Please open the zip file and follow these steps

1- read the text file

2- Read picture 1 and 2

3- read the CIS212 Case Study 3 Directions

4- check picture 3, it is a part of the Directions of the case study

Case study
focus on the this question here is should Marvel branch out into 1) movies starring their lesser known characters and 2) should they change their business model so they’re more like Disney. Explain why and show why you have choose your choice.

Professor Anita Elberse prepared this case. Alexander Atzberger (MBA 2005) provided valuable assistance. HBS cases are developed solely as the
basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective
management.
Copyright © 2004 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685,
write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be
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photocopying, recording, or otherwise—without the permission of Harvard Business School.
ANITA ELBERSE
Marvel Enterprises, Inc.
It was June 29, 2004, one day before the theatrical release of the highly anticipated sequel to the
Spider-Man movie, which was based on Marvel Enterprises’ most popular character. The movie
seemed destined to follow in the footsteps of the original’s record-breaking box-office run by offering
its familiar mix of high-flying action and drama. However, Peter Cuneo, Marvel’s vice chairman and
former CEO, knew his management team had staged a rescue that Spider-Man (or any of the other
superheroes to which Marvel owned the rights) could never have pulled off—that of the company
itself. Only six years after the company emerged from bankruptcy, and only three years after it
posted a loss of over $100 million and saw its stock hover at around $1, Marvel had amassed a market
value of more than $2 billion, recorded over $300 million in sales and nearly $170 million in operating
income in 2003, and seen its stock soar to over $20 (see Exhibit 1). “The culmination of our work
came a few weeks ago, when The Wall Street Journal reported on the best-performing stocks,” Cuneo
said. “Guess who was number one on the New York Stock Exchange over the past three years?”
Not only had Marvel’s original comic-book publishing business been turned into a profitable
division, its toy and licensing operations had also generated impressive returns in recent years (see
Exhibit 2). In the past three years alone, Marvel had lent its characters to eight movies, including
Sony Pictures’ Spider-Man, Universal’s The Hulk, Twentieth Century Fox’s X-Men, and Lions Gate’s
The Punisher. It had also made licensing deals for a wide range of other products, ranging from toys
to video games, apparel, party items, and food. “We contribute our characters and our knowledge of
the characters, we work hard to find the right partners, and we approve the products for quality, but
we don’t contribute any capital. We just collect checks,” Allen Lipson, Marvel’s president and CEO,
said. “It’s a gold mine. Cash just comes in every day,” added Isaac Perlmutter, Marvel’s other vice
chairman and biggest shareholder.
Despite Marvel’s remarkable rise, doubts about its business model and its growth potential
continued to exist. That same day, The Wall Street Journal had reported on mounting concerns about
the company’s future in a lead article entitled “Marvel May Need Heroic Help.”1 The same paper that
had compared Marvel’s rise to “Spider-Man scampering up the sides of tall buildings”2 had now
expressed fears that the company had “milked the best gains from its most prominent characters”
and had questioned Marvel’s ability to “use lesser-known superheroes such as Namor, Ghost Rider,
Iron Man, Punisher and The Fantastic Four and sequels to boost growth.”
1 “Marvel May Need Heroic Help,” The Wall Street Journal, June 29, 2004.
2 “Shareholder Scoreboard: Leaders and Laggards in the Rankings,” The Wall Street Journal, March 8, 2004.
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“There is no end to our success—we have a great library of characters,” responded Avi Arad,
Marvel’s chief creative officer and Marvel Studios’ chairman and CEO. “I do feel frustrated by all the
revenue that we are just giving away,” he admitted, pointing to Marvel’s relatively modest share of
the revenues for its motion pictures. For instance, despite Spider-Man’s impressive theatrical boxoffice
gross of over $820 million worldwide and sales of about 7 million DVDs (with an average retail
price of $20) on the day of its release in the U.S., Marvel had received only about $25 million from
Sony Pictures. According to The Wall Street Journal article, the sequel would have to be “one of the
biggest hits on record” in order to contribute much more to Marvel’s bottom line than the $10 million
that Sony had paid in advance. “We have been focused on activities that require minimal capital
investment on our part,” said Cuneo. “There are bigger bets to be placed as we move more into the
production and distribution of content—but there could be bigger rewards, too.”
Cuneo knew that Marvel’s management faced two sets of questions that were critical to its future.
First, could Marvel sustain its success in the coming years, or had its winning streak been just a fluke?
That is, was Marvel’s success dependent on a limited set of “blockbuster” characters, most notably
Spider-Man, and should Marvel continue to capitalize on those characters, or was it time to seek
growth in a larger set of lesser-known characters? Second, in exploring growth opportunities, was it
wise for Marvel to venture more outside the safety of its current business model and move into more
capital-intensive activities? What marketing strategy would allow Marvel to sustain its success?
Company Background
The Marvel Universe
Marvel owned and managed one of the oldest and most recognizable collections of characters in
the entertainment industry. Its proprietary library of over 4,700 characters included Spider-Man, XMen,
The Hulk, Blade, Daredevil, Elektra, The Punisher, The Fantastic Four, Captain America, Namor, Thor,
and Silver Surfer (see Exhibit 3 for some examples). Marvel’s characters had been developed through
a long history of comic books—the first Marvel comics appeared in 1939—which had contributed to
each character’s personality and context. The fictitious Marvel Universe provided a common historical
and contextual background for the characters and story lines. Popular characters would often make
“guest appearances” in comic books of lesser-known or newer characters. Morton Handel, Marvel’s
chairman, commented on the characters’ appeal: “They have some kind of vulnerability attached to
them. Spider-Man is just a kid with glasses. Although they have superpowers, our characters are
presented as normal people, with problems that anybody else would have.”
Lipson clarified the nature of the content library: “You’ve got to think of the 4,700 characters not
as individuals but as families. We have 40 years of Spider-Man stories. There might be 50 bad guys
associated with Spider-Man and 50 friends. So the Spider-Man family consists of 100, maybe 200,
properties. The Hulk accounts for another 100, while X-Men has about 400 characters.” While many
properties had been turned into household names, Spider-Man was widely perceived to be Marvel’s
most popular character. Cuneo agreed: “There is nothing close to Spider-Man. He is our number one
character, with the widest demographic appeal of any fantasy property. His appeal starts with twoyear
old children who wear Spider-Man pajamas and goes up to consumers in their 60s—they all
enjoy Spider-Man. I wish all our characters were that broad.”
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Early History: Marvel Comics
Marvel Comics had been founded in the 1930s. In the late 1930s and 1940s, its comics featured
superheroes such as The Human Torch, The Sub-Mariner, and Captain America. The subsequent decade
was characterized by a slump in sales, partly fueled by controversy about the potentially harmful
effect of comics on children. Marvel’s competitor DC Comics was the first to recover in the 1950s,
with The Flash and The Justice League of America (which included Superman, Batman, and Wonder
Woman) superhero series. In the early 1960s, following in the footsteps of DC Comics and led by
editor/writer Stan Lee and artist Jack Kirby, Marvel revived its lineup of superheroes, created the
Marvel Universe, and introduced continuity by moving away from single-issue story lines. Several
popular characters arose in this period, including The Fantastic Four and The Amazing Spider-Man, and
Marvel emerged as the second-largest comic-book publisher behind DC Comics. After Lee stepped
down, Marvel continued to thrive for most of the 1970s and 1980s, although overall comic-book
industry slumps generally also had their effect on Marvel.3
The Perelman Years: Marvel Entertainment Group
In 1989, investor Ronald Perelman bought Marvel and turned it into a publicly listed company,
Marvel Entertainment Group. He eliminated unprofitable lines of business, streamlined operations,
acquired other comic-book publishers, and diversified outside the core comic-book business. Initially,
this led to a solid performance record. However, in the mid-1990s, the core business began to falter.
For years, Marvel had capitalized on a speculative frenzy among collectors by significantly increasing
the number of titles (which lowered the comics’ overall quality) and by nearly doubling prices (to
$3.00 per book). When the frenzy ended, collectors were left holding worthless paper, and many
“regular” consumers had dropped out of the market, causing a plunge in Marvel’s comic-book sales.
Amid accusations that Perelman had mismanaged the company for his personal gain, Marvel was
forced to file for bankruptcy in the late 1990s.4 A fierce legal battle for the company ensued between
various parties. Eventually, on October 1, 1998, a public toy company called Toy Biz, Inc. acquired
Marvel Entertainment Group out of bankruptcy. The new entity was named Marvel Enterprises, Inc.
The Turnaround Years: Marvel Enterprises, Inc.
Marvel’s new board, which included the former Toy Biz owners Perlmutter and Arad, named
Cuneo CEO in July 1999 and hired several other new executives. The company’s new start was a
difficult one. After posting a $105 million loss for 2000, the stock traded at just over $1. However,
after that year, performance substantially improved (see Exhibits 1 and 2).
Marvel’s new strategy was first aimed at monetizing the content library via licensing characters
for use with media products (such as motion pictures, television, publishing, and video games) as
well as other consumer products (such as toys, apparel, collectibles, and food). Activities in these
areas reinforced each other, according to Cuneo: “If you have seen our movies, you might get into
our comic books, you might get into our video games, you might buy a T-shirt with a Marvel
character, or you might buy some of the other consumer products.”
3 See ComicsResearch.org (www.comicsresearch.org) and Les Daniels, Marvel: Five Fabulous Decades of the World’s Greatest
Comics (New York: Abrams, 1991).
4 “Bankruptcy and Restructuring at Marvel Entertainment Group,” HBS Case No. 298-059 (Boston: Harvard Business School
Publishing, 1998).
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Managing the library of characters to foster long-term value was the second key focus of Marvel’s
new management. Arad stated: “Almost everybody will have heard of Captain America or The
Fantastic Four. They may not know anything specific about the characters or the stories, but we can
change that. We can bring them to life, using motion pictures, television, animation, or toys.” Cuneo
added: “We’re planning the career of each of our characters. Spider-Man’s career over the next five
years is going to include two more movies, DVDs, toys, a video game, a promotion with Burger King,
and so on.” Bruno Maglione, president, International, went one step further: “We’re sort of like a
talent agency—but instead of Tom Cruise and Julia Roberts, we have Spider-Man and Elektra.”
Retaining some form of control over the creative process—to ensure the quality of the content that
featured Marvel characters—was the third main strategic dimension. A high level of consistency in
characters and stories was emphasized. Quality control was particularly relevant for the comic-book
publishing division. Cuneo stated: “We knew we had to rejuvenate our publishing business, because
that’s where a lot of our credibility came from. Our comic book lines were embarrassing. Before the
turnaround we had a 25% share of the North American market, and DC Comics had a 43% share.
Today it’s reversed.” Marvel’s management team had hired well-known artists and writers to lead its
creative efforts in the publishing division, including popular writers from the film and television
industry, and had started to sign exclusive contracts with key creative talent.
The strategy had been extremely successful by virtually any measure. In mid-June 2004, Marvel
was able to redeem all of its remaining long-term debt and emerge as a debt-free company—a fitting
end to the turnaround phase.
Marvel’s Divisions
Marvel operated as what Kenneth West, executive vice president and chief financial officer,
referred to as a “mini-conglomerate.” Each of its divisions—comic-book publishing, toys, and
licensing—were run as distinct businesses, but the Marvel Universe provided a common theme to all
activities.
Comic-Book Publishing
Products The large majority of comic books revolved around the classic Marvel superheroes,
such as Spider-Man and The Fantastic Four, while a small fraction of titles featured newly developed
characters. Comic books came in two main formats: periodicals and graphic novels. Periodicals were
comic books that looked like small magazines, contained roughly 30 pages (with advertisements) that
were stapled together, appeared biweekly or monthly, and were typically priced around $3. Graphic
novels (“trades”) were mostly collections of periodicals that captured a “complete” story about a
character’s adventure, usually contained roughly 150 pages (without advertisements) bound as a
book, and typically sold for anywhere from $10 to $25 (see Exhibit 4). Although the number of titles
had decreased significantly compared with that in the mid-1990s, Marvel maintained an “aggressive
publishing schedule,” according to Gui Karyo, president of Publishing. About 60 periodicals
appeared each month, and 100 to 300 graphic novels were published each year.
Increasingly, popular superheroes appeared in several series, each aimed at a specific audience.
For example, The Amazing Spider-Man was a classic Marvel comic popular among core readers. Over
500 issues had appeared since the early 1960s. Ultimate Spider-Man, introduced in 2001, was a series in
the Ultimate comics line that was developed with new comic readers in mind. “One of the problems
with our standard comic books is that it’s hard for new readers to get into them if they’re coming into
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a story later—they don’t have an opportunity to read the previous 30 years of comic books,” Karyo
explained. “What we did with the Ultimate series is move to complete adventures in four to six
magazines, so a new reader can come into the series and get interested in the whole story.” Bill Jemas,
a former Marvel Publishing president and chief operating officer, added: “In the Ultimate series,
we’re retelling a lot of the classic stories in today’s milieu, so young readers can relate. For example,
in 1962 Spider-Man was bitten by a radioactive spider. In Ultimate Spider-Man, he was bitten by a
genetically morphed spider—and he had a cell phone.” The newest line, Marvel Age, introduced in
2004, was aimed at the market served by mass merchandisers. Each magazine dealt with a complete
story, and artists adhered to specific style guides to ensure accessible content for readers of all ages.
Customers The primary target market for Marvel’s comic books consisted of male teenagers
and young adults from 13 to 23 years old, but established readership extended to adults in their mid-
30s. “The large majority of our readers are in their early teens to late 20s,” Karyo said. “They are
predominantly male, and they also tend to be well educated.” He estimated that there were about
half a million people who read Marvel comics on a regular basis in the U.S. Readers roughly fell into
two groups: those who bought comic books like any other magazines, and those who bought comic
books as part of a collection.5 “We’re good at listening to comic-book fans, really understanding what
they want, and getting that back to them in the comic books,” Jemas said. Retailers played an
important role in that process, he observed: “We realized that we will never understand the comicbook
customer the way the guy who works in the comic-book shop does.”
Distribution Marvel’s comic books were distributed through three channels: (1) to comicbook
specialty stores (the “direct market”) on a nonreturnable basis; (2) to traditional retail outlets,
including bookstores and newsstands (the “mass market”), on a returnable basis; and (3) on a
subscription sales basis (also see Exhibit 2).
The lion’s share of Publishing’s net revenues was derived from sales to the direct market, which in
the U.S. consisted of approximately 3,000 specialty comic-book stores.6 They played a crucial role.
“There are no other retailers in the world who are prepared to carry, or capable of carrying, as many
products as we produce on a monthly basis as comic-book specialty stores. We print around 60 titles
a month, DC Comics around 100, and there are a dozen other small publishers printing another 20
titles. All of these titles are best displayed with the cover clearly visible,” Karyo said. “Can you
imagine what it would mean for Wal-Mart, or even for a general bookstore, to display so many SKUs
[stock-keeping units] that way?” General bookstores and mass merchants typically did not carry any
periodicals and offered a limited selection of trade paperbacks.
However, the direct market had major disadvantages as well. Specialty bookstores generally did
not occupy premier retail locations, were often not managed as professionally as general bookstores
(such as Barnes and Noble and Borders) and mass-market retailers (such as Wal-Mart and Target),
and had a very narrow customer base. “It is enormously limiting,” Karyo said. “There has been little
effort to build the market, and new readers have not been coming in.” Marvel comic-book
subscriptions were available for all periodicals, usually at 90% of the cover price.
Market performance Marvel circulation had grown to 3.6 million copies a month in 2003:
approximately 1.6 million in the kids and teens market (17 years or younger) and 2 million in the
young adult market (18 years or older). On average, classic monthly periodicals sold about 50,000
copies, and trades about 10,000 copies. Best-sellers included the classic X-Men, the newly launched
5 Certain comic books were valuable commodities. For example, an early issue of Amazing Spider-Man in good condition could
fetch between $60,000 and $70,000 (Comics Price Guide, June 2004).
6 Comics & Games Retailer Magazine, June 2004.
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Astonishing X-Men, and Ultimate Spider-Man (Exhibit 5 presents key statistics for four popular titles
for a six-month period in 2003). Highly collectible issues (such as the first issue in a series or by a
particular artist or writer) sometimes generated sales of over 250,000 issues.
Sales often benefited greatly from exposure in other media, particularly movies. The publishing
division adjusted supply accordingly. “Around the time of The Hulk movie, we were printing an
enormous amount of Hulk product,” Karyo indicated. “There is nothing that supports sales more
than $20 million worth of advertising.” He added: “The Spider-Man movie began a wave of interest in
comics that actually grew the entire market. Before Spider-Man, the largest launch of a book with toprated
talent was around 100,000 units. Now a similar launch regularly breaks 200,000 units.”
The publishing division strived to make a profit on each title in its portfolio. Describing his
division’s performance over 2003, Karyo said: “There were only three books that lost some money at
the end of their stint. But more or less, everything we print is profitable.” He added: “We generally
don’t publish anything that has less than a 30% margin.” However, there was sufficient room for trial
and error, according to Jemas: “We can try new characters at almost no risk. We can put it out, watch
it for a couple of months, and if it doesn’t seem to take off, cancel it. We might lose $10,000, but that’s
nothing compared to the revenues from the winners among our 60 titles each month.”
The comic-book industry Total U.S. retail sales for comic-book periodicals and trades were
about $300 million in 2003. The market had been relatively stable since 1997, when annual sales also
totaled $300 million.7 Periodicals typically accounted for the lion’s share of sales—close to 90% in
2003. Marvel had a 40% dollar market share, compared with 35% for its nearest competitor, DC
Comics, which was part of the Time Warner conglomerate. Also, because many editors, artists, and
writers had worked for both Marvel and DC Comics over the course of their career, the comic-book
publishing giants were engaged in a relatively friendly rivalry. Marvel competed with a wide range
of other, smaller publishers that primarily produced creator-owned titles outside the superhero
genre. Eight of the top 10 monthly comic books typically were Marvel publications.
Toys
Marvel’s toy division designed, developed, marketed, and distributed a limited line of toys to
markets across the world. In July 2001, Marvel had entered into a five-and-a-half-year exclusive
licensing agreement with TBW, a Hong Kong-based independent company. Under this agreement,
TBW licensed the right to manufacture and sell action figures that featured Marvel characters. In
return, Marvel received a royalty fee of 15% of the wholesale value of toys sold. Also, because action
figures generally accounted for 90% of Marvel’s toy-licensing revenues, the deal had major
implications for the way in which the toy division operated. Under a related agency arrangement,
Marvel’s toy division agreed to take care of product design, marketing, and sales for TBW with
respect to Marvel-licensed toys. Marvel received a fee for those services that generally exceeded 20%
of toy wholesale revenues. Spider-Man was the only character that was excluded from the deal with
TBW—Marvel had a separate arrangement with Sony Pictures for that character.8
The nature of the agreement with TBW had important benefits for Marvel. “We are able to
maintain control over the quality of the product, from design to final engineering and execution,”
explained Alan Fine, president and CEO of Marvel’s toy division. “Of course we are also intimately
knowledgeable about and aware of our characters—we know what they are all about, what their
7 Comics & Games Retailer Magazine, 2004.
8 Marvel had also bought the rights to design, develop, market, and distribute toys based on the trilogy The Lord of the Rings.
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powers are, and what the story of their life is.” West pointed to another benefit: “Toy companies
always are at risk that their toys don’t sell. They risk their investment in inventory, the possibility
that the items will be returned, and so on—risks are everywhere.” He added: “We have toy
designers, salespeople, and merchandising expertise. TBW is a manufacturing company. It is a perfect
blend.”
Because senior executives and salespeople in the toy division had been part of Toy Biz, Inc., the
company that had acquired Marvel in 1998, Marvel had a great deal of experience with the toy
business. In the early 2000s, Marvel’s toy division was widely recognized as one of the world’s
foremost designers of action figures, action-figure accessories, play sets, and boys’ role-playing toys
for the mass market. The toy division maintained a product development and marketing staff of 12 to
14 people, sometimes obtained new product ideas from third-party inventors, and employed a large
number of freelancers for the sculpting of figures and other toys.
Products Many of the toy division’s designs (see Exhibit 6) had received praise from industry
insiders and from consumers. The Electronic Hulk Hands, a pair of large green hands that produced a
noise when they made contact, had been given the Toy Industry Association’s “Boy Toy of the Year”
award in 2003. It had sold over 4 million units at an average retail price of $18, becoming Marvel’s
most successful toy ever. It exemplified the creativity and simplicity for which the toy division was
known, argued Jemas: “You’re a little kid. You weigh 12 pounds. Everybody in the world is bigger
than you. How do you play Hulk? It’s the big hands. You put those big hands on and you feel the
noise, the power. . . . Once I put on a pair of the hands I knew we had a hit.” Fine added: “Our Spider-
Man Web Blaster this year is going to be the biggest toy we’ve ever had. It’s just a glove with a can of
Silly String—you can shoot Silly String directly from your hand. No fancy technology, but a huge
amount of play value, a chance for a child to become Spider-Man—all for a $15 retail price.”
The assortment of toys for movies was generally very broad. For a Spider-Man movie, for instance,
Marvel designed at least five sets of Spider-Man action figures, each with an accessory, and each with
a number of supporting characters, as well as a number of other toys. Prices for end-consumers
ranged from $7 for an average action figure to $15–$20 for role-play toys. A special line of toys for the
collector market, Marvel Select, was sold for a minimum retail price of $20. Retailers generally
received a margin of 35% to 50%.
Toy design and marketing activities were largely dictated by upcoming movie releases, Fine
indicated: “Avi Arad gets a script into my hands as early as possible, and we have lots of dialogue on
it. When we develop a line for a movie, we’re using lots of the material from the script. We try to
represent that in the direction and the tone of our toys.” He added: “We know that toys usually
represent the first exposure of a child to a character. It determines whether it’s going to be thumbs up
or thumbs down. If it’s thumbs up, then the likelihood of that child buying a T-shirt, a lunchbox, a
backpack, and a pair of sneakers based upon that character is much higher.”
Customers Marvel toys were “primarily aimed at boys from four to 12 years old,” according
to Fine. “The sweet spot is a boy who is six to seven, maybe five to eight years old.” “There’s also a
collector segment,” he continued, “which consists of the adults who have grown up with action
figures, who now buy the figures, store them, and watch them grow in value over the years.” The
collector market accounted for about 20% of total sales, according to toy division executives.
Distribution With the exception of Marvel Select figures (which were exclusively sold through
specialty stores and comic-book stores), outlets for toys included specialty toy retailers, mass
merchandisers, mail-order companies, and variety stores. Marvel also sold toys to independent
distributors who in turn shipped the products to retail outlets. The toy division’s five largest
customers were Wal-Mart, Toys ‘R’ Us, Target, Kay-Bee Toy Stores, and Kmart. Together, these
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customers accounted for 66% of Marvel’s total toy sales in 2003. Direct sales efforts to retailers
typically started 12 months prior to the period in which Marvel sought to sell toys, to ensure that
retailers provided a guaranteed minimum order and sufficient shelf space for the toys. Because the
time from concept to production of a new toy could range from six to 12 months, that meant sales
efforts usually started well before the product development process.
Market performance In 2001, the line of toys based upon the first Spider-Man movie had
accounted for more than 10% of Marvel’s net revenue. In 2002, the year in which the first movie was
released, the share was just over 35%. In 2003, without the support of a major movie, Marvel had sold
more than 1.5 million units of the Spider-Man Dual Action Web-Blaster.9 For 2004, the year of the movie
sequel’s release, Marvel expected Spider-Man toy sales of around $165 million.
The toy industry The toy business as a whole generated over $20 billion in sales in 2003. The
action figures and accessories category accounted for $1.2 billion in revenues.10 By industry
standards, the last few years had been lackluster. Intense rivalry existed among the big retailers. For
example, specialist retailers FAO Schwarz and Kay-Bee Toy Stores had both filed for bankruptcy in
recent years. The high level of consolidation had made retailers very powerful vis-à-vis toy
manufacturers vying for shelf space. Also, because toys were characterized by short life cycles,
competition for shelf space was intense. Marvel’s main competitors included Bandai (with its Teen
Titans line), Hasbro (with its Star Wars and G.I. Joe lines), and Mattel (best known for its Barbie line).
Licensing
The licensing division licensed Marvel’s characters to a variety of media, including feature films,
television programs, video games, animation, and destination-based entertainment (such as theme
parks). Marvel also received fees from the sale of licenses for use in a wide variety of consumer
products. “We’re helping our licensees sell their products under a Marvel brand,” Handel said. Two
teams handled activities with U.S. licensees. Marvel Studios, based in Los Angeles, primarily dealt
with motion pictures and had 11 full-time employees. Marvel’s Consumer Media Group, based in
New York, coordinated activities for all consumer products and consisted of three salespeople and
three assistants, supported by 15 legal and product-approval specialists. Marvel had recently opened
offices in Tokyo and London to increase its licensing activities in international markets.
Motion pictures Marvel had licensed several of its most popular characters with studios for
use in motion pictures. The company pursued a diversified base of studio partners, both to ensure
their commitment to each project and to mitigate risks. Exhibit 7a provides details on the eight
movies released since 1998. Spider-Man