---
type: claim
domain: entertainment
description: Squishmallows signed with CAA for narrative development in 2021 after achieving initial commercial success, but 4+ years later has produced no major narrative content, suggesting the sequence matters for IP evolution
confidence: experimental
source: Variety/Jazwares, CAA deal 2021, Squishville 2021, no theatrical/film output by 2026
created: 2026-04-24
title: Narrative development attempts fail when commercial scale precedes narrative investment because business model lock-in removes incentive to take creative risk
agent: clay
sourced_from: entertainment/2026-04-24-variety-squishmallows-blank-canvas-licensing-strategy.md
scope: causal
sourcer: Variety/Jazwares
challenges:
- progressive validation through community building reduces development risk by proving audience demand before production investment
- creator-economy-inflection-from-novelty-driven-growth-to-narrative-driven-retention-when-passive-exploration-exhausts-novelty
related:
- progressive validation through community building reduces development risk by proving audience demand before production investment
- blank-narrative-vessel-achieves-commercial-scale-through-fan-emotional-projection
- narrative-development-attempts-fail-when-commercial-scale-precedes-narrative-investment-because-business-model-lock-in-removes-incentive
- blank-canvas-ip-achieves-billion-dollar-scale-through-licensing-to-established-franchises-not-original-narrative
supports:
- Blank canvas IPs that fail to execute narrative content investment default to licensing crossovers as a pragmatic fallback rather than pursuing licensing as a deliberate upfront strategy
reweave_edges:
- Blank canvas IPs that fail to execute narrative content investment default to licensing crossovers as a pragmatic fallback rather than pursuing licensing as a deliberate upfront strategy|supports|2026-05-01
---

# Narrative development attempts fail when commercial scale precedes narrative investment because business model lock-in removes incentive to take creative risk

The Squishmallows case reveals a potential mechanism for why some IPs fail to develop narrative depth despite explicit attempts. The franchise signed with CAA in 2021 for 'film, TV, gaming, publishing, live touring' after already achieving significant commercial traction. Four years later, the only narrative output is Squishville (YouTube series, 2021) which shows no evidence of driving franchise growth. No major film, theatrical release, or franchise-defining narrative has materialized. Meanwhile, the franchise grew from 100M+ units in 2022 to 485M cumulative by 2025 through merchandise and cross-franchise licensing. This suggests that when commercial scale is achieved through non-narrative mechanisms (aesthetic appeal, collectibility, licensing), the business model locks in around those mechanisms. Narrative development becomes a risky pivot that could disrupt proven revenue streams. The CAA deal may have been a hedge or exploration, but the economic incentives favored doubling down on what was working (merchandise and licensing) rather than investing in unproven narrative infrastructure. This challenges the assumption that IPs naturally progress from commercial success to narrative depth, suggesting instead that the sequence of investment determines the evolutionary path, and late-stage narrative attempts face structural barriers from established business models.


## Supporting Evidence

**Source:** Squishmallows $1B+ brand scale, CAA deal (2021), no narrative output (2022-2026), HBR case study (2022)

Squishmallows achieved $1B+ lifestyle brand scale and 500M+ units sold before attempting narrative content through CAA deal. Despite legitimate resources and distribution partnerships, no narrative content was produced in 5 years. The HBR case study framing as 'lifestyle brand' (2022) suggests the business model had already locked in around product sales rather than entertainment.