'Willow', The Abandoned Streaming Series, Cost Disney $100 Million

Disney has revealed that it spent $105.9 million (£83.1 million) on making Willow, a sword and sorcery series which was dropped from its streaming platform after just six months.

Sequel to the beloved 1988 movie with the same name, it stars Warwick Davis, who reprises his role as the eponymous hero alongside Erin Kellyman, Ellie Bamber and The Grand Budapest Hotel's Tony Revolori.

Based on characters created by George Lucas, the series was developed by Jonathan Kasdan, son of long-time Lucasfilm collaborator Lawrence Kasdan, who co-wrote The Empire Strikes Back, Return of the Jedi, The Force Awakens and Raiders of the Lost Ark.

Disney acquired the rights to Willow when it bought Lucasfilm from its founder George Lucas for $4 billion in 2012. Seven years later, Ron Howard, director of the original movie, revealed that he had been approached by Jonathan Kasdan about working on a sequel series for the Disney+ streaming platform and in October 2020 it got the green light. The eight-part series debuted just over two years later and ran until January 2023.

At the time it was commissioned, the pandemic had thrown much of the world into lockdown leaving consumers craving new streaming content. Disney was eagerly adding shows to its platform in a bid to attract more subscribers than its rivals and no expense was spared.

Budgets of streaming shows are usually confidential as studios combine the cost of them in their overall expenses and don't itemise how much they spent on each one.

Shows made in the United Kingdom are exceptions and Willow is one of them. It benefited from the UK's Television Tax Relief scheme which allows studios to claim a cash reimbursement of up to 25% of the money they spend there.

To qualify, shows must pass a points test based on factors such as how much filming was done in the UK, the level of UK content and how much they promote UK heritage. Furthermore, at least 10% of the core costs of the production need to relate to activities in the UK and in order to demonstrate this to the UK government, studios set up a separate Television Production Company (TPC) there for each picture.

These TPCs have to file publicly-available financial statements showing everything from the headcount and salaries to the total cost of the production and the amount of cash they have been reimbursed.

The UK government's regulations state that each TPC must be "responsible for pre-production, principal photography and post-production of the television programme; and for delivery of the completed programme." Accordingly, there is no doubt that their financial statements show all of the costs of each series. It isn't even possible for studios to hide costs in other companies as the law also states that "there can only be one TPC in relation to a programme."

The companies usually have code names so that they don’t raise attention when filing for permits to film on location. The Disney subsidiary behind Willow is called Barking Lion Productions (UK), in a nod to the mythical creatures that populate the show.

It recently filed financial statements for the 17 months to December 31, 2021 which covers pre-production and filming of the series. That incurred costs of $105.9 million and the tally is set to soar in the next set of financial statements. They should show the bulk of the expenses for the post-production work which was led by the London office of Lucasfilm's Industrial Light & Magic MAGIC .

The net spending on the show was reduced by a $20.4 million (£16.1 million) cash reimbursement for filming in the UK but it doesn't stop there. Lucasfilm chose to film Willow in Wales, a country within the UK which offers additional fiscal incentives to studios. The local government there gave Lucasfilm a $5.1 million (£4 million) grant bringing the net spending on Willow to $80.4 million.

The production was based at Dragon Studios in South Wales and filmed at 32 locations across the country. They included Morlais Quarry, where the opening scenes were set, and Merthyr Mawr, which was the backdrop for Willow’s home.

Lucasfilm built five sets at Dragon Studios totalling 28,000 square feet as well as 20 additional buildings for the purposes of creature creation, puppeteering work, special effects and costumes. It made its mark on the local film industry.

Lucasfilm hired 25 trainees for six months as well as 206 Welsh citizens who were members of the crew. As a result, 17 of the 29 production departments were led by Welsh citizens whilst non-Welsh crew were also paired with Welsh citizens.

In December, Creative Wales, the government agency that promotes the development of creative industries in Wales, reported that brands such as Lucasfilm, Netflix NFLX and Bad Wolf have pumped more than $197.5 million (£155.6 million) of production spend into the Welsh economy.

Wales has been the backdrop for many iconic movie scenes including the Bat Cave in The Dark Knight Rises, the castle in the opening scene of Monty Python and the Holy Grail as well as part of the shoot for the original Willow movie. It has also been home to television series such as Da Vinci’s Demons, Doctor Who, Sherlock and His Dark Materials. Even more could be on the way.

Last month, Ryan Reynolds met UK Prime Minister Rishi Sunak at his office on 10 Downing Street to discuss how to drive more productions to Wales. The Canadian actor has multiple ties to Wales as he co-owns Welsh soccer team Wrexham AFC, which returns to the English Football League this month after a 15-year wait. He also recently announced a partnership with Welsh TV channel S4C which will see Welsh-language shows available in the US on his Maximum Effort channel.

Reynolds has remained in the UK since the SAG-AFTRA strike put filming of Deadpool 3 on hold and has used his time to drum up support for Wales.

"With Deadpool paused, we visited 10 Downing to discuss the excellence of UK film crews and Maximum Effort," he said. "Aside from shooting back home, the UK is my favourite place to make a movie. Hoping to see even more film work head to Wales."

Reynolds himself is playing a part in promoting Wales through his Disney+ documentary Welcome To Wrexham which was recently commissioned for a second season. The show follows the trials and tribulations of the team and has been so well-received that it secured six Emmy nominations. The same can't be said for Willow.

Although the series has an 84% critics score on review aggregator Rotten Tomatoes, the audience only gave it 65%. Willow's audience was reportedly amongst the lowest for a Disney+ show with industry analysts Samba TV reporting that only 481,000 households watched the show in its first five days of release despite two episodes being available. At the other end of the spectrum, the debut episode of hit Marvel streaming show Loki attracted 2.5 million households over the same timeframe according to Samba TV.

Accordingly, it was no surprise when Deadline reported in March that Willow would not be renewed for a second season. Just days later Jonathan Kasdan described Willow‘s status as more of a pause than cancelation. He noted that the second season has been written, and will hopefully eventually be made, but not for at least the next 12 months, leading to the decision to release the cast.

Since then, darker clouds have gathered over the future of the show as it was removed from Disney+ at the end of May amidst a content removal purge as part of a broader cost cutting initiative. Pulling the show enables Disney to take an impairment charge as it has spent money on a production that it deems not to be viable.

It is essentially a reduction in the value of an asset and this creates a loss on the company's balance sheet which reduces its tax bill. Disney has reported that its content purge has generated a $1.5 billion impairment charge which is precisely the happy ending it was looking for.

Disney has been on a cost-cutting drive since its chief executive Bob Iger returned to the helm of the company in November last year. Three months later he told investors that the studio needs to "reduce costs on everything that we make because, while we're extremely proud of what's on the screen, it's gotten to a point where it's extraordinarily expensive."

Willow is testimony to that and it was born in the days of lavish spending in a bid to attract subscribers. That expense might be justifiable if the end result fuels a surge in fan interest but not if it flounders like Willow.

Even then, the value of spending so much money on chasing subscribers is easy to question which explains why Iger has said that retaining "loyal" subscribers, rather than pure subscriber growth, is becoming the new priority.

In a bid to compensate for the colossal costs of production, Iger has cut around 7,000 of Disney's staff, or roughly 3% of its global workforce, but even that isn't enough. He recently told CNBC that Disney is slowing down when it comes to making movies and streaming series for its flagship Marvel and Star Wars franchises.

"You pull back not just to focus, but also as part of our cost containment initiative. Spending less on what we make, and making less." If further Marvel and Star Wars series aren't even assured, the prospect of a second season of Willow seems to be far, far away.