2. AGENDA
•Introduction
•Environmental Analysis
•Competitor Map
•BCG
•SWOT
•Porter’s 5 Forces
•Distribution
•Industry Environmental Model
•Life Cycle
•Financials
•Rules of the game
•Key success factors
•Recommendations
3. Marvel Product and Services
16
Publishing15 Toys16 Licensing15
•Comics •Marvel •Portfolio of •Motion Pictures
characters Characters
•Trade Paperbacks •Direct-to-Video
•Toy licensing
•Advertising •Television
and production
•Custom Project •Video Games
The toy segment‟s
Primary target market for products are aimed
its comic books has been primarily at boys age 4-
male teenagers and 12 and collectors.2
young adults in the 13 to
23 year old age group.2
4. Competitor Map
Since 2000, each Marvel character
Archie
Comics based film have taken in
on average close to $400
DC Comics
million in world wide
PUBLISHING box office receipts.
Marvel is the
fourth
leading
licensor in INDIRECT COMPETITORS
the world.
MOVIES
LICENSING
UA
It raked in
$5 billion In 2008, the
in retail
sales. DIRECT COMPETITORS company will
makes it debut as
producer of the first
of 10 films. The
TOYS company predicts a
windfall of $170 to $800
million in revenue from toys and
UA
merchandising from the movie slate.
5. BCG Growth Share Matrix applied to PPD Business Units
High
90%
42.78 % Licensing
Market Growth Rate
Mid
20%
14.7 % Publishing
Toys
1.7 %
Low
0%
High Mid Low.
50% 5%
1%
40 % 6.7 % 2.7 %
Relative Market Share
Source: ---. “Increasing global CRO market growth forecast.” Goldman Sachs Pharmaceutical Services. Sep 23, 2003.
6. Strengths to Weaknesses: 1.9
Quantitative SWOT Analysis Opportunities to Threats: 2.2
Total SWOT: 4.1
STRENGTHS Weight Rank Total WEAKNESSES Weight Rank Total
(-5 to 5) (-5 to 5)
Building Infrastructure & Layering Strategy 0.3 5 1.5 Investor Confidence and Departure of Key Leaders 0.4 -2 -0.8
Strong brand recognition and loyalty. Acquisition of Core Concepts to be used as a Marvel is still viewed by many as a comic book company despite changing its name
vehicle to promote its characters universe to the in-school market and custom comics. to Marvel Entertainment. Investors still remember when the firm was putting out fires
Core Concepts specializes in distributing free school supplies with featured advertising stemming from its previous bankruptcy (10). Avi Arad resignation (18). Worried that
nationwide instrumental in targeting a new demographic (8). The comic publishing is a Spidey is a “one trick pony”(21).
KSF for the business leading to movies, toys, video games, etc. (11). Layering strategy
product selling even without a movie (17).
License Diversification – Video Games, Global Markets 0.4 4 1.6 Potential Take Over Target 0.3 -1 -0.3
Video games based on licensed IP are more likely to succeed than games based on Marvel relatively undervalued shares makes it a prime take over target for a large
original IP. Therefore, Marvel‟s video game licensing opportunities are likely to remain media conglomerate or other related entertainment or electronic gaming business.
robust (1). Recently opened offices in the UK and Japan to facilitate international The company now has a clean balance sheet with no debt and a pile of cold hard
growth (10). It is also striving to negotiate greater guaranteed royalties with a more cash. (8).
concentrated and higher caliber base of licensees resulting in more revenue streams
and adding to the bottom line. Marvel leaning more towards entering into profit
participation, first dollar participation gross participation, and equity participation
agreements. Marvel now controls an estimated 80% of the Sony JV (8).
Migration to In-House Production for films could drive Growth 0.2 3 0.6 Smaller than Competitors in every Segment 0.3 -3 -0.9
Transition of Marvel‟s film business from a license-only model to a hybrid Licensing segment – DC Comics, Walt Disney, NBC Universal. Publishing segment -
licensing/ownership model could strengthen Marvel‟s film business. The non-recourse primarily DC Comics, but publishing now competes with other media. Toy segment –
nature of the film financing facility limits Marvel‟s risk. Its success will be determined by Hasbro, Mattel, Jakks Pacific.
its ability to produce successful films (1). Marvel has a very robust pipeline of upcoming
movie releases (8).
Toy Business in Transition 0.1 2 0.2
Marvel‟s clever new deal with Hasbro in FY07 and the termination of the TBWW
license. Licensing rate for new deal is smaller, but Hasbro has core competencies in
sales and marketing should drive higher volume, which will grow toy division operating
income (1). This move makes strategic sense because of Hasbro‟s worldwide clout (2).
TOTAL 1 3.9 TOTAL 1 -2.0
OPPORTUNITIES Weight Rank Total THREATS Weight Rank Total
(-5 to 5) (-5 to 5)
Strategic / Ultimate Alliances 0.3 5 1.5 Character Library & Film Flops and Intellectual Property Rights 0.6 -2 -1.2
Marvel should continue to enter into clever strategic alliances, joint ventures, and There is a fundamental risk that Marvel can not make money on 2 nd tier characters
licensing deals. It should look to make deals with Pixar for 3-D movie or TV series. Look like Black Widow, Deathlok, Ghost Rider, and Luke Cage. A licensee‟s use of
at Cartoon Network or Fox Kids for launching new TV series. Look at major network for characters could dilute or destroy their value. To date, the company has been
live-action series for secondary realistic characters. Seek out Electronic Arts and Take- successful with 2nd tier characters like Blade – Vampire Hunter and Daredevil.
Two Interactive for video games(10). Look at numerous opportunities in a wide variety Ownership and profit participation of characters could be in dispute and subject to
of markets and technologies. litigation (3).
Licensing 0.4 4 1.6 Threats to Toy Biz 0.3 -1 -0.3
Licensing excluding the Sony JV increased 53% y-o-y due to ability to leverage global Continuing consolidation of the toy retailers, creating pricing pressures on toy
market opportunities Marvel will begin to see benefits of layering strategy in continuing licensees, could hurt Marvel. Geopolitical risks of manufacturing toys in the Far East
efforts to license i.e. wireless category (4). 450 active licenses and growing (8). and currency fluctuations. Marvel relies on a master toy licensee for a significant
portion of its toy production. Delays in manufacturing and distribution and/or financial
and operational concerns could impede sales (3).
Putting infrastructure in place to tap into Future Growth 0.3 3 0.9 Studio Operations 0.1 -3 -0.3
New entertainment veteran COO of Marvel Studios. Expand producing its own films Competition for Marvel‟s “tent pole movies”, as competitors film franchises can be
using external non-recourse financing. Distributing films for direct-to-video – a good released near Marvel movie releases and diminish box office performance, as well as
medium to introduce and promote new and secondary characters. TV Program and take away toy shelf space. Marvel also relies upon studios for production and release
even live theatrical productions, among other projects. Hiring new head of Video Game dates of movies. Decisions by a studio could hurt character tie-in licensing
Development to further exploit video game licensing opportunities (5). New market opportunities, particularly with toy sales. In regard to its film financing studio, Marvel
entry into dog & cat accessories, pet food and pet tents. (6). Leverage better-known has participated in film production but lacks experience in running a full studio (3).
characters to increase exposure of the lesser-known franchise by interconnecting Independent studios are few and far between these days. Generally, this is because
storyline throughout the Marvel Universe (8). of the hit-driven nature of the business, high overhead and capital costs and
competition among major studios (7).
TOTAL 1 4.0 TOTAL 1 -1.8
7. Weight Rank Total
STRENGTHS (-5 to 5)
Building Infrastructure & Layering Strategy 0.3 5 1.5
Strong brand recognition and loyalty. Acquisition of Core Concepts to be used as a vehicle to promote its
characters universe to the in-school market and custom comics. Core Concepts specializes in distributing
free school supplies with featured advertising nationwide instrumental in targeting a new demographic (8).
The comic publishing is a KSF for the business leading to movies, toys, video games, etc. (11). Layering
strategy product selling even without a movie (17).
License Diversification – Video Games, Global Markets
License Diversification – Video Games, Global Markets 0.4 4 1.6
Video games based on licensed IP are more likely to succeed than games based on original IP. Therefore,
Video games based on licensed IP are more likely to succeed than
Marvel‟s video game licensing opportunities are likely to remain robust (1). Recently opened offices in the UK
games based on original IP. Therefore, Marvel‟s video game
and Japan to facilitate international growth (10). It is also striving to negotiate greater guaranteed royalties
with a more concentrated and higher caliber base of licensees resulting in more revenue streams and adding
licensing opportunities are likely to remain robust . Recently opened 1
to the bottom line. Marvel leaning more towards entering into profit participation, first dollar participation gross
participation, and equity participation agreements. Marvel now controls an estimated 80% of the Sony JV (8).
offices in the UK and Japan to facilitate international growth10. It is
also striving to negotiate greater guaranteed royalties with a more
concentrated and higher caliber base of licensees resulting in more
Migration to In-House Production for films could drive adding to the bottom line. Marvel leaning more
revenue streams and Growth 0.2 3 0.6
Transition of Marvel‟s film business from a license-only model to a hybrid licensing/ownership model could
strengthen Marvel‟s film business. entering into profit participation, first dollar participation
towards The non-recourse nature of the film financing facility limits Marvel‟s risk. Its
gross participation, and equity participation agreements. Marvel now
success will be determined by its ability to produce successful films (1). Marvel has a very robust pipeline of
upcoming movie releases (8).
controls an estimated 80% of the Sony JV 8.
Toy Business in Transition 0.1 2 0.2
Marvel‟s clever new deal with Hasbro in FY07 and the termination of the TBWW license. Licensing rate for
new deal is smaller, but Hasbro has core competencies in sales and marketing should drive higher volume,
which will grow toy division operating income (1). This move makes strategic sense because of Hasbro‟s
worldwide clout (2).
TOTAL 1 3.9
8. Weight Rank Total
WEAKNESSES (-5 to 5)
Investor Confidence and Departure of Key Leaders 0.4 -2 -0.8
Marvel is still viewed by many as a comic book company despite changing its name to
Marvel Entertainment. Investors still remember when the firm was putting out fires
stemming from its previous bankruptcy (10). Avi Arad resignation (18). Worried that
Spidey is a “one trick pony”(21).
Potential Take Over Target 0.3 -1 -0.3
Marvel relatively undervalued shares makes it a prime take over target for a large media
Investor Confidence and Departure of Key Leaders
conglomerate or other related entertainment or electronic gaming business. The
company now has a clean balance sheet with no debt and a pile ofa comic book company
Marvel is still viewed by many as cold hard cash. (8). despite
changing its name to Marvel Entertainment. Investors still
remember when the firm was putting out fires stemming from its
previous bankruptcy 10. Avi Arad resignation18. Worried that Spidey
is a “one trick pony”21.
Smaller than Competitors in every Segment 0.3 -3 -0.9
Licensing segment – DC Comics, Walt Disney, NBC Universal. Publishing segment -
primarily DC Comics, but publishing now competes with other media. Toy segment –
Hasbro, Mattel, Jakks Pacific.
TOTAL 1 -2.0
9. Weight Rank Total
OPPORTUNITIES (-5 to 5)
Strategic / Ultimate Alliances 0.3 5 1.5
Marvel should continue to enter into clever strategic alliances, joint ventures, and licensing
deals. It should look to make deals with Pixar for 3-D movie or TV series. Look at Cartoon
Network or Fox Kids for launching new TV series. Look at major network for live-action
series for secondary realistic characters. Seek out Electronic Arts and Take-Two Interactive
for video games(10). Look at numerous opportunities in a wide variety of markets and
technologies.
1.6
Licensing 0.4 4
Licensing
Licensing excluding the Sony JV increased 53% y-o-y due to ability to leverage global
market opportunities Marvel will begin to see benefits of layering strategy in continuing
efforts to license i.e. wirelessexcluding450 active licenses and growing (8). 53%
Licensing category (4). the Sony JV increased y-o-y due to ability
to leverage global market opportunities Marvel will begin to see
benefits of layering strategy in continuing efforts to license i.e.
wireless category (4). 450 active licenses and growing (8).
Putting infrastructure in place to tap into Future Growth 0.3 3 0.9
New entertainment veteran COO of Marvel Studios. Expand producing its own films using
external non-recourse financing. Distributing films for direct-to-video – a good medium to
introduce and promote new and secondary characters. TV Program and even live
theatrical productions, among other projects. Hiring new head of Video Game
Development to further exploit video game licensing opportunities (5). New market entry
into dog & cat accessories, pet food and pet tents. (6). Leverage better-known characters
to increase exposure of the lesser-known franchise by interconnecting storyline throughout
the Marvel Universe (8).
TOTAL 1 4.0
10. Weight Rank Total
THREATS (-5 to 5)
Character Library & Film Flops and Intellectual Property Rights 0.6 -2 -1.2
There is a fundamental risk that Marvel can not make money on 2nd tier characters like Black
Widow, Deathlok, Ghost Rider, and Luke Cage. A licensee‟s use of characters could dilute or
destroy their value. To date, the company has been successful with 2nd tier characters like Blade
– Vampire Hunter and Daredevil. Ownership and profit participation of characters could be in
dispute and subject to litigation (3).
Threats to Toy Biz 0.3 -1 -0.3
Character Library & Film Flops and Intellectual Property Rights
Continuing consolidation of the toy retailers, creating pricing pressures on toy licensees, could
hurt Marvel. Geopolitical risks of manufacturing toys in the Far East and currency fluctuations.
There is a fundamental risk that Marvel can not make money on 2nd tier
Marvel relies on a master toy licensee for a significant portion of its toy production. Delays in
manufacturing and distribution and/or financial and operational concerns could impede sales (3).
characters like Black Widow, Deathlok, Ghost Rider, and Luke Cage. A
licensee‟s use of characters could dilute or destroy their value. To date, the
company has been successful with 2nd tier characters like Blade – Vampire
Studio Operations and Daredevil. Ownership and profit participation of characters could
Hunter 0.1 -3 -0.3
Competition for Marvel‟s “tent pole movies”, as competitors film franchises can be released near
be in dispute and subject to litigation (3).
Marvel movie releases and diminish box office performance, as well as take away toy shelf
space. Marvel also relies upon studios for production and release dates of movies. Decisions by
a studio could hurt character tie-in licensing opportunities, particularly with toy sales. In regard to
its film financing studio, Marvel has participated in film production but lacks experience in
running a full studio (3). Independent studios are few and far between these days. Generally,
this is because of the hit-driven nature of the business, high overhead and capital costs and
competition among major studios (7).
TOTAL 1 -1.8
11. Porter’s 5 Forces -- Entertainment Industry
THREATOF NEW ENTRANTS
There is always the possibility of new entrants in the entertainment industry. Producers and or manufactures
may create a product to carve out a particular market or segment niche. The industry has a history of
employees banding together to create a new product to compete in the already in the full field,
but getting a local or national distribution is challenging smaller entertainment providers team with
already established distribution unit have an excellent chance of breaking ground into the market.(3).
L/M
BARGAINING POWER OF
SUPPLIERS RIVALRY AMONG EXISTING INDUSTRY BARGAINING POWER OF
Suppliers are creating new FIRMS H BUYERS
outlets for the The entertainment industry no matter how Consumers have the ability
entertainment industry fragmented it appears much of what is To patronize or not to patronize
through technological Produced. In terms of entertainment is held An entertainment outlet. However
advances. The winner closely by three U.S based media The limited ownership prevents
for battle technological conglomerates, Disney, Viacom and Time Consumers from believing
supremacy will lie solely on Warner. These conglomerates direct They will never deal with a
which technological outlet L the entertainment Company they have been
has the most partners.(2) Market and the direction of the media. (1) Dissatisfied with in the past (5).
L
THREAT OF SUBSTITUTE PRODUCTS
The threat of any type substitute in the entertainment in industry is high. Most often then not the threat comes
in time of gift giving season when marketing dollars are spent more to sway people from one product to
The other. This time of year is also filled with the hopes of new products entering the market to capture a
hungry audience. (4)
12. Marvel outsources its
distribution to its partners...
Own Control Package and
Create Produce Distribute
intellectual intellectual market
content content content
property property content
Partners
FUEL ENGINE
13. Distribution Channels
Movie producers Marvel.com Publishers Licensing
(Diamond Comic) (Toy Biz)
Subscription
Specialty retail Direct market
Retail outlets
14. Entertainment Industry Macro-Environment Model
Demographic/Economic Factors: Technological / Physical
• Entertainment industry is Environment:
targeting segmented groups that •Entertainment is available
have been long ignored including in variety of ways including
ethnic cultures, language, online, cell phone and on-
religious and women and in a demand video(3)(4)
case by case basis adults only •Sales in traditional
products.(5)(6)(7(8)(9)(11)(15). entertainment merchandise
has dropped(13)
Political/Legal Environment:
•Entertainment outlets are facing
parental lawsuits to prevent
particular products from being
place and or sold in a market or
setting.(1)
•Producers must keep vigilant on Social / Cultural
product content in order to deal Environment:
with either self regulated or •Entertainment has reached
government regulation.in order out to the community
to guarantee an investment conscious in educating it on
return. (2) events and beliefs in the
•The threat of piracy and illegal community(8)(10)
licensing is at stake in the
entertainment industry(11)
•The entertainment industry
lobbies to protect copyrighted
product(12)
15. Life Cycle
75% from additional release windows
Movie 25% 50% 25%
Life
Cycle Box-Office DVD/VHS/ Broadcast TV
Cable/VoD
Current 100% = 3-6 month lifespan
Game
Retail
Life Cycle
Game Life 3-6 Months Unlimited lifespan
Cycle with
Retail Games-on-Demand Services
Additional
Windows
Source; NY Times, August 22, 2004: „To combat the problem, publishers are- again, in Hollywood fashion- scrambling to develop secondary
revenue streams. One is online games: selling subscriptions to play on the Internet‟
17. Rules of the Game
•Maintain control over characters
•Protect characters through licensing
•Protect brand equity through licensing
•Face in more stores/ distribution
•Something special for
holidays/occasions/community needs
•Be aware of knowledge of competitors and what
they are doing
•Competing for discretionary money since all
products are entertainment related
18. Key Success Factors
Maintaining Layering
creative strategy
Library of character– each control of Conservative
character has a strong fan base characters diversification
and brands strategy
Licensing-
straightening Calculated risk
bargaining taking with
power introducing
new characters
19. RECOMMENDATIONS
•If pet market takes off consider licensing deal with Petco
and upscale pet products in high-end pet boutiques. Create
super pets like DC Superman‟s dog Kyrpto, the Bathound,
etc.
•Look to acquire more proprietary content like Darkhorse
Comics or even DC Comics if Time Warner is willing to sell
the operation.
•Consider merging with another entity like Disney or
Electronic Arts to allow for further exploitation of character
library.
•Consider bidding for comic book, toys, and related
products for already established entities i.e. Transformers,
Star Wars, TCM, etc.
•Expand video game licensing by entering into agreements
with Electronic Arts, Take-Two Interactive, and others.
