QUOTE AND NEWS
Cloud Computing  Dec 20  Comment 
While many SPM Performance Monitoring users quickly see the benefits of SPM and adopt it in their organizations for monitoring — not just for Elasticsearch, but for their complete application stack — some Elasticsearch users evaluate SPM and...
The Economic Times  Dec 19  Comment 
Sebi found that the collective investment scheme (CIS) was run without obtaining the certificate of registration from the regulator.
Forbes  Dec 12  Comment 
We, the public, have been visiting Peter Jackson's cinematic Middle-earth on and off for 14 years. But Mr. Jackson has been immersed in the process of adapting author J.R.R. Tolkien's fantastical world for the better part of the last 18 years,...
CNNMoney.com  Dec 10  Comment 
Did Sony almost let Spider-Man join the Avengers at rival Disney?
Forbes  Dec 8  Comment 
Since The Winter Soldier, Marvel's Agents of S.H.I.E.L.D.'s been looking for ways to be its own entity while still paying respect to its big screen cousins, and it seems to have done just that.
Forbes  Dec 4  Comment 
Marvel just made it official, folks -- Benedict Cumberbatch will play the title role in Marvel Studio's upcoming superhero fantasy film Doctor Strange. The sorcerer supreme hits theaters November 4, 2016, as part of Marvel's Phase 3 in their...
Forbes  Dec 4  Comment 
The next 007 adventure will be called Spectre. That's what we know, among other things, following a press conference at Pinewood Studios in London this morning. It has been a tradition for the James Bond franchise to info-drop during press...
Forbes  Dec 2  Comment 
DC Comics learned the lesson of Marvel's Iron Man and applied them to television, with Arrow.
TechCrunch  Dec 1  Comment 
 Back in April, Marvel — the UK startup that lets you turn sketches into app “prototypes” — had just one and half month’s runway left after burning through the majority of a £60,000 investment. At one point, the burgeoning company even...
Forbes  Nov 19  Comment 
Both The Wrap and The Hollywood Reporter are centering their box office previews for the weekend on the notion that The Hunger Games: Mockingjay part I could be the first franchise in history to open three consecutive entries to over $150...




 
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Marvel Characters Ironman, Spider-Man, Captain America, Thing, Wolverine, and the Incredible Hulk.
In late 2009, Disney purchase Marvel for about $4 billion in cash and stock.[1] Marvel Entertainment began as a comic-book business, and the heroes and villains created by its writers captured America's attention starting in the late 1930's. The company now owns a portfolio of over 5000 characters, and it continues to earn revenues by publishing the comic books and novels that established its core following.[2] However, over half of Marvel's revenues in 2007 came from licensing its characters to third party producers of video games, TV shows, toys, and movies. The licensing business has very high margins, since Marvel's cost of production on a licensed product is almost nothing - but the drawback is that Marvel sees only a percentage of the profits from the products.

In 2008, with the release of the first installment in the Iron Man franchise, Marvel took a step in a new direction. The company had previously licensed movie rights to third party production companies, as in the case of the Spider-Man and X-Men trilogies. While those movies were huge hits (Spider-Man movies grossed over $1BN worldwide [3] and the X-Men trilogy grossed over $500MM[4]), Marvel's royalties from those releases were only in six figures as most of the windfall went to the studios producing those movies, Sony Pictures and Fox Studios.[5] In order to capture a bigger piece of the profit from its hit movies, Marvel will make its own films through its new movie production segment - which hit the ground running when its first release Iron Man grossed nearly $100MM its opening weekend.[6]

Moving film production in-house is part of a larger strategy shift at Marvel, as the company is looking to combat poor creative management of its characters by third parties, such as the movie Elektra which grossed only $24MM domestically despite a $43MM budget.[7] However, in some businesses - toys, for instance - Marvel will continue to outsource production. Despite its recent successes in movies and video games, Marvel continues to face challenges in industries that require creative talent. These industries are risky not only because of the difficulty of producing quality content, but because of the fickle nature of consumers - what's considered brilliant one month is a bust in the next. A movie has significant production costs, and there is no guarantee that these costs will be recouped if the product is unpopular.

Business Overview

MVL's primary assets are rights and properties associated with its various comic book characters. The company sells those rights to a variety of media and entertainment outlets and uses these characters in products of its own.

Business Segments

The company reports in 4 different segments:

  • Licensing - The Licensing segment earns revenues from selling rights to movies, television production companies, video game publishers, and merchandise manufacturers to use it's character properties. The licensing business concentrates on a few large licensees, and attempts to manage and re-segment opportunities with its characters, creating "classic" editions, "youth" editions, and "movie" editions to take advantage of every revenue opportunity.
  • Publication - The Publishing segment produces, markets, and sells comic books. This business publishes comic books and novels about the company's characters, and licenses characters from other sources and turns them into graphic novels.
  • Toys - The Toys segment collects royalties and service fees from Hasbro. The company has an exclusive toy merchandising agreement with Hasbro (HAS) until December 31, 2011, that began in 2007.[8] Prior to this, most revenues in the Toy segment were made from toys produced by Marvel.
  • Movie Production - The movie production arm of the company was set up to independently produce films and grow revenues. The new Films segment produces films featuring Marvel's characters like Iron Man.

Character Portfolio

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Composite of many Marvel owned superhero characters

According to Marvel[9], its most popular characters are:

The company has hero "teams" such as the X-Men, the Avengers, and the Brotherhood of Mutants.[10]

For a complete listing, please see Wikipedia, "List of Marvel Comics Characters"

Trends/Forces

Saturation of super-hero type media a concern

Given that MVL's only character base is in its super-heroes (and associated villains), there is a concern over the number of movies in this genre that have been released or are in production from 2005-2010. The DC Comics Batman and Superman mega-franchises have recently had successful movie releases, and will likely continue to receive sequel treatment. Audiences can be fickle to their super-heroes, but more importantly these movies have captured the casual viewer who may not be a comic-book reader but is attracted to the films. Saturation of the market risks losing this mainstream audience's interest. Comic Book to Movie adaptations have benefited from a few box office blockbusters, but there have been flops as well, including Elektra (Budget: $43MM, Domestic Gross: $24M), and Catwoman (Budget: $100MM, Domestic Gross: $40MM).[11][12][13] Movie production has more associated risk than the licensing "third-party" businesses, but the upside is significant as a successful movie can gross in the hundreds of millions.

Competition

Due to Marvel's licensing business model based on its characters, it does not have very many comparable companies or direct competitors. The closest comparison could be made with rival DC Comics owned by Time Warner (TWX), which also has licensed its comic book characters, most notably, Superman and Batman.

Marvel has nearly 70 years of character history and awareness built up around it's properties. This is an extremely valuable intangible asset that can be levered in almost limitless ways to provide revenues, and costs practically nothing to maintain. Everyone from 5 year old boys to 70 year old women know of Spider-Man, Incredible Hulk, X-Men, Captain America, etc. This is a big competitive advantage that cannot be easily reproduced by a competitor.

Licensing

In the licensing space, Marvel characters are sold on various products generating overall revenue on the same scale with other large licensors. The largest licensor in the world is Disney, now Marvel's parent company, with over $20BN in licensed sales relating to its many children-entertainment properties.[14]. Competitors with similar scale to Marvel are:[15]

Publication

The publication business was the underlying business for character creation that Marvel is capitalizing on today, and continues to compete against rival DC Comics, each with their own respective character portfolios. More minor publishers include Image Comics and Dark Horse Comics.

Toys & Movie Production

Marvel no longer directly competes in the Toy business, as it has licensed the right to manufacture to Hasbro. Previously, it did not directly compete in the Movie business, but has since moved to directly compete the space. Its primary super-hero genre competitor DC Comics is continuing to license the right to make movies however.

References

  1. David Goldman (August 31, 2008). Disney to buy Marvel for $4 billion. CNNMoney.com.
  2. Marvel Entertainment "Company and Contact info"
  3. Box Office Mojo "Marvel Comics Movies"
  4. Box Office Mojo "Marvel Comics Movies"
  5. Seeking Alpha "Marvel's New Movie Financing Concept" May 16, 2006
  6. Box Office Mojo "Marvel Comics Movies"
  7. Box Office Mojo "Elektra"
  8. Marvel Entertainment FY 2007 10-K "Toys" pg. 19
  9. Marvel Universe
  10. Marvel Universe
  11. Box Office Mojo "COMIC BOOK ADAPTATION, 1978-Present" Date of Access:May 14, 2008
  12. Box Office Mojo "Elektra"
  13. Box Office Mojo "Catwoman"
  14. Wikipedia "Disney Consumer Products"
  15. Wedbush Morgan "Marvel Entertainment" December 17, 2007
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