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Case Study: Final Draft Marvel entertainment Team B Lolwah alfayaheen 200600515 Fatima Al arbash 200600565 Nwyer almarzogi 200700048 Maryam almousa 200600325 Fatima alsenni 200600568 Zainab al Gaw Ahmed 200600712 ASSE 4311 SUMMER 2012 LEARNING ASSESTMENT III Dr. Emmanuel Okey Ntui
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Current Situation & Corporate Governance Introduction: a) Company's background Marvel entertainment Inc is an American entertainment company classified under the entertainment business industry. The company was formerly known as Marvel Enterprises before the merging of the Marvel Entertainment group Inc and Toy biz Inc. The merging took place in order to bring the Marvel Enterprise out of bankruptcy, which occurred in 1998. The company was known to start functioning towards the end of the great depression and grew drastically during the late 1930s and the 1940s. In the 1950s, the industry suffered a setback, but eventually grew stronger in the 1960s due to the new crop of characters that appealed to children of the baby boomers generation. In the 1970s, the company again suffered a setback, but rebounded back in the 1980s when it grew larger and became more popular. It is in the 1990s that the company began diversifying as it seeks to obtain full value from its steady characters through licensing arrangements and other diverse media outlets. The reorganization of the company and its entry in the motion pictures contributed to the company’s name changing from Marvel Entertainment group to Marvel entertainment Inc in the year 2005. Marvel entertainment Inc is a large company that engaged in toy making, publishing, licensing and film production with a library of approximately 5,000 characters. Some of the characters include iron man, x-men, spider man, blade, incredible hulk, silver surfer, captain America, daredevil, the avengers, Thor, the punisher, Namor, the fantastic four, ant man and the ghost rider. Marvel Entertainment Company is known to operate in four diverse segments, which are licensing, toys, publishing and film production. The toy segment was eliminated in the year 2007 by signing a toy licensing agreement with Hasbro. As the years continued, the company became one of the top leading entertainment companies in the entertainment industry. The company is currently producing films, comic books and still licensing.
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b) Vision, mission, objective, and strategies Vision statements can be defined as a comprehensive summary of a company’s objectives. It unifies a picture of the organization’s future. The mission statement, alternatively, outlines current operational status of an organization. Marvel entertainment is a large company in the entertainment industry. The company’s vision and mission statement are incorporated together as one statement; thus gives a snapshot of the company’s operational status. The vision and mission statement, which also illustrate, the company’s objectives include; “With a library of over 5,000 characters, Marvel Entertainment, Inc. is one of the world's most prominent character-based entertainment companies. Marvel's operations are focused on utilizing its character franchises in licensing, entertainment, publishing and toys. Areas of emphasis include feature films, DVD/home video, consumer products, video games, action figures and roleplaying toys, television and promotions. Rooted in the creative success of over sixty years of comic book publishing, Marvel's strategy is to leverage its character franchises in a growing array of opportunities around the world.” The strategies Marvel entertainment Inc uses to ensure its success include monetizing content library through licensing the diverse characters for the utilization of media products, as well as consumer products, which includes the motion pictures. The other strategy is that they ensure quality of the content that features all Marvel characters by retaining control over the creative process and managing the library of all the Marvel characters with the intention of fostering long term value for each of the character. c) Current situation The bankruptcy that affected Marvel Company in 1998 caused a lot of damages for the company. In 2008, marvel entertainment Inc began experiencing some problems all related to the bankruptcy. The emerging of the bankruptcy led to the financial structure of the company to fluctuate widely. Marvel entertainment was not only competing against other comic book
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publishers such as DC Comics but also competing against entertainment giant companies such as Walt Disney, NBC Universal, ABC and many others. Marvel Company was relying heavily on its character driven intellectual property and this dependency was now threatened globally by copyright piracy, as well as by strong multimedia competitors this aspect has contributed to a decline in the fiscal sales of the company. d) Corporate governance Corporate governance is defined as the set of diverse processes, policies, customs, laws and institutions affecting how a company is directed, controlled and administered. It is the framework of policies, rules and practices by which a company’s board of directors ensures fairness, accountability, and transparency in its relationship with all of its stakeholders who include the financiers, government, customers, management and community. It is, therefore, in brief referred to as the relationship between a given company’s stakeholders. Corporate governance ensures that the company is being managed and controlled efficiently and effectively in performing its daily business operations. Marvel entertainment Inc board of directors includes the current chief operating officer, Isaac Perlmutter, who is the vice chairman of the board of directors ever since November 2011. Other key board of directors who are also the primary stakeholders of the company include Peter Cuneo, James Halpin, Morton Handel, Sid Ganis, Richard Solar, Laurence Charney and James Breyer. Other key corporate officers include John Turitzin, David Maisel, Alan Fine and Kenneth West. Marvel entertainment Inc corporate governance ensures the company is on the right track of its business operations. The board of directors ensures the company follows all the rules, policies and code f ethics that contribute to the growth of the company. The corporate governance guidelines guide the board of directors on how to control, administer and direct the organization or corporation in an effectual and efficient way. Marvel entertainment Inc board of directors ensures that the company’s business operations are accountable of all the actions it
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performs by showing diverse records such as the financial statements. It also ensures transparency in its daily operations by conducting meetings regularly to inform the stakeholders of all the company’s happenings. The dissemination of the company’s records to the stakeholders also shows the transparency of the company. Corporate governance is vital in all companies and Marvel entertainment; it ensures the company business operations are efficiently performed. e) Business industry Marvel entertainment Inc is a company classified under the entertainment business industry. The entertainment industry is among the top business industries in the world. It has grown and expanded rapidly with diverse divisional sectors or sub-industries such as the film, music, live performing entertainment, broadcasting, discotheques, fashion, theme parks and fashion (Stein & Evans, 2009). This industry is in the showbiz business involved in providing diverse entertainment to people. The many companies included in this business industry provide a stiff competition. Marvel entertainment has been in competition with other film industries such as Walt Disney, Hollywood and other comic publishing industries such as DC Comics. Entertainment industry is one industry that grows depending on diverse factors such as the economy factors, technological advances and advertisements or marketing. In economic factors, it is a flourishing economy that will help the entertainment companies or corporations market its business, which eventually leads to sales, revenues and profits increase. Technological factors play a vital role in the industry in that all entertainment companies need to be up to date in using advanced technology in producing their work. The products they use should be of good quality to capture a wider market. This factor contributes to the competition of consumers in that consumers only go for films that are of high quality and is easily accessible. The trend in advertising spending is a significant factor affecting this business industry. A large proportion of
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this industry’s top line is a resultant of ad expenditures, on both the regional and national level. Strong demand in the market happens during an upturn in the economy, indicating bright and success prospects (Haupert, 2006). Advertisement bring is consumers; thus this factor in this industry is of importance in ensuring its growth. The Entertainment Industry is a business industry that can change hastily. Thus, a skilled qualified management with the aptitude to invest in exceptional content, foresees trends, and capitalizes on diverse expansion opportunities are characteristics that an excellent media organization should possess. The changes in consumers’ needs are a common feature in this industry; thus every company needs to be alert in providing their consumers with their needs. This ensures the companies increase their market share, which increases sales and revenues. The entertainment industry is growing rapidly globally; an aspect that brings revenue to the industry.
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External environment (O&T), Internal environment (S&W) Introduction: Marvel Entertainment Inc. Is mainly involved in four lines of business: publishing, toys, licensing, and creation of movies. In the publishing line of business, the company is involved in mass production of comics and paperbacks. These are targeted for male teenagers and youngsters between the ages of thirteen and twenty-three. The comics serve as media for advertisement to millions of young Marvel fans. The toy business line is adorned with thousands of toy characters from Marvel comics, such as Spiderman, Incredible Hulk, Blade, Captain America, and the Xmen. The toys are targeted primarily at boys between the ages of four and twelve and toy collectors. Licensing department of Marvel specializes in licensing a portfolio of characters. Marvel Entertainment Inc. is ranked as the fourth most successful licensor in the world. From this venture, it receives in an average of five billion dollars per annum. For instance, they license the use of some of their characters in other businesses, such as hotels, toy companies, and fairs. Their fourth and most recent venture is Marvel Studios. This is a production studio that specializes in producing cartoons, animated character movies, video games, and television programs. Since 2000, each movie produced by Marvel Studios based on a Marvel character has raked in an average of close to four hundred million dollars in global box office receipts. To further increase their revenues, Marvel specializes in production and merchandising of action figures, inspired by movies and television shows. This venture earns the company two hundred to eight hundred million dollars per annum. Following a couple of financial woes from the nineties, Marvel Entertainment went through a number of takeovers, mergers and consolidation strategies. In August 2009, Walt Disney Co. acquired Marvel Entertainment for four billion dollars. According to Disney CEO
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Robert Iger, the transaction aimed at combining Marvel’s strong global presence and archive of characters with Disney’s creative skills thus creating a global portfolio of entertainment investments. This transaction worked well for Marvel, as its operating profit margin went from -8.32% in 2008 to 10.11% in 2009. The gross profit margin increased from -10.59% to 7.68% in 2009. In 2010, owing to the global financial meltdown, profitability went a notch lower. After completion of this multibillion-dollar deal, the shares of Marvel Entertainment soared by 25% in pre-market trading. However, the success in most of Marvel Entertainment’s business ventures does not just come due to luck. Marvel Entertainment strived to create strong brand recognition and loyalty. This has been achieved through aggressive marketing campaigns that are led by Core Solution LLC. Core Solutions, which is a subsidiary of Marvel Entertainment, and the medium used to promote Marvel products to the in-school market and custom comics. Marvel has recently discovered that video games based on licensed IP are far more likely to succeed than video games based on original IP. As a result, Marvel’s video game licensing venture is likely to remain firm. The transition of Marvel’s film business from the traditional license-only model to a hybrid license and in-house ownership model is likely to earn the company increased revenues. To further secure its position as the top toy manufacturer, Marvel made a deal with Hasbro in FY07 that resulted in the dissolution of TBWW license. As a result, the licensing rates went smaller and, considering Hasbro’s experience and competence in sales and marketing, Marvel’s toy revenues have risen. On the flipside, Marvel is still considered by millions of people as a comic book store, despite having changed its name to Marvel Entertainment Inc. This strongly works against the company in the sense that customers, clients, and suppliers are not fully aware of the firm's other
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ventures. Furthermore, owing to its protracted and widely popular bankruptcy case, many investors still lack confidence in the company. The bankruptcy case was widely followed by mainstream media, who made a step-by-step assessment of the situation. Marvel Entertainment has had a history of bad management ever since top creative designer Avi Arad resigned from duty. This history dates back to the 1970's, when the financial problems of Marvel Inc. Commenced. The rate of employee turnover at the time was shocking and contributed to the near-failure of the company. Another of Marvel’s great disadvantages is that it competes in a market with overbearing and outstanding competitors. In the licensing market, Marvel competes directly against big names such as DC Comics, NBC Universal, and Walt Disney. The publishing sector is faced by near obsolescence as a result of the shift to television, radio, and Internet. In the toy segment, Marvel goes against big names, such as Mattel and Bandai. Another near-crippling problem faced by Marvel Entertainment and other industry players is the inherent risk of using their second-tier animation characters, such as Black Widow, Ghost Rider and Deathlike. Common use of second-tier characters diminishes their value. Marvel Entertainment, being a late entrant in the movie production segment, should strive to comprehend that the industry is highly competitive, hit-driven, has high overheads and capital expenses. In spite of the aforementioned challenges, boundless opportunities exist for Marvel Entertainment to grow and earn more revenue. First of all, it should strive to make more strategic alliances with other industry players. For instance, it should aim to formulate a workable agreement with Pixar for production of 3-D animation movies or television series. Cartoon Network would be a splendid platform to launch new cartoon television series. Marvel
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Entertainment should take advantage of the advances made in technology to venture in 3-D gaming. A major demographic change occurring throughout the entertainment industry is that companies are targeting segments and clusters that have previously been ignored, such as women, as well as religious, ethnic, cultural, and language minorities. For instance, Marvel was used in the 1970’s as a medium to reach and educate the youth on issues relating to drug and substance abuse. Later, Marvel began featuring some of the previously unused characters, such as werewolves, aliens, and vampires, as characters in their stories. This development was widely acclaimed and a welcome deviation from the ordinary and lackluster methods of storytelling used previously. The comic entertainment industry is faced by a lot of political and legal restrictions. For instance, some entertainment outlets, being distribution channels, face parental lawsuits that regulate the sale of some comics to certain groups of people in specific settings. The risk of piracy and illegal use of patented material are always rife in the entertainment industry. Marvel Entertainment, therefore, has to keep vigil to ensure that their material is not used illegally. Producers must also be at par with federal and state regulations dealing with their products in order to avoid the chance of being sued. Marvel Entertainment has broken the social and cultural barriers of our country, producing goods aimed at all groups of society. It is said that entertainment is one of the key mirrors and influences of a society. Marvel Entertainment has taken this saying in stride, and is continually educating the society on matters such as gun violence, drug abuse, and racial segregation.
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As discussed in many instances above, advancement in technology has been one of the most important elements in the entertainment industry. Marvel is expected to continually be up to date with the upcoming developments in technology and evaluate how they will change the market. For instance, with the rapid spread of Internet, electronic comics are easily distributed across the globe. This has created new opportunities by venturing into previously untapped markets, such as Japan, Europe, and Africa. On the converse, the advent of technology has stiffened competition, since brands and characters from other nations have found their way into the American market as well. Furthermore, technology has dictated changes in the mode through which entertainment is received. Currently, phones and tablets are the popular mediums of receiving entertainment. As a result of advancement in technology, sales of comic books and other traditional forms of media have significantly dropped. It would be beneficial for Marvel to tap into these developments and produce electronic comics that can be read online. As, according to the latest count in December 31, 2012, Marvel employed 316 individuals on a permanent basis as designers, creative directors, accountants, and general faculty. In addition, the company also recruits people for creative jobs on as-needed basis, with over six hundred active freelance artists and writers. The employees are fairly rewarded via cash compensation. In addition, the employees of the company obtain equity or phantom equity rewards, which line up their interests with those of the general stockholders. This strategy ensures that the employees are motivated and reduces the turnover from one company to another. However, Marvel Entertainment employees are not subject to any communal bargaining arrangements, such as trade unions. In spite of this protective and potentially misunderstood provision, the management of the company believes that Marvel’s association with its staff is upright.
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The entertainment industry in which Marvel Entertainment operates is filled with ups and downs. There is a need for vigilant, passionate, and technologically advanced workers who can cushion the organization from failure. Myriad of factors influencing this industry could be perceived as strengths, weaknesses, opportunities, or threats to operation.
Internal Environment (S&W) Introduction Marvel Entertainment, Inc. Exists as a subsidiary business of the Walt Disney Company. Its core business is the licensing over 8,000 fictitious characters that the company holds exclusive rights to (Marvel, 2012). As a business strategy, the company has entered into several joint ventures with strategic partners in the past in a bid to commercialize these characters. The company also ventures into low risk/returns ventures on the side to augment its revenues. The following internal environment analysis of the company gives an in-depth picture of the status, strategic factors, and alternatives of Marvel Entertainment, Inc.
Business Description Marvel Entertainment, Inc. is an entertainment business established in 1988. Its predecessors were Marvel Comics and Marvel Productions that ceased to exist in 1986. Currently, the company specializes in the selling of toys, publication of comic books and trading of paperbacks. The company is also involved in the production and distribution films, and licenses of its numerous comic characters. Prior to 2008, the Marvel Entertainment, Inc. business unit consisted of four segments: Toys, Licensing, Film Production, and Publishing. The toys segment was mainly concerned with the creation of toys based on the company’s characters and offering them for sale. However, this segment was eliminated in the first quarter of 2008 as the company reorganized its operations structure. The licensing segment is concerned with the issuing of rights and licenses to third
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party toy dealers on the numerous characters patented by Marvel Entertainment, Inc. Licenses are also issued to clothes and electronics manufactures, theme parks, and feature films. The Film Production segment is concerned with producing and distributing films and animations worldwide. The publishing segment publishes branded comic books. Under its group portfolio, Marvel Entertainment, Inc. operates three directly. This includes one international subsidiary. The three subsidiaries are Marvel Studios, Marvel Worldwide, and Marvel Characters. The company’s area of operation is mainly the United States and the United Kingdom. Of all the business divisions at Marvel Entertainment, Inc, the Licensing segment is the most lucrative, accounting for about half of all the company’s net sales annually. This segment is also very vital to the company as it is tasked with brand management and promotion of the Marvel characters. The film production segment is also vital as the company seeks to strategize itself as a fully fledged film producer of films based on its characters. This would give the company greater and more flexible control over the film release.
Corporate strategy Over the past, Marvel Entertainment, Inc. has entered into joint ventures as a corporate strategy. The company is for instance entered into agreements with television production companies that allow for selling of rights and licenses to them. Other strategic partners of Marvel Entertainment, Inc. include video game publishers and merchandise manufactures. The corporation with toy production company, Hasbro, has for instance resulted in huge revenue being generated by both entities in the arrangement. Other strategic corporations that Marvel Entertainment, Inc. has engaged in include its partnership with Lions gate Entertainment Corp, in the distribution of animated DVDs, 20th Century Fox in the production of films such as Fantastic Four, and Universal Studios for theme parks. It is through this partnership that the company has continued to expand its portfolio and revenue base in the recent past.
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Marvel Entertainment, Inc. has modified its products to target different market segments in the past. To cater for the 4 to 14 age group for instance, the company focuses on cartoon characters that are known to appeal most to this segment. The company is also targeting adults who are after collecting antiques. This segment is known to have a larger spending capability and consequently, the pricing and quality of these products is done appropriately. The idea of targeting the older readers is a strategy to enhance the company’s ability of staying relevant and competitive at all levels. Some of the major issues and considerations that Marvel Entertainment, Inc. is pondering with include integrating constant innovations in its business strategy. Technological advancement has led to the emergence of new distribution channels. The company has to strive so as not to be left behind in the utilization of these new channels to reach out to new markets.
SWOT Analysis The strengths of Marvel Entertainment, Inc include its brand name and marketability of its characters. The strong brand name of the company allows Marvel Entertainment, Inc. to charge premium prices for its products and remain popular in the eyes of the customers. The strong brand names also benefit the company’s stock value since many consumers’ associate strong brands with better quality products and strong stock. Among the renowned brands associated with Marvel Entertainment, Inc. Include Black Panther, Spider Man, and Captain America II. These and other products of the company are highly marketable. Among the weakness that Marvel Entertainment, Inc. has to contend with include a declining market share as occasioned by other players in the industry, lack of independence from its mother country, and lack of capital. There are threats in the industry that the company has to contend with. The gaming and comic industry has for instance a very volatile macro environment. The entertainment trends are also very dynamic and unpredictable. There is also the growing risk of intellectual property. Marvel Entertainment, Inc.’s business decisions are impacted by the numerous legal constraints that exist in the different areas
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of operation; at both domestic and international level. There are for instance serious intellectual property violation of Marvel Entertainment, Inc.’s products especially in Africa and Asia. Marvel Entertainment, Inc. Is also threatened by DC Comics. Marvel Entertainment, Inc. has opportunities that are currently exploiting. On top of the list is a 5 Year licensing plan with toy manufactures, Hasbro. Marvel Entertainment, Inc. could take advantage of Hasbro’s expertise in toy manufacture to ward of the intense competition especially from DC Comics. There also exists unlimited opportunities in the strategic partnership that the company can venture into especially on the licensing and rights front. The emerging technological trends such as digital media and advanced technology also provide promising channels for reaching out to clients.
Financial Performance The company has recovered tremendously since the 1996 period when it filed for bankruptcy. A number of actors may have contributed to this bankruptcy. Such factors include poor strategic decisions, unfavorable change of trend in the entrainment industry, and unfavorable government policy. Overall, the company still boasts the record of the higher grossing film franchise ever with revenues exceeding $4 billion (Marvel, 2012). In the past five years, Marvel Entertainment, Inc. has recorded annual total revenue of between 2,000 and 6,700 million USD (Marvel, 2012). These figures have been projected to double over the next decade. Below is an excerpt of the company’s financial figures.
Table 1 Excerpt from Marvel Entertainment, Inc. DCF Analysis Year
Total Revenue
% growth rate
- COGS (Million
Gross Profit (Million
2007
(Million USD) 2,179
n/a
USD) 1,304
USD) 874
2008
5,138
135.8%
3,067
2,070
2009
5,093
-0.9%
3,018
2,074
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2010
5,451
7.0%
3,233
2,217
2011
6,130
12.5%
3,566
2,564
(Source: Live-Pr.com) Despite the remarkable turnaround of Marvel Entertainment, Inc. from the time of bankruptcy to the current high returns period, there are still concerns over the sustainability of the company’s business model. The company is currently in the process of repositioning as a global player through low capital investment ventures. Critics have pointed out that such projects are bound to yield low returns. On the long term, these low return projects cannot sustain the high growth trend at Marvel Entertainment, Inc. In addition, the over reliance on the brand characters names for a large portion of its income is quite risky given the industry’s changing nature and stiff competition. Going forward, it is recommended that the company consider other business options. There for instance exists a large area to be explored especially on the digital media and online networking. Online streaming in particular for instance is quite underutilized. The company could also invest in developing new characters and branding them. The company could also consider expanding its geographical area of operation to regions such as Africa that has remained largely unexploited.
Strategy Implementation, Evaluation and Control Marvel is an old film house and therefore has to deal with the problem of staying novel and relevant in the dynamic and unpredictable entertainment industry (Haupert, 2006). To confront these challenges, Marvel needs to incorporate into its strategies the retention of old and loyal readers of their comics while seeking to bring new consumers into their fold. As
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generations change, Marvel has to keep innovating and strategizing in order to capture the interests of the changing generations. Marvel targets the teenagers who are the largest consumers of summer blockbusters and avid readers of comic books. Marvel needs to address many factors in its strategy formulation. The entertainment industry has become politicized and therefore Marvel needs to be vigilant in its themes so that it does not antagonize consumers of various political, ethnic or racial groups in the depiction of its characters. This has not been a problem in the past where the main consumers of Marvel’s products were mostly Caucasian. The population in the United States and internationally has become more diversified and therefore more tact is required when creating entertainment for mass audiences. There are also technological issues to be addressed. Marvel’s movies are very technologically intensive, utilizing a wide variety of computer technologies to come up with their stunning visual effects. To stay ahead of other entertainment companies, Marvel needs to be current with its technology arsenal in order to produce animated and blockbuster movies faster and at a higher quality. The company has handled these issues well although there are still some issued that need to be ironed out if Marvel is going to avoid going into bankruptcy again in the future. The licensing model, which Marvel extensively uses in its revenue generation, has been very successful in taking Marvel out of bankruptcy into a profit making company. It is however questionable whether this business model is going to be continuously successful in the future. Marvel’s current economic fortunes are reliant on the few movies that it makes based on its characters. This means that the fate that befalls Hollywood will also befall Marvel comics. This is a loophole in its strategy since it has minimal control of the outcome of its business ventures and even less ability to predict the outcome of their ventures. Compared to its competitors,
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Marvel is under the greatest threat if the success of their Hollywood movies is not secured. This is because most of their revenues are reliant on the revenues made in the box office with the exception of its comics business. This means that if a movie made by Marvel does not make high revenues in the box office then most of its other strategic sectors are bound to suffer (Daniels, 1991). Marvel’s economic success depends on the continued economic viability of its characters. If Marvel’s characters do not continue to inspire moviegoers, then the company’s fate will be a bleak one. Hulk, for instance, was a flop in the box office, which was a big blow to the company. As Marvel continues to exhaust its repertoire of characters, they will be hard pressed to make a marketable movie based on the characters in the lower tiers of their portfolio. Lesser known characters have a low chance of featuring in a movie that will sell in the box office. The use of low tier characters in future Marvel blockbusters may mean a reduction of the bargaining power that Marvel has in negotiating licensing agreements and therefore a reduction in revenues the company may accrue. If for example, Marvel decides to increase their movie output to gain more presence in the market as a marketing strategy, it may lead to consumers getting tired of too many Marvel movies leading to a decrease in Marvel’s market share. Under Perelman, Marvel decided to increase its output of comics that inevitably lead to decrease in interest from the comic readers (Daniels, 1991). There are many threats to Marvel’s long-term economic viability. Marvel can adopt some strategic measures in order to strengthen their position in the entertainment industry (Stein and Evans, 2009). Marvel should concentrate their efforts in growing the best of their comic book titles. Marvel should take the best of their comic books and concentrate on increasing their demand so that in the future there is a ready demand for blockbuster movies based on these
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comics. The alienation of Marvel comics’ avid readers can be done through desisting from oversaturating the market, a costly mistake as exemplified by Perelman’s failure to keep the company profitable. The collector market can be rejuvenated by restricting the number of comic books printed. Collectors are a loyal consumer base that cannot be ignored despite of their low numbers. Collectors play a vital role in popularizing unknown comic books and bringing them to the attention of the avid reader. The relatively unknown titles should be kept out of the retail bookstores so that the image of their exclusivity can be generated to inspire readers to seek these titles out. Collectors are very important for this strategy to work. The bookstores can be used to distribute the characters that people are already familiar with like Spiderman and Ironman (Daniels, 2011). Market segmentation is also a useful strategy that Marvel can use in order to increase its viability in the long term. The company should consider creating titles exclusive to adults and children respectively. Once a niche market has developed around a previously unknown character brand, Marvel should consider marketing the character brand through television shows and cartoons. Although the revenue to be accrued from television shows and cartoons is dismal compared to blockbusters, the exposure is necessary in preparing the new characters for a possible blockbuster in the future. This will increase Marvel’s future economic viability. Marvel should insulate itself against inevitable future box office flops by making sure that the licensing deals of current popular characters are capitalized on. To reduce the chances of losses from a box office flop, Marvel should push for equity participation rights, which is the percentage of the gross income obtained from DVD, cable, and home video sales, since this amount is not usually drastically affected by flops, as is the box office.
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In a rapidly globalizing world, it is important that Marvel extend its business past the United States borders. A small amount of the company’s licensing revenue, about 10%, is generated internationally. The international licensing market is an area that remains unexplored despite the evidence that the demand outside North America is almost similar to that within North America. Half of the revenues from the box office have come from the international market, which means that there is a large underutilized demand outside North America. Marvel should consider collaborating with other established entertainment industries like Japan’s anime industry and produce movies that do not have Western connotations thereby diversifying their movie portfolio. This will also lead the diverse cultures that consume movies to perceive Marvel entertainment as a company that is not afraid to transcend cultural barriers. Lastly, Marvel should keep a close eye on other big companies in the blockbuster business such as DC comics since they might increase their super hero movie output, leading to a saturation of the market and consequently the possible loss of interest in super hero movies by moviegoers (Haupert, 2006). The turnaround strategy implemented by Marvel after the bankruptcy has been working thus far despite the skeptic stance taken by some critics who feel that Marvel’s economic success will be short-lived. Marvel was able to remain profitable during the recession, rising a whopping 250% in the stock market. After the bankruptcy, Marvel has learned the dynamic nature of the entertainment industry (Vogel, 2011). Marvel should change its strategy to accommodate for changes in preferences, trends and tastes. The business model that Marvel has adopted provides for the minimization of capital expenditure and risks. Although the bankruptcy was a big blow to Marvel, it also brought with it some advantage. Due to the bankruptcy, the company has an asset in the form of the Federal tax net operating loss carry-forwards, which has exempted the company from paying Federal taxes for a long time. Marvel has taken measures to go
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international by hiring Bruno Maglione to be the head of Marvel International. The fate of Marvel lies in its ability to reinvent itself and keep innovating new characters for their movies. The company needs to watch out for threats such as oversaturation in the market and dwindling licensing returns if it is going to remain competitive in the future.
References
Haupert, M. J. (2006). The entertainment industry. Westport, Conn. [u.a.: Greenwood Press Marvel Entertainment Inc,: Company profile, Information, Business Description, Background information on Marvel Entertainment Inc. Retrieved from http://www.referenceforbusiness.com/history2/52/Marvel-Entertainment-Inc.html Marvel Entertainment Inc, Retrieved from http://rochester.iweb.bsu.edu/profile.html Stein, A., & Evans, B. B. (2009). An introduction to the entertainment industry. New York: Peter Lang. Vogel, H. L. (2011). Entertainment industry economics: A guide for financial analysis. New York: Cambridge University Press. http://www.scribd.com/doc/52888785/Marvel-Entertainment Daniels, Les. (1991). Marvel: Five Fabulous Decades of the World's Greatest Comics. New York: Harry N. Abrams, Inc. Benezra, K. (1996). Marvel Wants to Be a Movie Mogul. MEDIAWEEK, July 8, p. 4.
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Marvel. (2012). Marvel. Retrieved 26 July 2012 from www.marvel.com Miller, R. (2011). Marvel Entertainment, Inc. (MVL) - Financial and Strategic Analysis Review - a new market research. Retrieved 26 July 2012 from http://www.live-pr.com/en/marvelentertainment-inc-mvl-r1048728813.htm Daniels, L. (1991). Marvel: Five Fabulous Decades of the World's Greatest Comics. New York: Harry N. Abrams, Inc. Haupert, M. J. (2006). The entertainment industry. Westport, Conn.: Greenwood Press Stein, A., & Evans, B. B. (2009). An introduction to the entertainment industry. New York: Peter Lang. Vogel, H. L. (2011). Entertainment industry economics: A guide for financial analysis. New York: Cambridge University Press.
