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Marvel Enterprises

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jeff715

Our solution to Marvel\'s increasing market power and expanding product portfolio centered around acquiring human and physical capital to vertically integrate the movie production process.

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Marvel Enterprises A plan for sustained growth 1
Based on Marvel’s current market position, it needs to answer two key questions about its future position Marvel Enterprises is the number 1 comic book publisher Marvel has experienced an and licenser in the US, ahead of increase in sales and closest competitor, DC Comics. profitability, and now needs to There has been slow to virtually position itself for future. no growth in publishing. 1 2 Should Marvel focus on Should Marvel invest in its core heroes or more capital-intensive, introduce its lesser but potentially more known heroes? profitable projects? 2
We recommend Marvel focus on introducing other heroes and investing in more capital-intensive projects 1 2 Should Marvel focus on Should Marvel invest in its core heroes or more capital-intensive, introduce its lesser but potentially more known heroes? profitable projects? Profitability Brand Equity Growth Potential 1. Build Marvel Universe by introducing new heroes with known heroes. 2. Invest in capital-intensive projects, specifically, movie production. 3
Licensing has led to Marvel’s rebound and rapid growth 1939 1990s 1998 2003 Introduction of Licensing 15% increase in 20x increase in market share stock price 4
Customers can be segmented by 3 main product categories Publications Toys Motion Pictures • Males • Boys • Mass audience • 13-23 yrs • 4-12 yrs • Beyond • Established • Collectors (20%) publications Readers 5
Competitors span across the different businesses Publications Toys Movies • DC Comics (35%) • Bandai • Warner Brothers • Smaller industry • Hasbro • Pixar distributors • Mattel • (Incredibles) (25%) 6
Business Model Publishing Toys Marvel Licensing – Motion Films Licensing – Other Products Marvel owns Marvel does not own 7
Currently, the motion picture segment is growing the fastest, but we only retain 7% of sales Breakdown of Revenue Percentage of Total Revenue and CAGR (’01-03) by Business Marvel Retains from Box Office Sales 97% 7% 24.51% 21.09% 22% 12% 14.56% 93% Publishing Toys Licensing - Movies Marvel has to capitalize on the movie production and distribution process. 8
The Marvel Universe is our greatest strength Spider-man Deadpool Iron Man The Marvel Fantastic Universe Four X-men Hulk Elektra Marvel needs to be a masterbrand, not a house of brands. 9
Marvel wants to seize the opportunity to capitalize on Motion Films Publishing Toys Marvel Motion Films for Core Heroes Licensing – Motion Films for Non- core Heroes Licensing – Other Products Marvel owns Marvel does not own 10
Lesser known heroes who find success in movies will become the future core heroes and be produced by Marvel Lesser known heroes Core heroes If successful Licensing Phase Production Phase 11
Marvel can leverage existing equity of core heroes to introduce new content with lesser-known heroes Criteria Production Licensing Gross sales > $250 m < $250 m Characters Core heroes Team = Core + Lesser known Audience Mass market Comic book fan base Goal of movies Introduce audience Discover potential to Marvel Universe core heroes 12
The toy market is highly competitive and driven by volume Percentage of Marvel Toy Sales vs Industry 19% 19% Marvel Toys 35% Margins Marvel is making high margins in a competitive market by licensing. 13
Publications are not growing at a sustainable rate, but can contribute as R&D to rising demand for online products Specialty Marvel Consumers Stores E-Comics Marvel is making high margins in a competitive market by licensing. 14
Based on the potential profits Marvel can retain by producing and distributing films, it should produce 683 Licensing Profits (millions) 296 221 Potential Production Profits (millions) 104 122 95 68 57.54 28.5 4.76 21 6.65 7.28 16.94 0.07 1 Projected Profit (‘04): Projected Profit (‘04): $1.1 b $0.5 b 15
Acquire studio and talent High Introduce lesser known heroes into core hero movies Develop e-comics Medium Creation of new characters via publications Own all movie productions Low Develop toy production capability Time 16
Thank you! Questions? 17

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Marvel Enterprises

  • 1. Marvel Enterprises A plan for sustained growth 1
  • 2. Based on Marvel’s current market position, it needs to answer two key questions about its future position Marvel Enterprises is the number 1 comic book publisher Marvel has experienced an and licenser in the US, ahead of increase in sales and closest competitor, DC Comics. profitability, and now needs to There has been slow to virtually position itself for future. no growth in publishing. 1 2 Should Marvel focus on Should Marvel invest in its core heroes or more capital-intensive, introduce its lesser but potentially more known heroes? profitable projects? 2
  • 3. We recommend Marvel focus on introducing other heroes and investing in more capital-intensive projects 1 2 Should Marvel focus on Should Marvel invest in its core heroes or more capital-intensive, introduce its lesser but potentially more known heroes? profitable projects? Profitability Brand Equity Growth Potential 1. Build Marvel Universe by introducing new heroes with known heroes. 2. Invest in capital-intensive projects, specifically, movie production. 3
  • 4. Licensing has led to Marvel’s rebound and rapid growth 1939 1990s 1998 2003 Introduction of Licensing 15% increase in 20x increase in market share stock price 4
  • 5. Customers can be segmented by 3 main product categories Publications Toys Motion Pictures • Males • Boys • Mass audience • 13-23 yrs • 4-12 yrs • Beyond • Established • Collectors (20%) publications Readers 5
  • 6. Competitors span across the different businesses Publications Toys Movies • DC Comics (35%) • Bandai • Warner Brothers • Smaller industry • Hasbro • Pixar distributors • Mattel • (Incredibles) (25%) 6
  • 7. Business Model Publishing Toys Marvel Licensing – Motion Films Licensing – Other Products Marvel owns Marvel does not own 7
  • 8. Currently, the motion picture segment is growing the fastest, but we only retain 7% of sales Breakdown of Revenue Percentage of Total Revenue and CAGR (’01-03) by Business Marvel Retains from Box Office Sales 97% 7% 24.51% 21.09% 22% 12% 14.56% 93% Publishing Toys Licensing - Movies Marvel has to capitalize on the movie production and distribution process. 8
  • 9. The Marvel Universe is our greatest strength Spider-man Deadpool Iron Man The Marvel Fantastic Universe Four X-men Hulk Elektra Marvel needs to be a masterbrand, not a house of brands. 9
  • 10. Marvel wants to seize the opportunity to capitalize on Motion Films Publishing Toys Marvel Motion Films for Core Heroes Licensing – Motion Films for Non- core Heroes Licensing – Other Products Marvel owns Marvel does not own 10
  • 11. Lesser known heroes who find success in movies will become the future core heroes and be produced by Marvel Lesser known heroes Core heroes If successful Licensing Phase Production Phase 11
  • 12. Marvel can leverage existing equity of core heroes to introduce new content with lesser-known heroes Criteria Production Licensing Gross sales > $250 m < $250 m Characters Core heroes Team = Core + Lesser known Audience Mass market Comic book fan base Goal of movies Introduce audience Discover potential to Marvel Universe core heroes 12
  • 13. The toy market is highly competitive and driven by volume Percentage of Marvel Toy Sales vs Industry 19% 19% Marvel Toys 35% Margins Marvel is making high margins in a competitive market by licensing. 13
  • 14. Publications are not growing at a sustainable rate, but can contribute as R&D to rising demand for online products Specialty Marvel Consumers Stores E-Comics Marvel is making high margins in a competitive market by licensing. 14
  • 15. Based on the potential profits Marvel can retain by producing and distributing films, it should produce 683 Licensing Profits (millions) 296 221 Potential Production Profits (millions) 104 122 95 68 57.54 28.5 4.76 21 6.65 7.28 16.94 0.07 1 Projected Profit (‘04): Projected Profit (‘04): $1.1 b $0.5 b 15
  • 16. Acquire studio and talent High Introduce lesser known heroes into core hero movies Develop e-comics Medium Creation of new characters via publications Own all movie productions Low Develop toy production capability Time 16