Marvel Entertainment Inc(Marvel), formerly Marvel Enterprises, is an American

Entertainment company

formed from merger of Marvel Entertainment group Inc and Toy biz, Inc. Marvel

starts toward the tail-

end of the Great Depression and grows rapidly during the remainder of the 1930s

and 1940s. The

industry suffers a setback in the 1950s, but grows stronger in the 1960s as a new

crop of popular

characters appeal to the children of the baby boom. After another slump in the

1970s, Marvel rebounds

in the 1980s, growing even larger and more popular. The company begins to

diversify in the 1990s, as it

seeks to reap full value from its stable of superheroes through licensing

arrangements and other media

outlets. Marvel counts among its characters such well-known properties as Spider-

Man, the Fantastic

Four, the Incredible Hulk, Thor, Iron Man, Captain America, the X-Men (notably

Wolverine), and others.

Most of Marvel's fictional characters operate in one single reality known as the

Marvel Universe.

Marvel achieves success during a time of economic recovery and post war boom. This

makes sense as

young adults growing up in that period seek inspiration and empowerment through creative,

fictional

representations of hope. Marvel’s Entertainment Inc’s history bears a striking resemblance

to one of its
downtrodden superheroes that battles rivals and fights injustices. As it transitioned from

traditional

publisher and toy maker into a new media and entertainment company Marvel is struggling

hard to

emerge as a winner over the intense competition from other players such DC Comics and

various

licensing agreements.

In first quarter of 2008, Marvel eliminated its toy division and reorganized into three

operating

segments: Publishing, Licensing and Film Production. Publishing segment focused

on creation and

publishing comic books, trade paperbacks, custom comics and digital comics of

their major characters

which including Captain America, Incredible Hulk, Spider-man, X-men, Fantastic

Four, Iron Man and

Ghost Rider.

The Licensing segment typically delivered over half of the company’s net sales in a

year. The licensing

segment focused on the licensing, promotion and brand management of all Marvel

Characters

worldwide. They established relationship with larger licensees with bigger

merchandising and financial

appetite. The Film Production include self-produced feature film. Marvel is planning

to strategize itself

into producing the movies of the characters which are not licensed to the third

parties. This will help

films and

coordination of licensed products. It also provides preproduction services, including

developing film

concepts and screenplays, preparing budgets and production schedules, and

obtaining production

insurance and completion bonds. Marvel Entertainment, Inc. has joint venture

interests in Spider-Man

Merchandising L.P.

Major Issues and possible consideration/action:

The ability to stay relevant and competitive Marvel need to retain attention of the

old readers, while

Also attracting the attention of new readers over time. The advent of new

distribution channels and new

Class of readers is also keeping Marvel on the toes for constant innovation in their

products and

strategy. There is always a challenge of adding teenage readers and putting efforts

to address following

related issues

• Social, Political, Economic, Technological, and Environmental Concerns

• Core values and Principles

• Current and Future aspirations

• Importance of network(family, friends, peers, teachers, coaches)

• Engagement in after school activities

• Absorption of messages from multi channel touch point

The above study can provide the foundation for target customer segment analysis.

The study can be used as an input for introducing new “Superhero” figure among

any target customer group. This activity may help create another Marvel characters

which can produce licensing revenues.

There is always a challenge from DC Comics which has a tight hold in the market as

well.

Another major underlying issue was the exclusive agreement with Hasbro to make

action figures, plush toys, and certain role play toys, and non exclusive rights of

several other toys made by using Marvel’s characters. Marvel faced intense

competition in the toy industry and relied on the expertise of Hasbro to reach its

major segments. There was drop in revenues in year 2008 in the toy market

segment.

Serious legal considerations influenced all of the Marvel operations, domestically

and internationally. There is serious intellectual rights violations from abroad

including countries from Africa, Asia, Europe, Middle East, Latin America which are

creating constant threat to company’s registered trademarks and copyrights.

The first step in stake holder analysis is to assess the influence and Importance of

each individual stakeholder or stakeholder group at Marvel Entertainment Inc. Isaac

Perlmutter, 65, had been Marvel’s Chief Operating officer since Jan 1, 2005 and was

employed by Marvel as Vice chairman of the board of Directors since Nov 2001.

Peter Cuneo, Sid Ganis, James Halpin, James Breyer, Laurence Charney, Morton

Handel, Richard Solar are some of the other Key Board of Directors or Primary Stake

holders of the company. The other key corporate officers include Alan Fine, David,

Maisel, John Turitzin, Kenneth West which concludes the major primary stakeholders
of the company whose influence and importance in the organization place them as

primary stakeholders.

The Board of Directors held eleven meetings during 2006. Each incumbent

director attended at least 75% of the aggregate number of Board of Directors

meetings and applicable committee meetings during the year. The Board of

Directors’ committees include the Nominating and Corporate Governance

Committee, Audit Committee, Compensation Committee, Film Slate Committee, and

Strategic Planning Committee. The Corporate Governance Guidelines provide that

the chairman of the Board of Directors presides at the regularly scheduled

executive sessions of non-management directors without management if the

chairman is a non-management director, as is the case with Mr. Handel. Mr. Handel

therefore presides at such meetings. The Nominating and Corporate Governance

Committee’s function is (i) to identify individuals qualified to become members of

the Board of Directors; (ii) to recommend individuals for selection by the Board of

Directors as nominees for election as directors at the next annual meeting of

stockholders; and (iii) to develop and recommend to the Board of Directors a set of

Corporate Governance Guidelines and the modification of such guidelines from time

to time. The Audit Committee’s function is (i) to directly appoint, retain,

compensate, evaluate and, where appropriate, terminate Marvel’s independent

registered public accounting firm; (ii) to assist the Board in its oversight of the

integrity of Marvel’s financial statements, Marvel’s compliance with legal and

regulatory requirements, the independent registered public accounting firm’s

qualifications and independence, and the performance of Marvel’s internal audit

function and the independent registered public accounting firm; and (iii) to prepare
the report required to be included in Marvel’s annual proxy statement, which

follows.1

After successfully repositioning the firm as a global player, post bankruptcy,

Marvel’s business model is raising concerns from both critics/analysts and

shareholders. Marvel’s growth does not seem sustainable as their current business

culture of investing in low capital intensive projects are yielding low and safe

returns that are hindering Marvel from extending their current growth rate; and in

addition, shareholders, including management, are becoming skeptical on how long

they can rely on their prominent characters for a large portion of the company’s

earnings. Four major forces shape the media and entertainment industry:

accelerating pace of change; increase levels of competition; sustained financial

pressure; and increase in unpredictability and risk. Marvel needs to ensure that they

can utilize these forces both efficiently and effectively in their favor to build the

Marvel Family and brand recognition. Therefore, it is recommended that Marvel

enter the business of producing digital and online media, such as movies, television

and online web streams; and using the new business medium to help introduce

other characters while continuing to leverage Marvel’s more popular assets to grow

earnings and get a better grasp of the market.

The other turnaround strategies can be :

• Monetizing the content library via licensing characters for use with media and

consumer products

• Managing the library of characters to foster long term value

• Retaining some control over the creative process to ensure the quality of the

content.

1
www.marvel.com
There is under utilization of the characters from Marvel’s Character library. There

should constant focus of creatively utilizing the array of characters available to

generate more stream of revenue. Marvel has low penetration in small screen

media market, which can be another great revenue source for the corporation.

Following can be another short term and long term strategy recommendations:

• To capitalize on the strength of prominent characters but at the same time,

also focus on the lesser known characters and try to turn them into potential

blockbusters.

• To look into the current business model of creating contents in two areas:

comic books and toys and slowly shift the focus toward the content

production and distribution.

• To diversify geographically; from US markets to the rest of the world

• To carry out more market research of its audience’s psyche from a superhero

prospective and the look internally to the characters available in its content

library to identify the next superhero that will connect well with the audience.