In Baby Yoda, Hollywood Sees Its Past, Present and Meme-able Future 
Illustration by Chris Buzelli

In Baby Yoda, Hollywood Sees Its Past, Present and Meme-able Future

For 'Star Wars' fans, 'The Child' is a delightful surprise in a tiny package. But for the entertainment industry, it marks the culmination of a decade’s worth of trends as powerful as the decline of the movie star and the rise of Netflix, the dominance of IP and the brilliance of a Beyoncé album drop, all wrapped up in one fresh yet familiar package.

In a remote fortress on a desert planet, a baby had been gestating for the better part of a decade. Tucked into an orb-shaped pram, wide-eyed and pointy-eared, sweet and wise, "The Child" emerged into the world Nov. 12, 2019. To millions, this infant alien, born 35 minutes into the first episode of Disney+'s marquee show The Mandalorian and instantly coined "Baby Yoda" by admirers, was an utter surprise. But one could date The Child's moment of conception to a morning in May 2011, when the Brown Derby restaurant at Walt Disney World's Hollywood Studios park in Orlando opened unusually early.

A wood-paneled tribute to Old Hollywood, the Brown Derby offers its patrons the opportunity to "dine like a studio boss with meals that are the toast of Tinseltown," according to the restaurant's website. On this particular morning, at least the first part of that was true. Disney CEO Bob Iger and Star Wars creator George Lucas and his wife, Mellody Hobson, were sharing a booth, having traveled to Florida to attend the rededication of the refurbished Star Tours ride. Halfway through breakfast, Iger asked Lucas if he had ever thought about selling Lucasfilm, the company the filmmaker founded in defiance of Hollywood in the San Francisco Bay Area in 1971. "I'm not really ready," Lucas told Iger.

By the end of the decade, that breakfast would have yielded for Disney one of the most valuable assets in modern media: the right to tell a story about a streamable, memeable character who was just like the one audiences had already loved for 40 years, only cuter. The Mandalorian depends upon no star — in fact, so inconsequential are human actors to the marketing that the title character played by Chilean actor Pedro Pascal spends the series with his telegenic face shrouded by a helmet. Instead, audiences are drawn by — in a legal phrase that robs anything creative of its sense of magic — a piece of intellectual property. "The scale of the reaction is beyond my expectations by a wide margin," says Iger. "That said, the moment I laid eyes on the character, I had a strong feeling that it was going to connect with audiences. So cute, so interesting, so compelling. So familiar and yet so new."

Familiar yet new. Baby Yoda may offer viewers a sweet respite from the world, a Dalai Lama in toddler form, but for Hollywood, Baby Yoda is the very embodiment of its modern reality, of all the forces that have shaped the galaxies of entertainment over the past decade and will likely mold it into the next decade and beyond. Baby Yoda is the decline of the movie star and the ascendance of IP, the rise of cord-cutting and the escalation of the so-called streaming wars, the dominance of web culture and the technological leaps in CGI … all tucked into one adorable little package.

"We didn't know until we were told, but we were fitting into the corporate strategy," says Mandalorian creator Jon Favreau. "We were just making a show."

That show is the result of the same dynamics that gave the world Grumpy Cat and Beyoncé's secret album drops and made Reed Hastings' DVD-by-mail company grow huge and a titan like Rupert Murdoch feel small. Baby Yoda is the character in the story who tells us exactly how we got here and where we're heading next.

***

By early 2012, Lucas had begun to think seriously about Iger's question, having considered how Disney had handled its acquisitions of Pixar, for $7.4 billion in 2006, and Marvel, for $4.24 billion in 2009. He allowed a small team from Disney to begin analyzing Lucasfilm's financials to arrive at a valuation. On the heels of its big-budget flop John Carter, Disney replaced film executive Rich Ross with former Warner Bros. chairman Alan Horn, who had overseen IP-driven hits like the Harry Potter films and The Dark Knight and was well suited to Disney's next stage.

As Disney's team was quietly crunching the numbers on Lucasfilm, another shift was underway across town in Culver City. On Father's Day weekend 2012, Sony Pictures released That's My Boy, a raunchy, R-rated comedy starring Adam Sandler as an over-the-hill partier who had fathered a son (Andy Samberg) at age 13 with his middle-school teacher; Vanilla Ice had a supporting role. "Even with 87.5 years to go, the 21st century may never see a stupider comedy than That's My Boy," critic Michael Phillips wrote in the Chicago Tribune. What was new, for Sandler and Sony, was that audiences seemed to agree with the critics, as the $70 million movie grossed just $58 million worldwide. Sony had been home to Sandler's Happy Madison Pictures for more than a decade, and the comedian had been one of Hollywood's most consistent box office stars, rewarded with at least $20 million a movie.

Behind the scenes, though, many at Sony were worrying that the star-driven formula they had long relied upon was no longer working. "There is a general 'blah-ness' to the films we produce," one Sony employee said in an email, later revealed in the 2014 Sony hack. "We continue to be saddled with the mundane, formulaic Adam Sandler films." Sony would be the No. 1 studio in market share in 2012, collecting $4.4 billion in worldwide ticket sales not because of its stars, but largely because two of its biggest franchises, James Bond and Spider-Man, yielded films that year. Increasingly, audiences weren't showing up for actors like Sandler. They were lured by known fictional characters, a commodity Sony had not cultivated as aggressively as it had its relationships with stars. Sony would not repeat that No. 1 status for the rest of the decade.

On Sept. 22, 2012, three months after That's My Boy flopped, a media empire of a very different sort was just getting started. That's when Arizona cable technician Bryan Bundesen posted a picture of his sister's cat, Tardar Sauce, on Reddit. The mixed breed feline, who had a flat face, bubble eyes and a form of dwarfism, appeared to wear a perpetual scowl. Within the first 48 hours, Tardar Sauce was upvoted more than 25,300 times, as users annotated the image with surly lines like, "I had fun once. It was awful." What began as an in-joke spread thanks to social media and increasingly easy-to-use software that meant anyone could create a meme. After her impressive debut, Tardar Sauce, soon renamed Grumpy Cat by her fans, would go on to net a book deal, appear on American Idol and star on the Lifetime special Grumpy Cat's Worst Christmas Ever, where she had an on-set trailer. By 2014, the cat's manager described an annual income in the seven figures, and at her peak Grumpy Cat earned some 6.2 million Facebook likes.

Also that fall, at the industry conference MIPCOM, another upstart was making a splash: Netflix, which then boasted 33 million global streaming video subscribers, screened the first two episodes of House of Cards, signaling its entrance into the premium original content business. "TV will not be TV five years from now," showrunner Beau Willimon said at the time.

As the status of the movie star and the meme were moving in opposite directions and streaming was claiming its place in the entertainment ecosystem, the foundations of Baby Yoda's creation were being put into place. On Oct. 30, 2012, Lucas traveled to Iger's office in Burbank to sign an agreement to sell Lucasfilm to Disney for $4.05 billion. Upon hearing the news of the deal, Favreau, who had directed two early movies in the Marvel Cinematic Universe, Iron Man and its sequel, and who was 11 when the first Star Wars movie came out, started to let his imagination roam to what he might be able to do in a Disney/Lucasfilm world. "[Baby Yoda] is one of the things that I had been making notes about," he says. "I just was trying to figure out what happened after the original Star Wars trilogy, after the Empire falls. We knew Yoda, who was so old and was a master. What would it be like for a new character, another one of the species emerging and being in training, who was just beginning that journey?"

***

Serena Williams had just won Wimbledon and the Yankees and Red Sox were about to start a three-game series in the Bronx, but one of the most important stories in sports on Aug. 4, 2015, was a Disney earnings call. That's when Iger admitted to analysts for the first time that ESPN, which had been contributing about 25 percent of Disney's operating profit, was experiencing "some subscriber losses." It was a bit more than "some." ESPN had lost 7 million of them in two years, and the numbers were continuing to plummet. Consumers were trimming their cable bills, getting their sports news from their phones. At the same time, Netflix was approaching 75 million global subscribers. On the call with analysts that day, Iger said he had "enormous confidence in ESPN's future no matter how technology transforms the media business." Investors apparently had less, sending Disney stock down more than 15 percent by the end of the month. "That was, in effect, an alarm bell," Iger recalled to THR this fall. "It incentivized us to address the issue quickly and aggressively."

Despite worries over ESPN, the film side of Disney's business had recovered under Horn. Marvel's Avengers: Age of Ultron and Pixar's Inside Out — two healthy products of the company's acquisitions strategy — would lead a $5.8 billion box office year. Horn was effectively turning Disney into a franchise factory, and the studio was still four months away from unveiling Star Wars: The Force Awakens. Director J.J. Abrams, working under Lucas' hand-picked executive, Lucasfilm president Kathleen Kennedy, had begun shooting in London in spring 2014, with a plan to release the film in May 2015, but script delays had pushed the release date to December. The high-stakes question at hand — was it possible to create something that would satiate the nostalgia of old Star Wars fans while feeling fresh enough to lure a generation of new ones? — would determine the creative and financial future of the franchise.

***

In the summer of 2017, Disney committed to disrupting its own businesses rather than watching while others did it, announcing a plan to create two streaming services, one for ESPN in 2018 and one for Disney in 2019. Building these services would mean short-term economic pain, as Disney would begin holding back the movies and shows it would have licensed to Netflix for its own use on Disney+, forgoing some $150 million in income in 2019 alone. This strategy would also, Favreau realized, require ramping up creation of content for the service. "That's when I called up Kathy [Kennedy] and asked to come in and pitch the idea," he says.

At the time, Favreau was on the African savannah, amid rock and orange skies, his cinematographer, Caleb Deschanel, on one side, a rhinoceros lumbering by on the other. The landscape, composed of zeroes and ones, was on the Playa Vista set of Disney's The Lion King in a nondescript office park near the L.A. headquarters of YouTube and Google. Visual effects house MPC had created roughly 58 square miles of CG scenery, which Favreau and his crew could travel to and shoot in by popping on virtual reality headsets.

After he finished reviewing shots on The Lion King each day, Favreau would spend a few hours working on his secret project. Kennedy suggested he meet with Dave Filoni, who had co-created multiple Star Wars animated shows. Filoni doodled on some cocktail napkins an image of Baby Yoda. Multiple artists would refine that image, and a concept drawing by Christian Alzmann with Baby Yoda clad in a worn little makeshift garment became the touchstone. "It looked cute, but it also looked a little weird," Favreau says. "That's part of Yoda. It can't just be cute. It can't just be a straight-up Disney baby, it has to be a little bit tweaked." Baby Yoda's large ears are not just there for aesthetic purposes. "The ears, the posture, the cocking of the head, with a dog, a lot of expression comes from that," Favreau says. "A big part of it was making something that felt like a pet that you had a connection with."

Meanwhile, the biggest content deal of 2017 was closing. Amazon's Jeff Bezos, jealous of the success of HBO's Game of Thrones, wanted his own global franchise. On Nov. 13, Amazon Studios outbid Netflix and spent $250 million for the small-screen rights to J.R.R. Tolkien's The Lord of the Rings. For years, tech companies had been paying Hollywood for its content, luring audiences to budding streaming services and building global distribution platforms, effectively beating the entertainment industry at its own game. But that era of cooperation was ending as Hollywood sought to build its own streamers and held on to its most valuable films and TV shows. The LOTR deal revealed the enormous sums Big Tech was willing to spend to replace that content: With production expenses, Amazon's Lord of the Rings series, due in 2021, is expected to cost more than $1 billion.

There was another deal in the making as well. Over the summer of 2017, Iger had received an invitation to Rupert Murdoch's winery estate in Bel Air. The moguls commiserated over the encroaching threat of Silicon Valley. "We don't have scale," the 21st Century Fox CEO fretted to Iger. "The only company that has scale is you." Murdoch wanted to sell, and Disney was a ready suitor, closing a $71.3 billion deal to buy most of 21st Century Fox in March 2019. With the countdown for the streaming service launch initiated and with Apple, AT&T and Comcast all preparing their own challengers to Netflix and its 151 million global subscribers, this deal would supply yet more content.

***

When Disney+ launched Nov. 12, there were some technical glitches due to extraordinary demand. But the main story audiences were talking about was the reveal of Baby Yoda. Favreau had gotten the idea of keeping the character a secret from Donald Glover while working together on The Lion King. "We were talking about music and pop culture and he was saying that what people really like now is to be surprised, because it doesn't happen that much," Favreau says. "When Beyoncé did an album, she would just put it online and everybody would react to it. Just putting it out there spurred a conversation that would become more viral and bring more genuine attention than any marketing."

The Beyoncé strategy worked. Disney deliberately withheld The Child from marketing and merchandising plans, sacrificing holiday toy revenue so as not to spoil the revelation. But by the time the second episode hit the service, Baby Yoda was ubiquitous as a meme. The phenomenon that had been pioneered by Grumpy Cat took hold for Baby Yoda, as fans shared memes of Baby Yoda sipping from his tiny mug and Baby Yoda messing with the switches in a spaceship to play Lil Jon's "Get Low." By late November, Baby Yoda mentions were outpacing any of the Democratic presidential candidates on social media. On Saturday Night Live, Baby Yoda visited "Weekend Update" to talk about feeling "blessed" by his sudden fame. Disney has said it expects to amass 60 million to 90 million global subscribers for the service by 2025.

Asked at a Nov. 14 event what had changed for Netflix since the launch of Disney+, Netflix chief content officer Ted Sarandos said, "Nothing, really." The next night, he held a star-studded bash in his backyard in Hancock Park. An annual toast, the party boasted theme cocktails, a photo booth with fake snow and, it seemed, most of the working talent in Hollywood. Robert De Niro, Martin Scorsese and Al Pacino were there on behalf of their Oscar contender, The Irishman. So were Eddie Murphy, Olivia Colman and Sandler, who after That's My Boy had signed a $250 million, four-movie deal to become one of the streaming service's original A-list converts. No longer the industry outsider, Netflix in 2019 felt as much the center of the entertainment business as MGM had in 1939, when Judy Garland and Clark Gable roamed the lot. But there was one A-lister who wasn't at the party: Baby Yoda, who was busy on the set of The Mandalorian season two.

Ryan Parker contributed to this report.

This story first appeared in the Dec. 19 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.