MVL » Topics » Licensing

This excerpt taken from the MVL 8-K filed Sep 18, 2009.

Licensing

Our Licensing segment is responsible for the licensing, promotion and brand management for all of our characters worldwide. We pursue a strategy, where feasible, of concentrating our licensee relationships with fewer, larger licensees who demonstrate the financial and merchandising capability to manage our portfolio of both classic and movie properties. A key focus is negotiating strong minimum guarantees while keeping royalty rates competitive.

Another strategy of the Licensing segment’s consumer products program is to create new revenue opportunities by further segmenting our properties to appeal to new demographic profiles. Initiatives such as Marvel Super Hero Squad, Marvel Extreme, Marvel Heroes and Marvel Comics (the retro depiction of our characters) have all helped the licensing business expand beyond its traditional classic and event-driven properties.

Major entertainment events play an important role in driving sales of our licensed products. In 2007, our Licensing segment revenue reflected the benefit of the May 2007 release of the movie Spider-Man 3. The Licensing segment’s 2007 initiatives were focused on merchandising our self-produced movies: Iron Man, which was released on May 2, 2008, and The Incredible Hulk, which was released on June 13, 2008. Our 2008 Licensing segment revenue benefited from the release of those movies, but not as significantly as 2007 Licensing segment revenue benefited from the release of Spider-Man 3. We expect that our 2009 Licensing segment revenue will be lower than in 2008 as there will only be one major entertainment event in 2009, X-Men Origins: Wolverine, expected to be domestically released on May 1, 2009 by Twentieth Century Fox. In addition, although we have many licensees that are large companies, the majority of our consumer product licensees are small to medium sized companies, located throughout the world, that rely on access to credit to produce and distribute their products. As a result of world-wide tightening of credit markets, some of our licensees may have difficulties producing and distributing goods. In addition, due to the lessening of consumer demand resulting from the global recessionary environment, some of our licensees may have difficulties obtaining sufficient sales orders. These macro-economic factors (see “Item 1A – Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, filed on February 27, 2009) are another reason for our expectation that 2009 Licensing segment revenue will be lower than in 2008. We believe the negative impact of these macro-economic factors on the Licensing segment may be partially mitigated as a result of the non-durable nature of the products sold by most of our licensees and the low prices at which the majority of these products are sold.

We typically enter into multi-year merchandise license agreements that specify minimum royalty payments and include a significant down payment upon signing. We recognize license revenue when the earnings process is complete, including, for instance, the determination that the credit-worthiness of the licensee reasonably assures collectibility of any outstanding minimum royalty payments. If the earnings process is complete with respect to all required minimum royalty payments, then we record as revenue the present value of those payments.

 

2


The earnings process is not complete if, among other things, we have significant continuing involvement under the license, we have placed restrictions on the licensee’s ability to exploit the rights conveyed under the contract or we owe a performance obligation to the licensee. In the case where we have significant continuing involvement or where any restrictions remain on the licensee’s rights (e.g., no sales of products based on a specific character allowed until a future date), we recognize revenue as the licensee reports its sales and corresponding royalty obligation to us. Where we have a performance obligation, minimum royalty collections are not recognized until our performance obligation has been satisfied. Minimum payments collected in advance of recognition are recorded as deferred revenue. In any case where we are unable to determine that the licensee is sufficiently creditworthy, we recognize revenue only to the extent of cash collections. When cumulative reported royalties exceed the minimum royalty payments, the excess royalties are recorded as revenue when collected and are referred to as “overages”.

As discussed above, beginning in 2008 we are including revenues earned from Hasbro, and related expenses, in our Licensing segment.

This excerpt taken from the MVL 10-Q filed May 9, 2007.

Licensing

Our Licensing segment is responsible for the licensing, promotion and brand management for all of our characters worldwide. Since 2004, we have pursued a strategy of concentrating our licensee relationships with fewer, larger licensees who demonstrate the financial and merchandising capability to manage our portfolio of both classic and movie properties.  A key focus is a continued effort on negotiating strong minimum guarantees while keeping royalty rates competitive.

 

Another strategy of the Licensing segment’s consumer products program is to create new revenue opportunities by further segmenting our properties to appeal to new demographic profiles. Initiatives such as Spider-Man and Friends, Marvel Retro and Marvel Juniors have all helped the licensing business expand beyond its traditional classic and event-driven properties.

 

Major entertainment events play an important role in driving sales of licensed products, and a significant portion of the Licensing segment’s 2006 initiatives were focused on the movie Spider-Man 3, which was released worldwide in May 2007. Our licensing segment revenue will significantly benefit in 2007 due to the release of Spider-Man 3. Revenue related to the 2006 Spider-Man 3 merchandise licensing initiative began to be recognized in the first quarter of 2007 when licensees were first permitted to begin selling merchandise relating to that movie. As a result, Licensing segment revenue is significantly higher in the first quarter of 2007 than in the first quarter of 2006. This trend is expected to continue as we expect that our full year licensing results in 2007 will be better than the licensing results achieved in 2006 and 2005.

This excerpt taken from the MVL 10-K filed Mar 1, 2007.

Licensing

Our Licensing segment licenses our characters for use in a wide variety of products and media, the most significant of which are described below.

Consumer Products

We license our characters for use in a wide variety of consumer products, including toys (other than toys licensed to Hasbro, Inc.), apparel, video games, electronics, homewares, stationery, gifts and novelties, footwear, food and beverages and collectibles. While revenues from these activities are classified in our Licensing segment,

 

 

 

1

 

 


 

we classify revenues from our past toy license with Toy Biz Worldwide Ltd. and our current toy license with Hasbro in our Toy segment.

Studio Media Licensing

Feature Films. We have licensed various Marvel characters to major motion picture studios for use in motion pictures. For example, we currently have licenses with Twentieth Century Fox to produce motion pictures featuring characters, including The Fantastic Four and X-Men. We also have outstanding licenses with studios for a number of our other characters, including Spider-Man, Deathlok, Namor and The Punisher. Under these licenses, we retain control over merchandising rights and retain more than 50% of merchandising-based royalty revenue.

Video Games. We have licensed some of our characters to top-tier publishers such as Activision, Electronic Arts, Microsoft, Sega, and others to produce current and next-generation video games on multiple platforms including Xbox 360, Playstation 3, Nintendo Wii, Playstation 2, Nintendo DS, PSP and PC.

Television Programs. We have licensed some of our characters for use in television programs, which fuel additional brand awareness. Several live-action and animated television shows based on our characters are currently in development including live-action television programming based on Moon Knight and animated programming based on The Fantastic Four, Iron Man and the X-Men.

Made-for-DVD Animated Feature Films. We have licensed some of our characters to an entity controlled by Lions Gate Entertainment Corp. to produce up to ten feature-length animated films for distribution directly to the home video market. The first two animated features, Ultimate Avengers and Ultimate Avengers 2, were released in 2006. The animated feature The Invincible Iron Man was released in early 2007 and has had strong sales to date. Doctor Strange is scheduled for release in August 2007.

Destination-Based Entertainment

We license our characters for use at theme parks, shopping malls and special events. For example, we have licensed some of our characters for use at Marvel Super Hero Island, part of the Islands of Adventure theme park at Universal Orlando in Orlando, Florida. We have also licensed some of our characters for use in a Spider-Man attraction at the Universal Studios theme park in Osaka, Japan.

Promotions

We also license our characters for short-term tie-in promotions that appear as advertisements, premium programs, sweepstakes and contests to consumers and/or the companies’ trade markets.

Publications

Our Licensing segment licenses our characters to publishers located outside the United States for use in foreign-language comic books and trade paperbacks and to publishers worldwide for novelizations and a range of activity books.

This excerpt taken from the MVL 10-Q filed Nov 8, 2006.

Licensing

Marvel’s Licensing segment is responsible for the licensing, promotion and brand management for all of Marvel’s characters worldwide. Since 2004, the Licensing segment has pursued a strategy of concentrating its licensee relationships with high-quality licensees who demonstrate the financial and merchandising capability to manage Marvel’s portfolio of both classic and movie properties.  A key focus is a continued effort on negotiating strong minimum guarantees while keeping royalty rates competitive.

Another aspect of the Licensing segment’s consumer products program is to create new revenue opportunities by further segmenting its properties against new demographic profiles. Initiatives such as Spider-Man and Friends, Marvel Retro and Marvel Juniors have all helped the business expand beyond its traditional classic and event-driven properties.

Major entertainment events play an important role in driving sales of licensed products (whether under a multi-character license or a single-character one), and a significant portion of the Licensing segment’s 2006 initiatives are focused on the movie

This excerpt taken from the MVL 10-Q filed Aug 9, 2006.

Licensing

Marvel’s Licensing segment is responsible for the merchandising, licensing and promotion of Marvel’s characters worldwide. Since 2004, the Licensing segment has pursued a strategy of concentrating its licensee relationships in the United States in high-quality licensees and negotiating higher guaranteed royalty amounts from each licensee. During that period, the Licensing segment has also pursued a strategy of expanding the Company’s base of licensees outside of the United States.

Another aspect of the Licensing segment’s strategy has been to create programs for classic brands beyond single characters, notably Spider-Man. Brands such as Marvel Retro, Marvel Heroes and Spider-Man and Friends feature multiple Marvel characters and draw on storylines from a range of Marvel comics, enabling Marvel to tap into new demographic segments

Major entertainment events play an important role in driving sales of licensed products (whether under a multi-character license or a single-character one), and most of the Licensing segment’s 2006 initiatives are focused on the movie

This excerpt taken from the MVL 10-Q filed Aug 8, 2006.

Licensing

Marvel’s Licensing segment is responsible for the merchandising, licensing and promotion of Marvel’s characters worldwide. Since 2004, the Licensing segment has pursued a strategy of concentrating its licensee relationships in the United States in high-quality licensees and negotiating higher guaranteed royalty amounts from each licensee. During that period, the Licensing segment has also pursued a strategy of expanding the Company’s base of licensees outside of the United States.

Another aspect of the Licensing segment’s strategy has been to create programs for classic brands beyond single characters, notably Spider-Man. Brands such as Marvel Retro, Marvel Heroes and Spider-Man and Friends feature multiple Marvel characters and draw on storylines from a range of Marvel comics, enabling Marvel to tap into new demographic segments

Major entertainment events play an important role in driving sales of licensed products (whether under a multi-character license or a single-character one), and most of the Licensing segment’s 2006 initiatives are focused on the movie

This excerpt taken from the MVL 10-Q filed May 8, 2006.

Licensing

Marvel’s Licensing segment is responsible for the merchandising, licensing and promotion of Marvel’s characters worldwide. Since 2004, the Licensing segment has pursued a strategy of concentrating its licensee relationships in the United States in high-quality licensees and negotiating higher guaranteed royalty amounts from each licensee. During that period, the Licensing segment has also pursued a strategy of expanding the Company’s base of licensees outside of the United States.

Another aspect of the Licensing segment’s strategy has been to create programs for classic brands beyond single characters, notably Spider-Man. Brands such as Marvel Retro, Marvel Heroes and Marvel Super Hero Kids/Spider-Man and Friends feature multiple Marvel characters and draw on storylines from a range of Marvel comics.

Major entertainment events play an important role in driving sales of licensed products (whether under a multi-character license or a single-character one), and most of the Licensing segment’s 2006 initiatives is focused on the movie Spider-Man 3, which is scheduled to be released in May 2007. Revenue from Spider-Man 3 merchandise licenses will not be recognized until 2007. The Licensing segment has also conducted a smaller initiative around the X-3 theatrical release, scheduled for May 2006.

The Company typically enters into multi-year merchandise license agreements that specify minimum royalty payments and include a significant down payment upon signing. The Company recognizes license revenue when it completes the earnings process, including the determination that the credit-worthiness of the licensee reasonably assures collectibility of any outstanding minimum royalty payments. Once the earnings process is complete, the Company records as revenue the present value of the outstanding minimum royalty payments. If cumulative earned royalties exceed the minimum royalty payments, the excess royalties are recorded as revenue when earned and are referred to as “overages”. If the licensee is not sufficiently creditworthy, the Company does not recognize revenue from minimum royalty payments until they are received.

In licenses in which the Company has significant continuing involvement or a performance obligation, the minimum royalty payments are not recognized until those obligations are fulfilled. Royalties collected in advance of the Company’s obligations being fulfilled are recorded as deferred revenue.

The Company expects to recognize less revenue in 2006 from renewals of merchandise licenses with its U.S.-based licensees than in either 2004 or 2005 because a relatively small number of those licenses are scheduled to renew in 2006. In addition, the one major Marvel-branded entertainment event scheduled for 2006, the movie

This excerpt taken from the MVL 10-K filed Mar 16, 2006.

Licensing

Marvel’s Licensing segment is responsible for the merchandising, licensing and promotion of Marvel’s characters worldwide. Since 2004, the Licensing segment has pursued a strategy of concentrating its licensee relationships in the United States in high-quality licensees and negotiating higher guaranteed royalty amounts from each licensee. During that period, the Licensing segment has also pursued a strategy of expanding the Company’s base of licensees outside of the United States.

Another aspect of the Licensing segment’s strategy has been to create programs for classic brands beyond single characters, notably Spider-Man. Brands such as Marvel Retro, Marvel Heroes and Marvel Super Hero Kids/Spider-Man and Friends feature multiple Marvel characters and draw on storylines from a range of Marvel comics.

Major entertainment events play an important role in driving sales of licensed products (whether under a multi-character license or a single-character one), and most of the Licensing segment’s 2006 initiatives will be focused on the movie

This excerpt taken from the MVL 10-Q filed Jul 29, 2005.

Licensing

 

Marvel’s Licensing segment is responsible for the merchandising, licensing and promotions of Marvel’s characters worldwide. The Licensing segment expanded its overseas businesses in 2004 through newly established offices located in London and Tokyo. The Licensing segment is pursuing a strategy of concentrating its licensee relationships in a smaller number of high-quality licensees, and negotiating higher guaranteed royalty amounts from each licensee. The Licensing segment is also focusing on entering into licenses in new product categories, such as the wireless category, which was first licensed in late 2004. The Company typically enters into multi-year merchandise license agreements that specify guaranteed minimum royalty payments and include a significant down-payment upon signing. The Company recognizes license revenue when it satisfies the requirements of completing the earnings process, which is normally upon the effective date of the agreement. The remaining balance of the guaranteed payments, reflected as accounts receivable, is due in accordance with the periodic schedule as specified in each agreement. If sales of the licensee’s merchandise are high enough to entitle the Company to royalties in excess of the amount of the minimum royalty guarantee (which excess amounts are defined as “overages”), the Company receives the remaining balance of the guaranteed payment sooner than provided for in the agreement’s payment schedule. Overages are not recognized as revenue, in most cases, until the minimum guaranteed payments are fully collected. Licensing fees collected in advance of the period in which revenue would be recognized are recorded as deferred revenue.

 

Revenue recognized under license agreements during the periods ended June 30, 2005 and 2004 was generated within the business categories set forth below. The table does not include revenues from the Company’s master toy licensee, Toy Biz Worldwide Ltd. (“TBW”), as such revenue is recorded in the Company’s Toy segment. The “Other” category includes licensing revenue from domestics, collectibles and other items.

 

Licensing Segment

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

2005

 

2004

 

2005

 

2004

 

(in millions)

 

(in millions)

 

 

 

 

 

 

 

 

Apparel and accessories

$       7.9

 

$    20.5

 

$    32.8

 

$     40.2

Entertainment (including studios, themed attractions and electronic games)

16.6

 

10.8

 

41.5

 

16.2

Toys

8.1

 

9.0

 

13.2

 

15.3

Other

11.3

 

6.7

 

27.6

 

22.1

Total

$     43.9

 

$    47.0

 

$  115.1

 

$     93.8

 

Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki