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Marvel Enterprises A plan for sustained growth 1

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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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Page 1: Marvel Enterprises

Marvel Enterprises

A plan for sustained growth

1

Page 2: Marvel Enterprises

Based on Marvel’s current market position, it needs to

answer two key questions about its future position

2

Marvel Enterprises is the number 1 comic book publisher and licenser in the US, ahead of closest competitor, DC Comics. There has been slow to virtually no growth in publishing.

Marvel has experienced an increase in sales and profitability, and now needs to position itself for future.

Should Marvel focus on its core heroes or introduce its lesser known heroes?

Should Marvel invest in more capital-intensive, but potentially more profitable projects?

1 2

Page 3: Marvel Enterprises

We recommend Marvel focus on introducing other heroes

and investing in more capital-intensive projects

3

Should Marvel focus on its core heroes or introduce its lesser known heroes?

1

Should Marvel invest in more capital-intensive, but potentially more profitable projects?

2

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.

Page 4: Marvel Enterprises

Licensing has led to Marvel’s rebound and

rapid growth

4

1939 1990s 1998 2003

15% increase in market share

20x increase in stock price

Introduction of Licensing

Page 5: Marvel Enterprises

Customers can be segmented by 3 main

product categories

5

Publications • Males • 13-23 yrs

• Established

Readers

Toys • Boys • 4-12 yrs

• Collectors (20%)

Motion Pictures • Mass audience

• Beyond

publications

Page 6: Marvel Enterprises

Competitors span across the different

businesses

6

• DC Comics (35%) • Smaller industry

distributors (25%)

• Bandai • Hasbro • Mattel

• Warner Brothers • Pixar

• (Incredibles)

Publications Toys Movies

Page 7: Marvel Enterprises

Business Model

7

Marvel

Publishing

Licensing – Motion Films

Toys

Licensing – Other Products

Marvel owns Marvel does not own

Page 8: Marvel Enterprises

Currently, the motion picture segment is growing the

fastest, but we only retain 7% of sales

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21.09% 24.51%

14.56%

22%

12%

97%

Publishing Toys Licensing - Movies

Breakdown of Revenue and CAGR (’01-03) by Business

7%

93%

Percentage of Total Revenue Marvel Retains from Box Office Sales

Marvel has to capitalize on the movie production and distribution process.

Page 9: Marvel Enterprises

The Marvel Universe is our greatest strength

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Spider-man

X-men

Hulk

Deadpool

Fantastic Four

Elektra

Iron Man The Marvel Universe

Marvel needs to be a masterbrand, not a house of brands.

Page 10: Marvel Enterprises

Marvel wants to seize the opportunity to

capitalize on Motion Films

10

Marvel

Publishing

Motion Films for Core Heroes

Toys

Licensing – Other Products

Marvel owns Marvel does not own

Licensing – Motion Films for Non-core Heroes

Page 11: Marvel Enterprises

Lesser known heroes who find success in movies will

become the future core heroes and be produced by Marvel

11

Lesser known heroes

Licensing Phase

Core heroes

Production Phase

If successful

Page 12: Marvel Enterprises

Marvel can leverage existing equity of core heroes

to introduce new content with lesser-known heroes

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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 to Marvel Universe

Discover potential core heroes

Page 13: Marvel Enterprises

The toy market is highly competitive and

driven by volume

13

19%

Percentage of Marvel Toy Sales vs Industry 19% Marvel Toys

35% Margins

Marvel is making high margins in a competitive market by licensing.

Page 14: Marvel Enterprises

Publications are not growing at a sustainable rate, but can

contribute as R&D to rising demand for online products

14

Marvel is making high margins in a competitive market by licensing.

Marvel Specialty

Stores Consumers

E-Comics

Page 15: Marvel Enterprises

Based on the potential profits Marvel can retain by producing

and distributing films, it should produce

15

4.76 21

6.65

57.54

7.28 28.5 16.94

0.07

68

221

95

683

104

296

122

1

Licensing Profits (millions)

Potential Production Profits(millions)

Projected Profit (‘04):

$1.1 b Projected Profit (‘04):

$0.5 b

Page 16: Marvel Enterprises

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Low

M

ed

ium

H

igh

Time

Acquire studio and talent

Develop e-comics

Introduce lesser known heroes into core hero movies

Creation of new characters via publications

Own all movie productions

Develop toy production capability

Page 17: Marvel Enterprises

Thank you! Questions?

17