouTube can foster greater depth, Roblox can give your community a space to grow and play.

Essentially, if your story or idea can exist authentically in all of these spaces, you’re creating a similar kind of pre-sold fandom that made Backrooms so successful.

Backrooms is unique in other ways. It worked because liminal spaces landed on a specific cultural nerve, especially for a post-Covid impacted Gen Z, a generation for whom "reality is constantly mediated through screens," as Gunseli Yalcinkaya put it to the BBC. That's not a formula you can replicate on demand. The way Severance resonates with Millennials and Gen X on similar themes, Backrooms speaks to Gen Z’s particular disaffectedness.

That’s not to say any creator can do it, either. The YouTube to Hollywood trajectory will produce some Kane Parsons and a lot of creators who made great short-form content and find that feature filmmaking is a different discipline entirely. 

That’s the other element of caution here, too. Though Backrooms is clearly a success, that doesn’t mean studios should start signing YouTube creators speculatively, hoping for the same outcome without understanding the underlying mechanics of why Backrooms worked (all the things we just laid out!).

Anyone in the film industry knows it’s getting harder and harder to make movies. Budgets are shrinking, co-productions are necessary, and theatrical windows are closing. If you can develop a story that generates its own fandom, and therefore already has slightly more certainty of butts in seats, you’ll have an edge.

For IP holders, film financiers, entertainment brand strategists, and creatives, there are plenty of takeaways that Backrooms’ success highlights.

Go where the fans are. The next great seed is already taking root somewhere, accumulating views, and having interactive experiences built around it. If you can find IP that has all that, and a genuinely talented creator behind it, it’s worth digging into.

If you’re sitting on IP you want to develop in new ways, it’s worth taking this kind of content into account in your licensing strategy. If your IP has a dedicated fandom, a community already building Roblox experiences or Fortnite maps, YouTube lore videos or TikTok content, there may be a creator there worth tapping into for a genuine commercial return.

For the creatives out there, it’s key to think beyond a viral clip or scene. There is real world-building that is needed for something to make the leap from short to long form. Diversification is what makes something move beyond just the creator into a real, fully fledged business.

FIFA shifts from a single-partner gaming model to a multi-partner ecosystem, with partnerships spanning Roblox, Epic Games, Konami, SEGA/Sports Interactive, Netflix, and others.

TL;DR

Why you should care

What FIFA are building with their new Digital Football Strategy is built upon the full fan journey, across different verticals and entry points. This approach across genres and platforms means FIFA can be discoverable in a Roblox session, a mobile commute, a competitive esports tournament, and a full simulation game all at once.

The Roblox numbers, over a billion plays and 10 million monthly active users on FIFA Super Soccer, show there is an audience of younger fans building a baseline association with FIFA before they ever watch a live match. As we've covered when discussing fluid fandom, the connection built early is the one that can be reactivated later. FIFA is planting those seeds deliberately.

It’s a plan that FIFA’s Georgi Stoimenov detailed at SEG3 LA, which sees FIFA putting the fans and the community at the heart of its strategy. 

The Netflix partnership is super interesting from a risk/reward perspective. EA’s FIFA/FC franchise spent decades building the gold standard in football simulation. FIFA is now launching a rival product through Netflix, a platform whose games strategy we looked at in Edition 104, which puts distribution and accessibility as the priorities for FIFA.

For IP holders beyond football, it shows that there is an option beyond a single platform dependency deal. There are different ways of showing up across verticals, as we wrote about last week, and doing so authentically can create pathways for new fans, reentry points for lapsed fans, and build a broader ecosystem around your IP that gives it more diverse cultural and commercial value. 

Working on anything cool, or have a press release you would like us to cover? Send it in for the chance for it to be covered in next week’s edition!

That’s all for now, everyone - thanks again for reading the latest edition of The SEG3 Report. If you found it of interest, please do consider sharing with a colleague or friend who’d enjoy it too!