Marvel-From Comic Books To The Big Screen-12-CLEAN

From Comic Books to the Big Screen
Susan Kim Hussein Kalaoui Rosalia Morales Daniel Pulido Sabogal Fernanda Trigo Judy Wu
Chapter:
Strategy and Competitive Advantage
Final Draft
Table of Contents
Executive Summary .......................................................................................... 76 The Early Years: 1939-1950 .......................................................................... 1312 Industry Analysis ......................................................................................... 1514 Strategic Positioning .................................................................................. 2221 Activity System ........................................................................................... 2322 The Silver Age: 1950-1968 ............................................................................ 2726 Industry Analysis ......................................................................................... 3130 Complementors......................................................................................... 3534 Strategic Positioning .................................................................................. 3635 Activity System 1950-1957 ......................................................................... 3837 Activity System 1957-1969 ......................................................................... 4241 The Bronze Age 1970-1989 .......................................................................... 4847 Industry Analysis ......................................................................................... 5049 Complementors......................................................................................... 5453 Strategic Positioning .................................................................................. 5554 Activity System ........................................................................................... 5756 The Perelman Years: 1989-1998 .................................................................. 6261 Industry Analysis ............................................................................................. 66 Complementors............................................................................................. 79 Strategic Positioning .................................................................................. 8382 Activity System ........................................................................................... 8685 The Rebirth: 1998 2009 ............................................................................... 9291 Industry Analysis ......................................................................................... 9493 Complementors......................................................................................... 9796 Strategic Positioning .................................................................................. 9897 Activity System ....................................................................................... 102101 Future Prospects .................................................................................... 106105 Key Takeaways ......................................................................................... 108107
Exhibit 1: Five Forces Industry Analysis ................................................... 114113 Exhibit 1a: The Early Years ..................................................................... 114113 Exhibit 1B: The Silver Age ....................................................................... 115114 Exhibit 1C: The Bronze Age ................................................................... 116115 Exhibit 1c: The Perelman Years ............................................................ 117116 Exhibit 1d: The Rebirth ........................................................................... 118117 Exhibit 2: Activity System.......................................................................... 119118 Exhibit 2a: The Early Years ..................................................................... 119118 Exhibit 2b: The Silver Age 1950-57 ........................................................ 120119 Exhibit 2C: The Silver Age 1957-68 ........................................................ 121120 Exhibit 2D: The Bronze Age ................................................................... 122121 Exhibit 2E: The Perelman Years ............................................................. 123122 Exhibit 2F: The Rebirth ............................................................................ 124123 Exhibit 3A Marvel SUperhero Characters ............................................... 125124 Exhibit 3B Marvel Characters During the Silver Age .............................. 126125 Exhibit 4 Marvel Toys ................................................................................ 128126 Exhibit 5 Recent sales data...................................................................... 128127 EXHIBIT 6: Main Acquisitions and Divestures in the 1990S ..................... 132131 Exhibit 7: Publisher Market Shares of Sales of Comic Books, Trade Paperbacks, and Magazines (2006-2009) ............................................. 135133 Exhibit 8: Comic Books Ordered by Comics Shops in North America (in dollars) ....................................................................................................... 135134 Exhibit 9: Comic Books Ordered by Comics Shops in North America (in units)........................................................................................................... 136135 Exhibit 10: Comic Sales (monthly average in millions) for Marvel and DC Comics (1950-1987) ................................................................................. 137136 Executive Summary ............................................................................................ 6 The Early Years: 1939-1950 .............................................................................. 12
Industry Analysis ............................................................................................. 14 Strategic Positioning ...................................................................................... 21 Activity System ............................................................................................... 22 The Silver Age: 1950-1968 ................................................................................ 26 Industry Analysis ............................................................................................. 30 Complementors............................................................................................. 34 Strategic Positioning ...................................................................................... 35 Activity System 1950-1957 ............................................................................. 37 Activity System 1957-1969 ............................................................................. 41 The Bronze Age 1970-1989 .............................................................................. 47 Industry Analysis ............................................................................................. 49 Complementors............................................................................................. 53 Strategic Positioning ...................................................................................... 54 Activity System ............................................................................................... 56 The Perelman Years: 1989-1998 ...................................................................... 61 Industry Analysis ............................................................................................. 66 Complementors............................................................................................. 79 Strategic Positioning ...................................................................................... 82 Activity System ............................................................................................... 85 The Rebirth: 1998 2009 ................................................................................... 91 Industry Analysis ............................................................................................. 93 Complementors............................................................................................. 96 Strategic Positioning ...................................................................................... 97 Activity System ............................................................................................. 101 Future Prospects .......................................................................................... 105 Conclusions ..................................................................................................... 107 Exhibit 1: Five Forces Industry Analysis ......................................................... 108 Exhibit 1a: The Early Years ........................................................................... 108 Exhibit 1B: The Silver Age ............................................................................. 109 Exhibit 1C: The Bronze Age ......................................................................... 109
Exhibit 1c: The Perelman Years .................................................................. 110 Exhibit 1d: The Rebirth ................................................................................. 111 Exhibit 2: Activity System................................................................................ 112 Exhibit 2a: The Early Years ........................................................................... 112 Exhibit 2b: The Silver Age 1950-57 .............................................................. 113 Exhibit 2C: The Silver Age 1957-68 .............................................................. 114 Exhibit 2D: The Bronze Age ......................................................................... 115 Exhibit 2E: The Perelman Years ................................................................... 116 Exhibit 2F: The Rebirth .................................................................................. 117 Exhibit 3A Marvel SUperhero Characters ..................................................... 118 Exhibit 3B Marvel Characters During the Silver Age .................................... 120 Exhibit 4 Marvel Toys ...................................................................................... 121 Exhibit 5 Recent sales data............................................................................ 122 EXHIBIT 6: Main Acquisitions and Divestures in the 1990S ........................... 126 Exhibit 7: Publisher Market Shares of Sales of Comic Books, Trade Paperbacks, and Magazines (2006-2009) ................................................... 128
EXECUTIVE SUMMARY
This paper explores evolution toward fit of Marvel Comics (officially, Marvel Publishing Inc, a subsidiary of Marvel Entertainment), the largest American comic book publisher. The company created and owns iconic characters such as Spider Man, the Incredible Hulk, Captain America and the Fantastic 4. After a brief overview our findings, this paper will go into further detail, analyzing Marvel in five distinct periods: The Early Years, The Silver Age, The Bronze Age, The Perelman Years, and The Rebirth. We chose to break the analysis up into these periods for two reasons: 1) these periods follow agreed-upon industry consensus on the major time periods of comic book development based on the industry milestones, and 2) these periods generally reflect significant changes in Marvels business. One exception to the two points is the Silver Age, which has two distinct parts Chapter: Executive Summary (to be described in the relevant section). The research methodology we followed was to conduct thorough analysis of each time period through extensive use of secondary research materials, then performing an evaluation of the interactions between and effects of each time period on the Companys strategy.
For the analysis of each time period, we used the activity system framework. This methodology allowed us to understand the choices and resulting trade-offs made by the company in order to ensure fit with the prevailing industry environment (eternal fit); and assess the degree to which its internal priorities and processes articulated with its internal strategy (internal fit). We built the activity system in each period around core themes that reflected the companys strategic choices and categorized each activity under the key components of the Companys value chain: Artists and creative processes, licensing and alternative media, fan base management, and distribution. In order to understand the developmental processes that led to the organizational configurations and fit, we examined the history of the comic book industry through the lens of Marvel Comics. Given the importance of Marvel within the industry, many important changes in the environment that also impacted competitors, and other relevant parties Chapter: Executive Summary can be traced to the Company. Despite limited (and sometimes conflicting) resources related to the beginnings of Marvels history, we were able to piece together Marvels developmental process. Marvel was founded in 1939, by Martin Goodman, as Timely Publications, a small privately-held entrepreneurial venture in New York City. The company enjoyed initial success by developing an activity
system built around adapting storylines and genres to frequent changes in reader tastes. In the 1950s, the comic book industry went into a period of decline, and a distribution disaster led the company to the brink of bankruptcy in 1957. Editor in chief Stan Lee was left to rebuild the company and its activity system from the bottom up. From this period onward, the focus was around creative storylines, depth of characters and elevating the medium through which content was delivered. It was after this period that Marvel enjoyed some of its greatest successes with the creation and popularization of some of its most well-known characters. Beginning in the 1970s, the company began to leverage its intellectual property thorough licensing and forays into TV and film, with notable successes. In 1991, the company was taken public and shifted its strategic focus to leveraging its existing characters, both through comics and aggressive expansion into other media platforms. The company filed for bankruptcy in 1996, from which it emerged in 1998 with Chapter: Executive Summary a new business model based largely on licensing its intellectual property. In September 2009, Marvel was purchased by the Walt Disney Co. at a premium for $4 billion. This acquisition is believed to be highly mutually beneficial; Marvel has access to Disneys expertise in licensing and renewing its library of characters, and Disney can utilize Marvels fan based to increase its consumer reach.
Marvel is an example of a company that successfully reinvented itself several times. First, in 1957 Marvel effectively adjusted its activity system as it switched from producing hundreds of comics in different genres without much content to focusing its strategy on creativity and high-quality content development, based on an industry-imposed publication limit of 8 monthly titles. This change in strategic focus required changes in its activity system so that it reinforced creativity and intellectually-coherent superhero storylines. In 1990, Marvel again adjusted its activities and operations as changes in industry dynamics took the firm from a comic book publisher to a diversified entertainment company focused, at the time, on exploiting the collectibles boom. Finally, beginning in 1998, the firm emerged from bankruptcy with a new strategic focus: growth through licensing of its library of characters in other industries, including film, toys and apparel. Marvel is also an example of a company that was forced to move Chapter: Executive Summary from a low to a higher peak on the competitive landscape. By the mid 1950s, the company had a highly mature activity system designed to produce dozens of titles per month and shift storylines and genres according to the whims of the reader base. Nearing bankruptcy in 1957 forced the company off this peak and onto a new, higher peak with an activity system designed around producing quality superhero comics. The
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period after this realignment saw Marvel become the dominant player in the comic book industry. In addition, Marvel is a good example of how a company can successfully use a substitute threat as a complementor. The emergence of television in the late 1930s was a huge threat for comic books, as TV could have replaced comic books as an inexpensive and user-friendly form of entertainment for children and young adults. Marvel (along with its main competitor DC Comics) effectively used television to increase the popularity and demand for its superhero characters to appeal to a broader audience by creating TV shows based on its characters, such as The Incredible Hulk and Spiderman. Since comic books have now lost their mass appeal as reading material and have become collectible items, Marvel continues to utilize new media to extract value by licensing its characters for cartoon TV shows and blockbuster films. Marvel also exemplifies a company whose strategic decision Chapter: Executive Summary making process evolved from Entrepreneurial to Imposed to Unconnected to Planned as the company structure changed. From the 1940s through the 1950s, all business decisions were made by the sole proprietor Martin Goodman (Entrepreneurial), who set the companys strategy. After the near bankruptcy of 1957 the companys strategy was imposed upon it by the 8-title per month distribution deal and severe resource constraints. As
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individual editors and artists gained influence in the 1960s through the 1970s, the companys strategic decision making became more unconnected. After the company was sold to Cadence executives though the present day, strategic decision-making can best be characterized as planned. We can use Marvels evolution as a case study for firms that need to reinvent themselves and use changes in the industry structure to its advantage.
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Chapter: Executive Summary
THE EARLY YEARS: 1939-1950
Prior to the creation of the comic book, sales of comic strips depended on space allocation within local and national newspapers. During the Depression era, budget cuts in the main newspapers prompted the downsizing of their comics sections, and comic books subsequently emerged as a new vehicle for publishers to reach their intended audience. Some of the early players in industry included DC Comics, then known as National Allied Publications, and Fawcett Publications. DC Comics started producing comics in 1935, four years before Marvel was founded. DC introduced superheroes to the industry with its 1938 Action Comics publication featuring the story of Superman.1 This period became known as The Golden Age as superheroes became a cultural phenomenon. DC Comics introduced other successful characters, Chapter: The Early Years: 1939-1950 including Batman, in 1939. Fawcett Publications started printing comic books in the late 1930s, and its most popular character was Captain Marvel.2
Gerard Jones, Men of Tomorrow: Geeks, Gangsters, and the Birth of the Comic Book. New York, New York: Basic Books, 2004, p. 170
1
Artist C.C. Beck and writer Bill Parker created Captain Marvel in late 1939. This character was developed for Fawcetts Whiz Comics #2 and had no relation to Marvel.
2
13
In 1939, upon witnessing some of DC Comics early successes, Martin Goodman founded a pulp magazine publishing business under the name of Timely Publications. As a businessman, Goodman seized the opportunity to expand downstream and began to produce his own comic book content. It is important to note that the comic book content production came as a way to create demand for the Goodmans main business, the pulp magazine production. The first publication, under Timely Publications, titled Marvel Comics #1 and cover-dated October 1939, quickly sold 80,000 copies. The following month, Goodman produced a second batch, selling ten times more. The first characters to appear included the Human Torch, created by Carl Burgos, and Namor the Sub-Mariner, created by Bill Everett (see Exhibit 3A). However, Marvels most successful character at the time was Captain America, created by freelance artists Joe Simon and Jack Kirby (see Exhibit 3A). Chapter: The Early Years: 1939-1950 In order to secure the deal with Simon and Kirby, and develop the resources required to compete with DC and Fawcett, Goodman premiered the Captain America character in his own magazine, while promising 15% share in profits to both artists. This provided incentive for the artists to focus on the development and creativity of Captain America, as they would directly benefit from its success.
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In 1939, Goodman brought in Stan Lieber, a relative, who used the pen name Stan Lee. Lee focused on producing as many covers and storylines as possible to see which series would become popular. Demand was high and Goodman and Lee utilized as many freelance writers and artists to keep the Captain America series going. Only the biggest publishers and distributors with strong relationships survived the Depression. Goodman successfully led Marvel given his experience in publishing and printing, equipment, and relationships with both distributors and artists. By the mid 1940s, as the war was ending, superheroes began falling out of fashion with comic book readers. With this change in readers preferences, Marvel Comics began expanding into other genres, including horror, humor, science fiction, and drama. This strategy change led Marvel to expand its product line, its readership, and eventually its businesses.
INDUSTRY AN ALYSIS
The first comic books were cheaply produced reprints of the comic strips that appeared in newspapers. With time entrepreneurs realized the high demand for this inexpensive form of entertainment and started the first comic book companies. Towards the end of the 1930s, these companies began using their own material, which lead to the start of a
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Chapter: The Early Years: 1939-1950
separate industry. In this initial stage, the industry was very attractive for the companies that moved in first and secured relationships with distributors. Entrepreneurs targeted a new segment of the reading public: Young people. (See Exhibit 1A)
SUPPLIER POWER: LOW
The comic industrys main suppliers included creativity providers, such as writers, freelance artists, and editors. Other minor suppliers included providers of publishing materials, including paper and ink companies. In the beginning of the comic book industry, freelance artists were abundant and nearly anyone who could write attention-grabbing short stories and draw eye-catching covers was often published. By the 1940s, the war created a shortage of skilled artists, as they were lost to the draft. However, there was consistent availability of freelance artists in the pipeline who filled absences. The audience seemed rather indifferent about the quality of the books and rather just demanded that series continuation. Thus, the quality of comics began to drop by the late 1940s. Additionally, most titles were discontinued after only a few issues and there was little customer loyalty to artists or writers. Therefore, Goodman wielded significant power over writers and artists. The power of freelance artists (as suppliers of content) to negotiate deals and publish their own ideas was low. The standard practice in the Chapter: The Early Years: 1939-1950
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industry was for artists to sell the rights to their characters prior to publication. As the success of a new character was uncertain before launching, the companies were able to purchase rights to characters fairly cheaply. For instance, DC Comics bought the rights to Superman for $130.3 While artists were well compensated with employee salaries and in some instance with a share of revenues, the publishing companies retained sole ownership of the cash cow characters, such as Superman and Spiderman. Furthermore, once freelance artists sold their creations, writers would independently develop the storyline. Once this was completed, writers would pass the storyline to the artist to render drawings to accommodate the story.4 This separation of duties kept artists and writers under the control of the publisher. The supply of printing material was rationed during World War II. The American government regulated the supply of valuable resources that could be used for the war effort, such as rubber and paper. The metal plates used for printing plates were used for building armament. In addition, shipping and distribution of comics became problematic as gasoline became scarce. As a result of this macro pressure on the
Schweier, Philip. DC Comics A History, Part 1. Comics 101. 2007. Comic Book Bin. 1 Nov 2009 <http://www.comicbookbin.com/DCComicsHistory001.html>.
3
Haddox, Frederick. Marvel History Part 2 The Silver Age. Comics 101. 2008. Comic Book Bin. 1 Nov. 2009 <http://www.comicbookbin.com/Marvel_History002.html>
4
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physical inputs of comic books, circulation figures declined during the war. Given these supplier cost factors, the share of value appropriated during this period was compressed.
BUYER POWER: HIGH
Sales of comic books depended on newsvendors and small shops, such as drug, cigar, and candy stores. These retail outlets provided shelf space for the wide variety of comic books that emerged in the mid 1930s. The number of retail outlets accessed by the distributor directly correlated with the volume of sales that Timely Comics achieved. Therefore, comic books depended on their distributors and retail outlets, in both push and pull methods. In order to secure shelf space, comic books heavily relied on their distributors. By the mid-1930s a more sophisticated system of comic book distribution emerged. As more retail outlets and storeowners made shelf space for superhero and humorous comic books, a dealer would take shipment on consignment and return books he had not sold, paying for only those he had. Dealers would then only return the cover of the book as unsold past-dated books were of no value. Soon, however, torn copies were being sold to end consumers and publishers reacted by reattaching covers to books and reselling them. Chapter: The Early Years: 1939-1950
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On the other hand, the typical end consumer of comic books was a young boy. Goodmans strategy with Marvel Comics was to follow the trends and target young boys through heroes with costumes and secret identities with ordinary public appearances and commitment to fighting the bad guys5. Goodman believed that such characters would inherently attract the playful nature of young boys. In addition to young boys, teenage and male adults also consumed comic books. It is estimated four to five consumers read each comic book then. Moreover, 90% of fourth and fifth graders described themselves as regular readers6. While an abundance of comic book stories appeared, these consumers had the power to determine which books would become popular. During this period, the consumers switching costs were low because readers were not yet deeply invested in each storyline
BARRIERS TO ENTRY: I NTERMEDI ATE BUT INCRE ASING
Although writers and artists could potentially create their own publishing company, relationships with retail outlets and storeowners were needed to be successful in widely distributing their product. Thus, barriers to entry were fairly high for the comic book industry.
5 6
Ibid., p. 199
Gerard Jones, Men of Tomorrow: Geeks, Gangsters, and the Birth of the Comic Book. New York, New York: Basic Books, 2004, p. 170
19
Distributors would compete for rack space and geographic territory and their relationship with local retailers and storeowners was measured by reliability of weekly delivery of the product. In addition, distribution involved warehouse space, truck leases, mailing permits, and delivery routes7.
INDUSTRY RIVALRY: LOW BUT INCRE ASING
During the 1930s, as small publishers closed shop due to the depression and the remaining publishers fought for their ration of paper from the War Materials Board, overall competition amongst comic book publishers decreased. Only those with creative stories caught their audiences attention. The first major success (and inspiration for Marvel Comics) came from DC Comics with their premier of Superman, selling almost fifteen million comics books per month. On the periphery, Dell Publishing was another major player, but chose to focus on Disney characters and movie personalities, avoiding stories about superheroes, and thus staying shy from direct competition with Marvel Comics. However by the 1940s, with the increasing popularity of comic books, dozens of publishers emerged. Several comics were selling over a Chapter: The Early Years: 1939-1950
Ibid., p. 87.
20
million copies an issue8 and production was limited not by the market but by the time on the printers schedule and availability of paper.9 The Golden Age of Comics had begun and at the forefront of the battle stood Superman, Batman, and Captain America. By 1942, comic books made up over 30% of the printed matter mailed to military bases.10 By 1941, Captain America was circulating nearly one million copies. Superman sold more than a million copies every issue, and Captain Marvel sometimes two million. This time period was challenging in terms of macroeconomic conditions, but consumers were still looking for an outlet for entertainment, and comic books served this void. The varying degrees of rivalry throughout the period diluted industry profitability, but on the whole, the profitability of the players who survived this challenging period was moderate to high. Chapter: The Early Years: 1939-1950
THRE AT OF SUBSTITUTES: LOW
Comic book titles, magazines, newspapers, and other books competed for shelf space. Magazines, books, and newspapers were more expensive than comic books, which sold at an average price of ten cents, and provided a different kind of entertainment.
8 9
Ibid., p. 187. Ibid., p. 187 Ibid., p. 213
10
21
Thus, comic books were a cheap form of entertainment targeted to young boys who fantasized about superheroes. The illustrations and narrative style of comic books made this type of reading material accessible for illiterate boys who could understand the story by following the illustrations. As a result, switching costs and buyers propensity to substitute were low. Until literacy rates improved and accessibility to television sets and paperbacks increased in the late 1940s and 1950s, the threat of substitute remained low in the early years of the industry.
STRATEGIC POSITIONING
Rather than innovate, Goodman looked for successful trends in the market and followed what had already proven to be profitable. Initially, Marvel Comics focused exclusively on superheroes and tried to put themselves in the same strategic position on the frontier as competitors. However, as World War II neared its end and superheroes fell out of fashion, Goodman expanded his publication to horror, humor, crime, and even romance. This strategy worked well for Timely to meet the varied consumer demands of the time; although Goodman and his team never initiated trends, they were quick to produce a slew of imitators, many of which were commercially successful.11 Chapter: The Early Years: 1939-1950
11
Stan Lee and the Rise and Fall of the American Comic Book, Raphael & Spurgeon, 2003 Chicago
22
Despite having straddled in terms of creative content, Marvel followed a needs-based positioning where they served one segment with a variety of different characters and genres. In accordance, the Company pursued a strategy that emphasized low cost, as the expense of the development of the creative processes required to come up with highly differentiated products. Since in the beginning consumers did not pay too much attention to quality, low price was a key product attribute that guaranteed mass appeal, particularly during the depression and war years.
ACTI VITY SYSTEM
During this time, Marvels activity system revolved around the following strategic themes: Attention grabbing covers, quickly producing new titles to respond to demand shifts, maximizing profits from bestseller titles, and operating at a low cost. The first two strategic themes were Chapter: The Early Years: 1939-1950 concerned with external fit, while the other two involved internal and external fit (See Exhibit 2A). Activities were in turn divided into the following categories: Strategic decision-making, artists and creative processes, and distribution.
STRATEGIC DECISION M AKING
Review Press.
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In the early days, one of Marvels core aspects was that Goodman personally handled most of the business issues. He spent significant time and attention examining market data for new trends that the company could jump on. Once successful, the company would milk the trend for all it was worth until it fell out of favor, at which point the title was discontinued or modified. Goodman himself, who was first and foremost a businessman rather than an artist, made key strategic decisions12.
ARTISTS AND CRE ATIVE PROCESSES
Small core creative team of salaried employees: Goodmans initial core artistic team was made up of two established artists: Joe Simon and Jack Kirby, the creators of enduring characters such as Captain America, the Human Torch and the Sub Mariner. While both Simon and Kirby contributed to the story line and inking, Simon excelled in dialogue and lettering, while Kirby focused on layouts and figures. Incentives for the retention of top talent for high-selling titles: Goodman offered Simon and Kirby, the creators of Captain America, a 15% cut of profits generated by their characters and salaried positions as comic editor and art director.13 However, following Captain Americas success, an internal conflict split the team and Goodman scrambled for Chapter: The Early Years: 1939-1950
12 13
Ibid Jones, Oc.Cit.,P. 170
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other artists to continue Captain America14. Structurally, Goodman remained at the top of the organization, however, the distribution of power shifted slightly to the editor, Stan Lee. Scalable work for hire: Besides a few relatives of Goodman, Simon and Kirby were the companys only salaried employees in 1940.15 The company essentially just Goodman opted for a flexible workforce consisting of freelance artists that were paid either by the page or weekly. This would become the industry norm in the decades that followed. Some artists worked from the companys small office and others from home. In an industry where literary quality meant little and consumers were fickle, this flexibility gave the company the ability to churn out new titles and stories quickly under tight deadlines as market trends shifted. In order to keep the tight deadlines, Marvel simply brought in other artists to help16. Active Cover Management: In a nascent industry where titles, characters, and artists carried little brand equity, covers could make or break a title, regardless of the actual content of the book. Recognizing Chapter: The Early Years: 1939-1950
It is said that Goodman never paid Simon and Kirby their agreed 15%. However a conflicting story reports that Simon and Kirby schemed the conflict in order to get a better deal with DC Comics Jack Liebowitz.
14 15 16
Ibid. Ibid.
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this, Goodman personally supervised the assignment and design of covers17. Comic book series: The majority of the storylines were filled with anticipation and suspense, amplifying the desire for readers to make their next purchase. While financially, there existed low switching costs, if a reader began a series the personal switching cost increased as he or she became more involved with the storyline. On the other hand, series production meant that a popular story relied on its original creator and group of artists to continue writing and drawing.
REL ATIONSHIP WITH DI STRIBUTORS AND RETAI L OUTLETS
Good relationship with key distributors: As a series became more popular, more retail space became available for comic books. Timelys good relationship with distributors allowed for the publication of as many books per month as the company could put out, which lent itself to Goodmans scattershot strategy of releasing many titles in the hope that some would catch on and become successful. Chapter: The Early Years: 1939-1950
17
Ibid
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THE SILVER AGE: 1950-1968 REGUL ATORY AND DISTRIBUTION BUST (1950-1957)
By the 1950s, super-heroes did not capture audiences attention as much as they did when they fought the Nazis. After the war, the superheroes lost direction and the financial performance of Goodmans company started suffering. In 1951, Timely Publications changed its name to Atlas Comics (the name of Goodmans distribution company) and began to focus on a wide variety of genres including horror, humor, and crime (See Exhibit 3B). In general, the comic industry had a difficult time reviving the demand for comic books during the Silver Age. The situation furthered deteriorated in 1954, after the release of a book by Dr. Frederick Werthman that criticized how comics were directly correlated with the delinquency of Americas youth. The author called comics the drugs of our youth. This bad publicity led to a congressional investigation into the negative effects comic books were having on children. At the same time, parents and educators organized an anticomic campaign, which increased the anti-comic sentiment in America18. Chapter: The Silver Age: 1950-1968
18 Benton, Mike. Superhero Comics of the Silver Age: the illustrated history. Dallas: Taylor Publishing
Company, 1991.
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In response to this attack, the comic industry collaborated and formed The Comic Magazine Association of America in 1954. In this way, comic book publishers self regulated and created a printing code for their covers (the Comic Book Code). The Code limited the content of covers and precluded the release of certain books deemed to be violent. Therefore, the themes of comic books switched back to superheroes and science fiction as a way to convey positive messages and values. Since the Comics Code had been created Timely (Marvel) had been having a hard time. In 1957, these problems, combined with dropping sales and distribution problems, caused Editor Stan Lee to have to cancel 55 titles in a three-month period. 19 1n April 1957, Marvel went through a distribution fiasco that caused important financial and talent losses. Starting in 1952, Goodman had distributed his companys comics to newsstands through his own distributor, Atlas. In late 1956, when the financial results obtained through internal distribution fell short of expected, Goodman decided to manage all of the Companys distribution through American News Company, the nation's largest distributor. A few months later, American News Company discontinued its operations soon after being challenged by the Department of Justice because of its monopolistic position. Goodman Chapter: The Silver Age: 1950-1968
19
CBW Comic Book Story, The Silver Era: 1956-1969,Comicbookwebsites.com.
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was then forced to negotiate a deal with rival DC Comics to distribute Timely comics through DC's newsstand system. 20The deal limited Atlass distribution to eight books per month. Marvel lost its distribution capabilities and was forced to leave its space in the Empire State building and move into a cramped two-office space on Madison Avenue. During the following two years Marvel published leftover material from the 55 cancelled titles mentioned above.
CRE ATI VE BOOM (1957-1968)
Given the massive layoffs at Marvel, the company essentially consisted of only Stan Lee and Jack Kirby, which led to a high degree of freedom and creativity to do their work. The new trend in the 1950s was science fiction, featuring giant monsters with unpronounceable names. As a result of the Cold War, radiation and nuclear energy, were very popular story lines of comics, particularly at Marvel. Furthermore, many enemies in Marvel comics had Russian names and there were clear parallels of the communist and capitalist divide. This new variety of comic books, resulting after the creative success of the company, expanded the market base for the comic industry. Meanwhile, DC Comics focused on reviving the superheroes that proved to be successful during the Golden and was profitable. DC
20
Ibid.
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Chapter: The Silver Age: 1950-1968
Comics created the Justice League of America as a way to create a new story line for its traditional superheroes. Even though science fiction comic books were popular, Marvel sales began to suffer. Thus, in an effort to compete with DC comics, Marvel returned to creating superhero comics. Marvel created the Fantastic Four to compete directly with DC Comics Justice League. These new superheroes were a great success, and led Marvel to continue to focus on this theme, creating characters such as the Incredible Hulk, Spiderman, X-Men and Iron Man (see Exhibit 3A). Despite regulatory challenges, some of the most popular superheroes that continue to characterize Marvel today were created during the Silver Era. The first publication under the Marvel Comics brand emerged in 1961 as a science-fiction anthology titled Amazing Adventures.21 In addition, The Fantastic Four and Spiderman emerged in this era and will be discussed in further detail below. By the late 1960s, Marvel experienced the pains that came with transitioning from a small business fueled by a handful of artists and writers to one that could power a corporation and employ multiple talents. In 1968, Goodman sold his entire publishing business to Perfect Film and Chemical Corporation, at which point Marvel regained the freedom to produce as many titles as it wanted. Perfect Film and Chemical, a
Gerard Jones, Men of Tomorrow: Geeks, Gangsters, and the Birth of the Comic Book. New York, New York: Basic Books, 2004, p. 98.
21
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publishing and vitamins conglomerate, renamed itself Cadence Industries, and Goodman stayed at publisher for another four years. Marvel had to distribute through DC Comics until 1969, when Cadence Industries bought its own distributor, so Marvel could again increase the number of titles published At the height of the Silver Age in 1968, Marvel was selling fifty million comic books per year. Financially, however, the industry was still small. For instance, a cover price of twelve cents resulted in only six million dollars in gross annual sales to be allocated among publisher, employees, distributors, newsstands, and stores.22
INDUSTRY AN ALYSIS
Given the industry structure, the profitability during this period was low. The regulatory effects and heightened rivalry compressed profitability, while the distribution glut caused by the excessive power of distributors severely affected Marvels and other publishers ability to place their comics in the market. (See Exhibit 1B) Chapter: The Silver Age: 1950-1968
SUPPLIER POWER: LOW BUT INCRE ASING
The suppliers to the comic industry did not change from the previous era, but their importance increased. Freelance artists and writers still had low bargaining power as the standard of selling characters rights
22
Raviv Dan, Comic Wars: Marvels Battle for Survival, Broadway Books, 2002, p. 32
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continued during this period of time. However, the work between artists, writers and editors became more collaborative at Marvel during this period, as artists and writers began to work together to develop story lines, thickening the importance allotted to the creative content providers. In addition, the scarcity of printing and publishing materials ended. The printing and publishing capabilities became very specialized during this era, increasing the value given to suppliers. As a result, the comic industry started producing publications with higher quality.
BUYER POWER: HIGH BUT DECRE ASING
The buyer continued to have heavy influence power over comic themes and sales during the Silver Age. Comic book publishers relied mostly on tips from distributors, industry gossip, and gut instinct in their search for new titles and new readers.23 Comic book companies did not have a formalized marketing intelligence or research departments, but in an effort to adapt to a rapidly changing and demanding market, the industry relied heavily on information passed on from distributors. Although independent consumers could not directly band together to put pressure on firms, distributors represented the consumers sentiment to the firms. The collapse of a major distributor of comic books (American News Company) and the negative impact that this had on the publishers that
23
Ibid., p.5.
32
distributed through this channel also points to the high power yielded by distributors in this industry. The effect on the US publishing market was disastrous. Many publishers had to switch to independent distributors and accept unfavorable contract conditions that eventually caused the demise of many actors in the industry.24 Near the end of Silver Era, the industry saw a transformation in the distribution channels with the appearance of second-hand stores and comic stores. Sales for Marvel were propelled with these new distribution channels, supplementing the profits generated from the creation of new superhero characters. The appearance of these specialty-stores would turn the balance of power in favor of comic book publishers during the Bronze Age (see next section). During this time, buyers power also started to go down as the collector trend emerged. By the 1960s, the market for comic books had expanded from children to adults, and interest in collecting past issues rose. For example, Batman and Robin, already more than 20 years old, appealed to older generations of comic collectors. As a consequence, comic books were no longer limited to children and teenagers but included adults as well. Chapter: The Silver Age: 1950-1968
Ashley, Mike, Transformations: The Story of the Science Fiction Magazines from 1950 to 1970. Liverpool: Liverpool University Press, 2005, p. 187-188
24
33
BARRIERS TO ENTRY: INTERMEDI ATE
Overall production costs were not a significant entry barrier, resulting in the emergence of a large number of competitors. However, as previously mentioned, in order to succeed in the industry, companies needed well-established distribution channels as well as creative content. This latter factor was specifically determined by human capital (artists and editors). Succeeding in these two areas was challenging and posed a clear barrier to entry, thus very few entrants were able to capture a significant portion of the market.
INDUSTRY RIVALRY: HI GH
Continued intense rivalry led to saturation of the industry as comic book publishers began creating many new titles and characters in an effort to increase sales. There were more than 650 titles sold at the same time each week in a newsstand.25 This saturation made it difficult for Chapter: The Silver Age: 1950-1968 companies to succeed in their attempts to introduce new best selling characters since it was hard to differentiate their comics. Eventually, fierce competition led to the disappearance of 12 comic book publishers by 1955. Publishers such as Lev Gleason, Ace Magazines, Superior Comics and Quality ceased activities.
25
Ibid., p.6.
34
In an effort to differentiate itself, DC Comics attempted to bring back heroes from its Golden Era (Second World War years) to revamp popularity. Among many other characters, Flash and Wonder Woman were re-introduced and became a great success for DC comics. This created a surge in the popularity of DC Comics, and by 1957 Marvel began struggling for survival. Marvel had to lay off almost its entire staff except for its editor Stan Lee and creative artist Jack Kirby.
The substitutes for comic books continued to include other forms of entertainment for children, such as toys and other books. However, these products targeting children posed a low threat of substitution because comics continued to be highly accessible due to their price advantage. Comic titles were selling for 12 to 25 cents during this era (see Exhibit 3A). During the Silver Age a new form of entertainment consolidated, becoming a potential threat for the industry: television. Although television became increasingly popular during this time, during the 1950s until late 1960s, it actually helped revamp comic books popularity. In 1951, DC Comics Superman character premiered on TV. The show had a general positive impact on the sale of comic books that featured superheroes, bringing a new boom to the industry.
COMPLEMENTORS
35
During the Silver Era, television became an important complementor for the industry. At this point in time television helped to increase the popularity and carry out the advertising needed to increase the circulation of printed comics. The television success of Superman and eventually Batman led to their becoming iconic superheroes amongst the youth of the day. Batman was one of the most popular TV shows and many other superheroes also had their own show. Comic book characters invaded television on Saturday mornings.
Marvels strategic positioning during the Silver Age can be separated into two periods: From 1950 to 1957, the company continued to grow and its activity system continued to thicken around its tried-and-true strategy of genre hopping and trend following. At the same time, the company adapted to the increasing maturity of the industry by patching a production system called the Marvel Method (explained below) and implementing an apprenticeship model for its artists. The limitations of the genre-hopping imitator strategy became apparent during this period. For example, competitor Entertainment Comics (EC) comics enjoyed success with its new innovative superhero titles that featured complex storylines and a lively letters page that Chapter: The Silver Age: 1950-1968
36
provided a direct dialog with their fans. Stan Lee attempted to imitate the EC approach but with little success. The activity system Atlas had in place did not lend itself to this approach; EC was able to produce better work form the same talents that worked for Stan Lee26. This can be interpreted as a straddling approach that failed because Atlas tried to duplicate ECs success by copying only a few parts of a complex activity system. Lee would learn how to truly emulate ECs success only after completely recreating the companys activity system following the near bankruptcy of 1957. From 1957 through 1969, the Company went though a realignment of its strategy. Ironically, by building a new activity system around the limitations imposed by the distribution fiasco of 1957, the company entered one of its most creative periods. The Company positioned itself as a selective publisher of super-hero titles. Stan Lee made a trade-off between producing all sort of comics for all types of customers, and producing few titles for a selected audience. This strategy was not necessary a conscious one and was brought about by the distribution limitations and limited financial resources of the firm. Chapter: The Silver Age: 1950-1968
Stan Lee and the Rise and Fall of the American Comic Book, Raphael & Spurgeon, 2003 Chicago Review Press.
26
37
The Company then focused in the production a reduced number of high-quality titles. As mentioned previously, this era resulted in the creation of Spider Man, the Incredible Hulk, and the Fantastic 4, which ultimately propelled Marvel to the industrys leading position.27 Martin Goodmans comic book business officially became Marvel Comics in May 1963. The characters created and titles released during this period would come to provide the mainstay for this company that would soon overtake DC to become the leading player in the industry.
ACTI VITY SYSTEM 1950-1957
The main strategic themes of the companys activity system during this time period were similar to those of the golden age: low cost, maximizing profit from best sellers, and generating attention grabbing covers. However, the company added a new focus on quickly profiting from emerging trends (See Exhibit 2A). Chapter: The Silver Age: 1950-1968
Marvels business strategy continued to be determined by Goodman, with creative decisions being deferred to an increasingly larger extent to Stan Lee. This made sense in an industry where artistic decisions became progressively more important, especially in light of the
27
38
innovative and successful new superhero comics being published by competitors and an increasingly discriminating and mature customer base. However, the company continued its strategy of responding immediately to the success of sales of previous weeks based on the information provided by distributors and by imitating the competitions successful characters and themes.
Trimming of work for hire and patching of the bullpen system: By the 1950s the company did away with outsourcing and developed a bullpen system where all artists worked in a large room on the 14th floor of the Empire state building with capacity for around 30 artists. Artists were mostly salaried, which contrasted with the freelance model of the previous period. This resulted in the trimming of freelance element in the activity system. Patching of apprenticeship system: There was an amicable atmosphere where artists could freely exchange ideas. A particular advantage of this setup was that younger illustrators could learn by watching veteran artists at work; this was important in an industry where seasoned artists had gained valuable experience but in which there were not yet any formal schools in which these skills could be learned28. Another Chapter: The Silver Age: 1950-1968
28
Stan Lee and the Rise and Fall of the American Comic Book, Raphael & Spurgeon, 2003 Chicago
39
advantage of this system was that Stan Lee, who was now editor-in-chief, had easy access to artists and could make corrections directly and maintain control over the material being produced. Thickening of active cover management: Stan Lee took over Goodmans role in maintaining strict control of the comic book covers, which continued to be important relative to the actual content of the books. In order to meet deadlines with a less-flexible salaried workforce, Stan Lee maintained an inventory backlog of completed scripts29. Patching the Marvel Method: In the late 1950s, Lee developed a process of standardizing creativity that became known as the Marvel Method: Initially Stan Lee and later additional writers created full scripts that were illustrated by artists. Scripts included detailed breakdowns of panels per page, what the reader would see on each page and the dialogue. Artists work adhered as closely as possible to the scripts directions. Previously no relationship existed between writers and artists; during this era the cooperation of writers and artists reinforced the creative processes. This method also guaranteed tight editorial control Chapter: The Silver Age: 1950-1968
Review Press. Stan Lee and the Rise and Fall of the American Comic Book, Raphael & Spurgeon, 2003 Chicago Review Press.
29
40
and maximized the economic benefits of specialization, but it resulted in a lack of inspiration and creativity in the final product30. All these new activities fit well with the company policy of genre hopping and filling pages with as many features as possible, at the expense of more complex and rich stories. It also allowed for tight control of the creative process on the part of Lee and Goodman, which assured that artists were creating works that catered to the perceived market opportunities. Artists that worked well with Stan Lee under this system were those that had talent for being prolific in addition to their illustrative skills. However, this drove away some talented artists who left the company in frustration.
Thickening of close relationship with distributors: Similar to the previous era, during the beginning of the Silver Era, distributors were fundamental to the internal strategy of Marvel. They were not only the key source of information about sales, but they were also the direct link between the firm and its customers. Depending on the information provided by distributors, the firm would change and preserve characters, themes and story lines. Moreover, distributors were crucial to Marvel Chapter: The Silver Age: 1950-1968
since they determined the exposure and accessibility to the market. The
30
41
company had to assure a positive, stable relationship with them in order to succeed in the market. Marvel required flexibility to respond quickly to any change in the market, and the close relationship with distributors helped to assure this responsiveness. Patching direct distribution: In 1950, Goodman moved into the distribution business. From 1952 to late 1956, Goodman distributed comics to newsstands through his own distributor, Atlas. This move aimed to support the companys market-based strategy by giving it direct access to market information and providing the flexibility required to respond more quickly to market trends and sales figures. Theoretically, it should have increased profits by eliminating the middleman. However, it as explained above, it was this failed move into distribution that brought the company to the brink of bankruptcy in 1957.31
ACTI VITY SYSTEM 1957-1969
During this time, the activity system was realigned to fit the internal resources of the company and to respond to the external conditions in the industry. Internal consistency between the activities was enforced by necessity and by the strict limitation imposed on distribution. The activity system revolved around maximizing sales per title given the eight-book
31
42
distribution limit and creating a universe of complex superhero stories that captured peoples imagination. (Exhibit 2B)
Comic books were now a small part of the Goodman empire that included major books and magazines. Goodmans involved in the creative process declined, leaving Lee with free reign. However, Goodman took note of DCs success in the superhero genre and suggested to Stan that the company return its focus to this area. Largely in light of the distribution constraint and lack of resources, Lee was forced to exclusively focus on developing the new superhero titles.
Trimming of in-house creative and artistic team and patching of work for hire: In the wake of the companys near collapse, Stan Lee was left to singlehandedly rebuild Atlass creative core. Lee hired back some of his best artists on a freelance basis and entered a period of publishing science fiction titles that many consider precursors to the superheroes of the 1960s. With few resources at his disposal, Lee had to defer an unprecedented amount of decision-making to his artists; this inadvertently unleashed their creative talents and uncovered the formula to the companys future success. Chapter: The Silver Age: 1950-1968
43
Trimming of scattershot approach: The defining factor of this period was the distribution constraint that allowed only eight titles per month, no matter how many pages Lee and his team could produce. This forced the company to think carefully about which titles it published and Lee had to get creative. The company could no longer use a scattershot approach, and they were forced to invest in their titles and release only the ones that were successful. It can be argued that this constraint forced the company to focus on the quality of its books and storylines. The company was forced to make difficult tradeoffs and commit its resources to what it did best. Hence, Teen-Age Romance was replaced with the Incredible Hulk. Journey into Mystery became the Mighty Thor, and Amazing Fantasy became Spider Man. Patching of crossovers: The eight books per month limit also forced the company to resort to using constant crossovers and frequent appearances by characters in each others titles in order to build awareness and stickiness. This included the reintroduction of past Marvel characters such as Captain America and the Sub Mariner, thereby providing a link to the companys past as Atlas and Timely Comics. Patching of editorial autonomy: Running his downsized outfit, Lee enjoyed several advantages as a one-man writer-editor that archrival DC, with its conservative bureaucracy, did not have; on any given project, Chapter: The Silver Age: 1950-1968
44
Lee could chose an artist without fear of upsetting other editors. He had the leeway to decide what would be published within Goodmans guidelines. Perhaps most importantly, with the 8-book-per-month constraint on the number of titles he could publish, Lee now had time to focus on every creative decision. In the newly downsized company, Lee enjoyed a close working relationship with his most talented artists, Kirby and Ditko, and maximized their talents as artists and storytellers. Kirby was given incredibly wide latitude in his working relationship with Lee. Thickening of the Marvel Method: In Goodmans downsized company, Lee took to writing synopses out of necessity and working with artists on dialogue later. This afforded artists more creative leeway. Once the basic theme and storyline were decided, the artists would proceed to draw comics without further guidance from the firms editor. Lee and his team leveraged their past experience with multiple genres to create Chapter: The Silver Age: 1950-1968 complex characters and storylines in the superhero genre that blended elements from other genres such as monsters, romance, comedy and westerns. This new system bore fruit in November 1961 with the release of the first issue of the Fantastic 4 - a final product significantly different from Lees initial synopsis and a reflection of Kirbys creative ideas, many of which were in clear disregard of Lees original vision for the book. The book was a fantastic success for the company.
45
With the mandated eight books per month limit, the successful Fantastic 4 series became a logical place to introduce and test new characters. Successful characters were later given their own books that were notable for their depth and complexity of storylines. Stories continued between issues and artists were encouraged to settle on one title for an extended run. This enabled the artists to develop their craft. The characters Kirby created during this period would constitute the bulk of Marvels mainstay for the next 40 years. Thickening of top talent retention: With the emergence of star artists such as Steve Ditko and Jack Kirby, retention became increasingly important. Marvel had to ensure that their artists would not leave the company, particularly as sales increased and competition with DC became more intense. With the company growing and now capable of leveraging the creative abilities of the best artists, Marvel made a push to Chapter: The Silver Age: 1950-1968 acquire top talent, including luring artists away from rival DC comics.
Patching of limited distribution: As explained above, Marvel was forced to distribute its comic books through the newsstand system of its main competitor. The first issue of the Fantastic 4 was actually a ninth title that Lee slipped in under the radar. New titles and characters had to be
46
introduced gradually and carefully. One by one, the non-superhero titles were replaced with superhero titles.
MARKETING AND FAN-B ASE DEVELOPMENT
Patching of the letter page for fan feedback: During this period, Stan Lee began a personal publicity push to establish a connection to his fans. He instituted a lively letters page in which he responded to fan mail personally. Because Stan Lee was working in a genre in which he had little experience (superheroes) and where the eight books monthly limit left little room for error, Lee highly valued fan feedback. For example, it was in response to fan feedback that Lee asked Kirby to put costumes on the Fantastic 4. Stan Lee also connected to fans through lectures to college students, which proved to be great publicity for the company and began to build Stan Lee as a brand in himself. Patching of the Marvel Universe Concept: Through crossovers and interconnectedness of stories, Marvel began paying attention to the creation of a coherent universe that rewarded loyal fans with subtle details and complex subplots. Chapter: The Silver Age: 1950-1968
47
THE BRONZE AGE 1970-1989
Transitioning into the 1970s, the comic book industry began to weaken as the two dominant firms, Marvel and DC, battled for expansion in a shrinking market. Both companies flooded the market with new titles, two-thirds of which were discontinued within two years. By the 1970s, comics were no longer a mass medium, and by 1980, annual comic book sales dropped to 150 million from peak of 600 million in 1950s.32 Television as an entertainment substitute, the disappearance of traditional distribution outlets, as well as rising cover prices that dissuaded younger buyers contributed to the industry decline. Nonetheless, TV and film began to emerge as important ways for both Marvel and DC to capitalize on the popularity of the characters they had developed in previous years. In 1978, the industry was transformed by the first truly successful live-action blockbuster movie based on the comic Chapter: The Bronze Age 1970-1989 book character, Superman: The Movie. In the 1980s, the Incredible Hulk TV series was a big success for Marvel, as were a number of animated series based on popular Marvel characters33. By the mid 1980s, the industry had experienced a marked recovery. After a decade of dropping sales, the $120 million industry recovered, with
32 Stan Lee and the Rise and Fall of the American Comic Book, Raphael & Spurgeon, 2003
Chicago Review Press.

33
Ibid
48
Marvel reporting a 14.5 percent increase in monthly circulation during the last half of 1984. DC Comics Inc. also reported a substantial gain in circulation in1985. Finally, 3,000 comic book specialty shops had emerged by 1985, pointing to the increasing importance of this channel.34 In 1986, Cadence Industries sold Marvel to media company New World Entertainment. Under the ownership of New World Entertainment, Marvel Comics developed new strategies and products designed to attract new generations of readers and please older ones. During this period, the company continued to increase its sales, profiting from the renaissance of its main character, Spiderman. In 1987, Marvel released a special high-priced annual issue of the Amazing Spider-Man with great fanfare. In addition, the Company appointed Todd MacFarlane, a very talented artist that had worked in other Marvel titles, as the main creative force behind Spider-Man. MacFarlane attracted an important number of readers by adding a more dramatic style to the comic series and restoring some of the old features the character. 35Following this success, Marvel gave MacFarlane the task of re-launching the entire series as a new comic book title. The first issue of this series was presented with different Chapter: The Bronze Age 1970-1989
BIFF! POW! COMIC BOOKS MAKE A COMEBACK. Business Week [0007-7135],1985, volume 2910 pg:59
34 35
Raviv, pp. 35
49
covers, all illustrating the image of Spider-Man, but with different color arrangements. Sales for this issue reached three million copies, setting a new record for the industry and prompting other comic book publishers to replicate this strategy.
INDUSTRY AN ALYSIS SUPPLIER POWER: HIGH
The industry standard until this time was that Marvel and DC owned their characters, not the artists that created them. The comic book makers had been able to largely deflect pressure to assign ownership to artists, and paying artists per page was the long-standing norm36. However, the rise of underground and independent comics characterized by worker ownership of the characters put pressure on large companies such as Marvel and DC to institute similar incentives for their artists and writers. Further, the new realities of a marketplace where buyers hunted down back issues from specific artists made retention of artists an increasingly important concern37. The result was the increasing power of artists and writers to negotiate favorable terms. Marvel started paying royalties to writers and artists who reached specific revenue targets. In 1982, Marvel also introduced a separate Chapter: The Bronze Age 1970-1989
36 37
Ibid Ibid
50
division, Epic Comics, in which creators were allowed to retain copyright to their work and explore more sophisticated subject matters.38
BUYER POWER: LOW
Consumers consisted of growing numbers of older collectors and nostalgia buffs as the medium lost ground among children and teens. These new buyers hunted down back issues based on artists, changing the dynamics of the market. However, the 1980s also saw a huge shift in the distribution network for comic books. In the 1980s, comic book companies started to sell to a number of distributors that in turn sold to specialized retailers. The industry had three main distributors: Heroes World, Diamond Comics Distributors, and Capital City Distribution. These distributors sold to comic book specialty stores. Readers began increasingly buying from specialty comic book stores and less from newsstands. The industry benefitted from this because it gave comic book publishers greater access to customers39. It is estimated that at the end of the 1980s, there were about 12,000 specialty stores.
38 39
Ibid. Ibid.
51
Chapter: The Bronze Age 1970-1989
The fact that the distribution network now consisted of independent specialty stores meant that comic-book publishers had the power to negotiate better terms with them than with larger, higher-volume outlets. For example, comic books became non-returnable, which helped to stabilize sales. By 1982, Marvel was making half of its sales through such specialty comic book stores, many of them run by fans-turnedmerchants.40
BARRIERS TO ENTRY: LOW
The new distribution channel based on specialty comic shops was a boom to would-be independent publishers. Barriers to entry were reduced as anyone with a little capital and some creative skills could launch an independent comic book company and gain access to the network.41 The independent stores were willing to devote shelf space to comics produced by small, independent outfits and the diminished importance of mass-market appeal made it possible for new comic book titles to catch on without building brand equity through mass distribution or marketing. Nonetheless, the emerging comic book companies could not achieve market shares anywhere close those of the two top players n the market: Marvel and DC Comics. Chapter: The Bronze Age 1970-1989
40 41
Ibid Ibid
52
INDUSTRY RIVALRY: HI GH
Overall, rivalry in the industry was quite high in the 1970s and 1980s. The increasing number of small independent comic book publishers competed for comic book fans dollars. The significant decrease in the overall level of sales in the industry, lead to more intense competition. However, although the number of publishers grew, the dominant players remained DC Comics and Marvel. In the 1980s, Marvel replaced DC Comics as the market leader.
THRE AT OF SUBSTITUTES: LOW BUT GROWING
Alternative forms of entertainment such as TV, movies and video games increasingly competed with comic books for the attention and dollars of the industrys traditional customer base. Nonetheless, by this time the industry had developed a loyal fan base of young customers who closely followed the stories and of older readers and collectors who had been drawn to the media during the Silver Age. For these customers, it was difficult to switch to other forms of entertainment because they had developed a strong loyalty. Fewer people were reading comic books, but those who did so consumed more issues and paid more for them than ever before.42 Chapter: The Bronze Age 1970-1989
Wright Bradford, Comic Book Nation: The Transformation of YHouth Culture in America, Cahners Business Information, Inc., 2001, p. 280
42
53
In addition, during this time comics still had a price advantage relative to emerging forms of entertainment such as video games and video rentals. The comic book characters that had been developed during the Silver Age enjoyed a high degree of recognition and were difficult to substitute. Therefore, the most common impact of new technology was the presentation of traditional comic book characters in complementary forms of media.
COMPLEMENTORS
TV and film continued to act as both substitute forms of entertainment and important complementors. The success of TV shows such as the Incredible Hulk in the 1980s (based on the popular Marvel character), the Superman feature film (based on the DC character) and cartoon shows such as Spider Man and his Amazing Friends (based on Marvel characters) reinforced the popularity of these characters and Chapter: The Bronze Age 1970-1989 brought them to new audiences. In addition, the success of non-comic related science fiction features such as Star Wars and cartoon shows such as the Transformers continued to feed into the publics infatuation with fantasy and superheroes. These features provided new material for comic book titles based on the licensing of those themes and characters. Video games and toys, while substitute forms of entertainment, also provided ample opportunity for Marvel and DC to license their popular characters for use in media and products. This allowed characters such as Spiderman
54
and Superman to be introduced to a new generation of audiences who may have never before opened a comic book. Although Marvel and DC were direct competitors, DCs success with the Superman film in 1978 helped to prove the concept of a comic book superhero-based feature. This increased the likelihood that Marvel would be able to land similar movie deals with its own characters. In the mid 1980s, a Spider-man video game for the Atari 2600 and Mattel Intellivision home video game systems was released. The early entrance into this form of entertainment ensured that marvel could reap the benefits from the existing complementarities between the comic books and video games.
In the 1970s and 80s, Marvels strategy consisted of vastly Chapter: The Bronze Age 1970-1989 expanding its range of titles. The unshackling of the company from the restrictive eight book distribution deal in 1968 allowed a return to the scattershot approach geared towards capitalizing on popular trends, but this time with an increased focus on cashing in on its rich and popular superhero universe. Starting in the 1970s, Marvels strategy was to overwhelm its main competitor, DC, by flooding the market with new titles. By mid-decade, the company had expanded its lineup from about a dozen to over fifty
55
titles. Although overall sales continued to grow slightly, individual title sales declined43. Marvel went back to its strategy of jumping on every trend they could find, aggressively pushing out new titles. As a result, the company encountered a number of operational difficulties; books shipped late and editors feuded with one another for control of creative talent and titles. As the line expanded, more writers were brought in, which made topdown supervision increasingly difficult. The rush to hire led to a decline in quality of the writing staff. Per a Marvel insider there were people working for the company that shouldnt have been writing anything.44 By 1978, comic book sales were declining and the companys editorial operation was in disarray. However, by this time company was generating a significant portion of its sales from licensing some of its bestknown characters for merchandizing, films and TV shows. Marvel set up an LA division in 1980 to manage this work, with Stan Lee at the helm. The LA division went onto produce numerous successful cartoon shows such as Spiderman and His Amazing Friends, GI Joe and the Chapter: The Bronze Age 1970-1989
43 44
Ibid Ibid
56
Muppet Babies45. In this way a substitute threat (TV entertainment) was turned into a complementor and a direct source of revenue. In addition, Marvel achieved a certain degree of stability when Jim Shooter became editor in chief in 1978. Shooter improved Marvels profitability by eliminating low-selling titles, developing new ones to target previously untapped segments of the population (young girls, ethnic minorities, and younger children), and focusing on the quality of the artistic work.46
ACTI VITY SYSTEM
The activity system revolved around maximizing profit per reader, leveraging intellectual property in other forms of media, and creating complex superhero stories to capture reader imagination. (See Exhibit 2C)
owned the firm. Goodman was no longer involved, and Stan Lee focused more on expanding Marvels business into TV, Film and merchandizing than on the creative process of comic-book making. As a result, there was a strong focus on leveraging existing characters to dive growth (rather
45 46
Ibid Raviv, Op.cit, P. 33
57
Cadence executives made the business decisions now that they
than elevate the medium) through crossover titles, licensing and forays into adjacent markets.
The return to the scattershot approach necessitated a large staff of young, energetic writers and artists who could remain faithful to the tried and true Marvel style developed by Lee, Ditko and Kirby. After the rapid growth that took place in the 1960s, the bullpen became chaotic and, with Lee no longer creatively involved, editors had significant leeway with the titles they controlled. Patching of artist incentives: Marvel also instituted bonus and royalty plans that rewarded creators when their books sold well. Specifically, Shooter instituted good medical insurance and a system of royalties, sharing the profits from comic book sales in excess of one hundred thousand copies. This approach resulted in some creative successes, such as the X-men, Punisher and Daredevil titles that evolved far from Lees original conception but became commercial successes in large part due to the new life that the younger artists and editors were able to instill in these titles47. Patching of cross-selling: At the same time, however, the pressure to put out large numbers of titles and follow trends resulted in increasing
47
Ibid
58
dependence on cross selling of characters and titles. For example, Spider Man had three different titles of his own, and numerous mini-series were released with the goal of increasing revenue per reader. Patching of recycling: Popular themes and characters were recycled repeatedly and profitability per title began to drop. Patching of licensing Intellectual Property from other creators: Marvel also began aggressively licensing characters from others in order to produce new comic book titles based on films and themes with their own brand equity, such as Star Wars, Battle Star Galactica and the Transformers48. This fit in well with their focus on quickly producing new titles, leveraging existing successful creations and using the Marvel Method to produce new comics that cashed in on trends. An important milestone achieved through this activity was the contract that Marvel won to adapt the Star Wars Saga into a comic book series. This was the first comic book series to sell over one million copies per title in thirty years. Marvel was able to negotiate a favorable profit agreement with George Lucas. Chapter: The Bronze Age 1970-1989
Patching of distribution on a non-returnable basis: With small independent comic book stores becoming the dominant distribution
48
Ibid
59
outlet for Marvel, the company gained in power relative to its distributors and used this leverage to end the buy-back provision for unsold comics.
Thickening of direct feedback mechanism: The company further developed its policy using former editor in chief Stan Lee as a kind of celebrity and brand. His association with the classic characters of the Marvel Universe helped to reinforce the policy of cashing in as much as possible on existing characters and themes. Marvel also sought to cultivate the fan base by continuing with the direct feedback mechanism (letter page).
LICENSING AND ALTERNATI VE MEDI A
Patching of licensing: the Company focused on leveraging its existing intellectual capital to the maximum extent possible through aggressive Chapter: The Bronze Age 1970-1989 licensing of its characters for merchandise and the development of alternative media products, such as TV shows. In 1981, Marvel Comics purchased the DePatie-Freleng Enterprises Animation Studio (famous for Pink Panther) and named it Marvel Productions (referred above as L.A. Division). The new studio released the Spider Man and Incredible Hulk Series. The firm also tried to leverage Stan Lees celebrity status by having him head up the licensing operations in Los Angeles, where he focused his
60
efforts on bringing Marvel into the film business49. However, there was little else in the Marvel activity system that reinforced their efforts to enter the movie business. Lees star power was not enough to gain traction in Hollywood. Although the company was pushing hard to break into the film industry, most of its film projects never saw the light of day, and those that did were dismal failures50. Again, Marvels attempt to straddle two markets failed as they tried to enter the film industry without having developed an activity system that would allow it to develop competitive advantage.
49 50
Ibid Ibid
61
THE PERELMAN YEARS: 1989-1998 COMICS INDUSTRY BOOM
The economic recovery in the 1990s had a positive effect in consumption and contributed to the rapid rise of the industry in the first half of the decade. This period coincided with the start of a collectibles craze that Marvel and other comic book companies identified and sought to profit from. The industry responded to this collectibles boom by publishing more comic books. In addition, specialty retail stores also increased in numbers. In January 1989, investor Ronald O. Perelman bought Marvel Comics from New World Entertainment for $82.5 million. Marvel Comics was placed under MacAndrews &Forbes (M&F), a holding company that held interests in other companies, such as Revlon, and that was completely under Perelmans control. Perelman implemented a profound restructuring of the company, eliminating unprofitable business lines, streamlining operations, and diversifying outside of the comic book industry. 51 He transformed the company from a comic book publisher into a diversified entertainment company: Marvel Entertainment Group. In the first year under Perelman control, Marvels net income more than doubled from $2.4 to $5.4 million,
51
Elberse Anita, Marvel Enterprises Inc, Harvard Business School Case 9-505-001
62
Chapter: The Perelman Years: 1989-1998
while revenues increased from $68.8 to $81.8 million. 52 In 1991, Perelman took the company public by selling forty percent of the companys stock in the New York Stock Exchange for seventy million. By March 1993, the stock price had multiplied nearly tenfold to almost $20.53 In that same year Marvel earned $56 million on revenues of $415 million. 54 Perelman was a notorious corporate rider that had acquired multiple companies in the 1980s and 1990s using high yield debt. He had no personal interest in the artistic aspect of the comic book industry and was attracted to the company by the large cash flows generated during the boom years. He used the companys healthy cash flows to leverage the firm at the holding level and used debt proceeds to extract handsome dividends and finance his diversification strategy. Under Perelmans management, Marvel, for the first time, entered into the sports Chapter: The Perelman Years: 1989-1998 and entertainment cards, stickers, toys, and confectionary businesses. During this time, Marvel began wrapping its comics in plastic and produced different covers for the same issue as customers, considering comics a form of investment, became willing to buy every single version so as to have a complete set that could be sold to collectors. DC Comics also launched special editions of its comic books to boost sales, such as
52 53 54
Esty and Auerbach, Op.Cit.,P. 2 Raviv, Op.Cit., P. 37 Bryant Adamn, Pow! The punches that left Marvel Reeling, The New York Times, May 1998.
63
The Death of Superman in 1992. Although Marvel was aware of this trend, management did not realize the degree to which speculators had been driving the businesses. There were no statistics available from the thousands of retailers that had emerged so quickly.55 In June 1993, a Canadian comic sold a copy of Marvel Comics' `Amazing Fantasy No. 15' for $14,000, the most ever paid for a comic book. Steven Fishler of New York's Metropolis Comics paid the handsome sum for the inaugural issue of the Amazing Spiderman.56This type of transactions encouraged sellers to buy limited editions as collectibles.
COMICS INDUSTRY DECLINE
Publishing revenue reached a peak in the winter of 1992, when sales of issue # 75 of DC Comics Superman: The Death of Superman, sold three million copies at $2.95 per copy. This issue is believed to have led to thirty million dollars of sales for the comics industry in a single day. However, the industry started to experience a moderate downturn starting in 1993 as the collecting bubble that had driven industry sales suddenly burst in 1994, when customers realized they could not get the value that they expected from speculating with comic books.57 Thus, Chapter: The Perelman Years: 1989-1998
55 56 57
Haddox Frederic, Marvel History Part 6 Alberta Report / Newsmagazine; 6/28/93, Vol. 20 Issue 28, p30. Raviv, Op.Cit., P. 39.
64
speculators stopped buying comic books and a monumental crash ensued. Lower speculative purchases resulted in a decline in publishing revenues in 1994 compared to 1993, and to a lesser extent, in 1995 relative to 1994. Retailers that were stuck with unsold inventory significantly reduced their order flow, and only ordered proven titles. Just as the comic book market started to decline, so did the entertainment and sports cards business, a business that Marvel had venture into in 1992, when player strikes affected both professional hockey and baseball in 1994. Trading cards sales fell by 30% over 1995 and 1996.58 Comic books experienced sales of $425 million in 1997, down from $850 million in 1993. 59 The market remained relatively stable since 1997 with annual sales around three hundred million dollars.60 In the early 1990s, comic book print runs usually averaged in excess of 100,000 copies for key titles however, by 1996, publishers declared success when they printed and sold anywhere from 50,000 to 75,000 copies.61 Chapter: The Perelman Years: 1989-1998
Esty Benjamin and Auerbach Jason, Bankruptcy and Restructuring at the Marvel Entertainment Group, Harvard Business School, 1997, pp. 5
58 59 60 61
McAllister, M.P., Sewell, Jr., E. H., & Gordon, I, Comics and Ideology, Peter Lang, 2001. Elberse, Op.Cit.,P. 6
The Washington Times, Comics industry is serious venture: '90s have been boom or bust for superheroes, September 29, 1996
65
In 1995 and 1996, Marvel reported its first losses due to slumping sales and crippling bank debt. Marvels share of the market slid from around 70 percent to 35 percent in 1995, and then to 25 percent at the end of 1996.62 The significant deterioration in the industry severely affected Marvels capacity to repay the significant amount of debt that it had incurred to finance the multiple acquisitions of the early 1990s. Marvel, under Perelmans management, suffered the consequences of various failed business and financial dealings that would ultimately lead to its bankruptcy in December of 1996. After the bankruptcy filing, an intense legal battle ensued to define a reorganization plan and assign control of the company to a solvent party. In October 1998 Toy Biz, a public toy company, acquired Marvel out of bankruptcy and renamed it Marvel Enterprises Inc.63 Marvel would end the decade as it started, as a comic book publisher with the objective of exploiting the massive character equity that it had built over the years.
INDUSTRY AN ALYSIS
During the 1990s, the industry of reference evolved from the pure comic book business to the entertainment business. The increasing use of
62 63
Raviv, Op.Cit., P. 71 Elberse,, Op.Cit., P. 3
66
existing alternative media (television and films), the emergence of the Internet, and the consolidation of the video games industry changed the major comic book companies, including Marvel, focus from publishing comic books to providing different forms of youth entertainment. Marvel primarily focused on comic books and sport and entertainment cards, but also entered into other forms of media, toys, and confectionery. During the nineties, although talented suppliers and customers regained some power, industry structure continued to be conducive to good profit margins and limited competition. Due to industry dynamics, comic book publishers did not have large capital requirements, did not require high levels of inventory, or hold accounts receivable for a long period of time. Also, companies in this industry could operate with a low level of fixed costs because comic book writers and artists worked on a Chapter: The Perelman Years: 1989-1998 free-lance basis and publishers outsourced printing rather than doing it inhouse. Additionally, the industry required little advertising. 64 The industry remained very attractive, as evidenced by its capacity to recover from the speculators bubble burst and Marvels ability to survive Perelmans excessive financial leverage and aggressive diversification policies. (see Exhibit 1D)
64 Hopkins, M.M.,Marvel Entertainment Group,Inc. - Company Report, 7 October 1992, WHEAT FIRST
BUTCHER & SINGER, INC.
67
SUPPLIER POWER: HIGH
During this time suppliers successfully integrated forward into the comic book industry. Suppliers continued gaining power during the Perelman years despite attempts of the comic publishers to reduce artists bargaining power. During the first half of the nineties, Marvel and other comicpublishing companies paid less attention to the creative aspects of the business to take advantage of the speculative frenzy in comic books. However, at the end, suppliers of talent demonstrated that they had an important say in the direction of the industry. In the early 1990s, Marvel focused on immediate financial results through the harvesting of long-established comic book characters at the expense of the creative function of the company. Marvel downsized creative teams and focused on exploiting successful titles by publishing special issues as collectibles. The idea of fewer people reading comic books and more keeping them simply as investments negatively affected the morale of editors, writers, and artists.65 In December 1991, a group of illustrators led by Todd MacFarlane, asked Marvels president for ownership and creative control over their work. Marvel did not accept this demand for greater autonomy and
65
Raviv, Op.Cit., ppP.37
68
economic compensation. In 1992, MacFarlane and six other artists shocked the comic book industry when they left Marvel to create a new company called Image Comics. The artists who defected Marvel were all well known for their participation in top-selling titles: Todd McFarlane (Spider-Man), Jim Lee (X-Men), Rob Liefeld (X-Force), Marc Silvestri (Wolverine), Erik Larsen (The Amazing Spider-Man), Jim Valentino (Guardians of the Galaxy), and Whilce Portacio. In four years, Image Comics became the third company in sales after Marvel and DC Comics. The defection of Marvels main artists was widely publicized in the media and the first comics published by Image outsold many Marvel and DC titles. Images business principles include the vow to never own creators property and never interfere creatively or financially with any creator. The company produced a very successful Chapter: The Perelman Years: 1989-1998 character, Spawn, which was launched in 1992 and made into a movie in 1997. Regarding the materials suppliers, comic book companies continued to outsource their printing to specialized companies. In the 1990s, Marvel contracted with World Color Press to produce most of its lower-price-point comic books and with Ronalds of Canada to produce it higher-price-point books. DC Comics also printed a significant portion of its books at Ronalds. Given the high competition and tight margins of
69
printing companies, these competed heavily for business from publishers and were willing to offer low prices in order to secure contracts that would keep them afloat.66 This can be evidenced in Marvels ability to diversify away from its main supplier of printing services in the early nineties. Besides a considerable increase in the prices of ink and paper that put pressure on comic book margins, not much occurred in the field of suppliers to alter their power during this decade.
BUYER POWER: LOW BUT GROWING
All comic book companies continued to focus their distribution on specialty stores (direct sales channel) because of the targeting and cost advantages of this channel. As explained above, most comic book readers buy at specialty stores and these stores purchase comics on a non-returnable basis. This was particularly important because it allowed Chapter: The Perelman Years: 1989-1998 comic book companies relying on this channel to have a make to order system and avoid costly excess production. Even though specialty stores purchased comics from distributors at discounted prices, comic book companies gross profit per comic from sales to the specialty stores was still higher due to the lack of returns. The highly fragmented buyer base and the ability of comic book companies
Lowe S.D. et al, Marvel Entertainment Group Inc. Company Report, First Boston Corporation, January 7, 1992, P. 26
66
70
to impose a non-return policy serve as evidence that buyer power was rather low during this period. Despite this favorable environment, management at Marvel was set on changing the distribution system in the industry to its advantage. Perelmans executives argued that even though Marvel had fifty-five percent of the market as measured by sales volume, it was only getting thirty percent of shelf space.67 In 1995, Marvel sought to reduce the power of distributors and improve the marketing of its books by acquiring Heroes World, a regional comics distributor, and giving it the exclusive rights to sell its comic books nationwide. This strategy alienated specialty stores and resulted in the complete concentration of distribution in a single player. The small business owners that ran specialty stores were forced to buy from Heroes in order to have access to Marvels products and had to fill in separate orders for other publishing houses. In addition, they stopped receiving the volume discounts that they used to get from suppliers of all brands of comic books and simply lowered their orders or closed down. It is estimated that the number of specialty stores went down from 9,000 in 1993 to about 4,500 in 1996. 68 That number stabilized at about 2,500 towards the end of the decade. Chapter: The Perelman Years: 1989-1998
67
Raviv, Op.Cit.,, ppP. 67-68
68 The Washington Times, Comics industry is serious venture: '90s have been boom or bust for
71
The slim profit margins of specialty storeowners did not allow them to survive without volume discounts. Specialty storeowners suffered a lot, and most of them blamed Perelman for focusing excessively on the Companys financial gain at the expense of buyers. In fact, most of these storeowners were the most avid fans of comic books, which reinforced a negative image among end-consumers. Intermediate consumers influenced the decision of purchasers downstream and caused a further decline in sales. Marvel's move to self-distribute put pressure on DC Comics to sign a distribution agreement with Diamond Distributors. Diamond also secured exclusivity agreements with Marvels rivals: Dark Horse, Image, and Archie comics. These developments left Capital without its main comic suppliers and ultimately caused this companys demise. In June 1996, Diamond Chapter: The Perelman Years: 1989-1998 bought Capital City, assuming an important position in the comics distribution system. Heroes World struggled to transform its regional distribution infrastructure into a national apparatus and succumbed amid complaints of delayed deliveries and poor customer service. Finally, in February 1997, Marvel finally announced it was closing Heroes World and returning to the only major distributor left standing: Diamond.
superheroes, September 29, 1996
72
Instead of reducing the power of distributors, Marvel ended up directly contributing to the opposite. In 1997, Diamond became the only source of most comic products to specialty stores in the United States. Diamond Comics reserved the right to distribute any comic book to the specialty stores if it deemed that it had sufficient sales potential.69 Clearly, this increased Diamonds power in the industry, making it more difficult for new companies to enter the comic book industry, but also forcing companies to sell only through one monopolistic distributor that had immense control over catalogue content and marketing activities. The power of small publishers and retailers alike were weakened by Diamonds dominant control. Also the complete concentration of distribution also exposed the industry to the risk of Diamond closing down.70 The 1990s also saw an increase in the power of end consumers in the industry, as the Internet made it possible for them to organize in a significant way. Consumers deeply resented the gimmicks that Marvel and other of its competitors tried, such as creating collector editions and launching issues with different covers, and were outraged at the declining quality of the product resulting from the cost cutting measures the
69 70
Rhoades Shirrel, Comic Books: How the Industry Works, Peter Lang Publishing, 2008, pp.155 McAllister, M.P., Sewell, Jr., E. H., & Gordon, I, Comics and Ideology, Peter Lang, 2001.
73
followed the speculative bubble burst. In 1996, editorial staff was reduced from 52 to 12 and Marvel titles were reduced from 120 to 40 per month. That same year there was a reader boycott. Marvel fans became disappointed at the lower quality of content and Marvels excessive focus on financial gain. Bob Kunz, a Marvel enthusiast studying at Duke University, denounced Marvels lost focus and rallied more than three hundred Marvel fans to declare in writing that they would stop buying Spider-Man comics until its quality improved. The boycott gained intensity after Marvel decided to launch a new Spider-Man saga in which the superhero was not Peter Parker, but his clone Ben Reilly. Other boycotters launched campaigns by mail and on the Internet, gaining the attention of the company. In turn, Marvel decided to drop the unpopular clone saga that ironically was designed to boost sales.71 The boycott lasted Chapter: The Perelman Years: 1989-1998 approximately a year and resulted in the depressed sales of comics in the middle of the decade.
BARRIERS TO ENTRY: HIGH
Given the change in focus in the industry from developing comic stories to youth entertainment, the barriers to entry now consisted of the difficulty to develop the iconic characters that companies in the industry owned. These characters had developed a degree of recognition that
71
Raviv, Op.Cit.,P. 66
74
made it hard for potential entrants to develop new ones that could compete for distributor and licensees attention in the market. This became the most important factor driving profitability in the industry. Upon taking control of Marvel in 1989, MacAndrews and Forbes (M&F) conducted market research that indicated that the entertainment industry had not produced lasting iconic characters between 1960 and 1990. In the early 1990s, Marvel owned the largest collection of character assets. This proprietary collection enabled Marvel to have a large production scale and be the lowest-cost comic book producer in the industry. In addition, Marvels character library allowed it to dominate the important comic book distribution channels. Other comic book publishers lacked the array of character assets owned by Marvel and, to a lesser Chapter: The Perelman Years: 1989-1998 extent, by DC Comics. This constituted an extremely strong barrier to competing against these companies.72 The same can be said of the other business lines that were based on the licensing of comic book characters. The sports and entertainment cards segment also has important barriers to entry because the production and distribution of cards requires having the rights to the sports
72 Lowe S.D. et al, Op.Cit.,P.5
75
and entertainment stars.73 Fleer, the trading card company acquired by Marvel in 1992, had a license for three major sports, baseball, football, and basketball. SkyBox, a sports card company purchased by Marvel in 1995, was one of the only four licensees that could feature images of the National Basketball Association (NBA) players in its products. This limited the entrance of new players into the sports and entertainment cards industry The time required to develop a new successful character and the existence of intellectual property rights served to protect the dominant position of industry leaders, Nonetheless, in the 1990s suppliers of talent were able to successfully integrate forward into the comic book publishing industry, creating an opening for new small entrants (see discussion on supplier power above). Chapter: The Perelman Years: 1989-1998
INDUSTRY RIVALRY: INTERMEDI ATE
In the 1990s, the comic book and sports and entertainment cards industries had a large number of players. In 1994 there were over one hundred publishers in the United States and at least four companies licensed to sell sport picture cards. Nonetheless, the large number of
73 Stewart, T., et al, Marvel Entertainment Group - Company Report [Transcript], New York Society
of Security Analysts, the Investext Group, December 8th, 1992.
76
publishers did not necessarily translate into a high degree of rivalry because the industry was highly concentrated. More than a third of publishers in the industry only released one comic book during 1997. 74 In the early 1990s, Marvel Comics was the leading publisher of comic books followed closely by DC Comics. Other companies included Archie Comics and Dark Horse Comics. Marvel enjoyed the highest share of the comics market in the first half of the nineties, accounting for between fifty and seventy percent of the comic books sold. After the merger of Warner Communications and Time Inc. in 1989, DC Comics, Marvel's largest competitor, became a subsidiary of the newly formed media conglomerate: Time Warner Inc. In the early nineties, DC Comics had a market share of the U.S. comic book industry that ranged between twenty and thirty percent.75 The third-largest U.S. comic book publisher, Chapter: The Perelman Years: 1989-1998 privately held Dark Horse Comics, only had a five percent market share, despite licensing popular characters, such as Alien and Terminator.76 An important factor behind the lower, than before, degree of rivalry among existing competitors is the fact that rivals did not compete on the same dimensions. Marvel and DC comics focused on two different market
74
McAllister, Op.Cit., P. 21
75 Esty Benjamin and Auerbach Jason, Bankruptcy and Restructuring at the Marvel Entertainment
Group, Harvard Business School, 1997

76 Lowe, Op.Cit.,P.7
77
segments. In the 1990s, Marvel focused on the 6-18 year old market, while DC targeted the 18-25 year old market. 77 In addition, DC Comics relied primarily on traditional superhero titles, due to the popularity of its Batman and Superman characters, while Marvel Comics focused on other more human characters as well. DC Comics is perceived as evolutionary, constantly changing themes to remain current, while Marvel is revolutionary, occasionally introducing radical new concepts, but remaining faithful to its original concepts.78
DC Comics and Marvel were in the enviable position of having a very large portfolio of iconic characters that were hard to replace. However, comic book audiences in the 1990s could find many other forms of comparable entertainment. Widely accessible cable stations aired Chapter: The Perelman Years: 1989-1998 programs aimed at the same target demographic that comic books focused on, while video games offered the same type of entertainment, but in a much more interactive way. It was estimated that the number of readers had fallen from 15 million at the height of the industry to only 1 million in the early 1990s. This indicates that new forms of entertainment did in did substitute comic books.
77 Frazzano, J.C., Marvel Entertainment -Company Report, Oppenheimer & Co., The Investext
Group, September 10th, 1991

78 Rhoades Shirrel, Comic Books: How the Industry Works, Peter Lang Publishing, 208, pp 4.
78
In the eyes of Marvels management in the early 1990s, the main potential substitutes of comic books were other forms of relatively inexpensive entertainment for the target demographic: candy bars, trading cards, Coca-Cola, and arcades. Management constantly tracked the ratio of the prices of comic books ($ 1.25 in 1992) to these items, as well as to the price of CDs and video games. According to Terry Stewart, President and Chief Operating Office of Marvel in 1992, the attractive price-performance of comic books and trading cards continued to give Marvel products an advantage vis--vis substitutes.79 Management did not see video games and television as substitute products, but more as complementors. Comic book characters successfully crossed-over into other types of media, but publication sales have remained stagnant since the second half of the 1990s due in part to Chapter: The Perelman Years: 1989-1998 the abundance of alternative sources of entertainment.
COMPLEMENTORS
In the 1990s, major industry players started to work together to increase the overall attractiveness of comics. The 1990s saw a dramatic increase in the number of strategic alliances, which mainly took the form of inter-publisher crossover: a story or set of stories in which characters of one publisher are pitted against characters from another one. In 1996,
79
Stewart et al., Op.Cit.,P. 23
79
there were 29 different publisher crossovers, involving 17 different publishers. DC and Marvel published books featuring battles between Superman and the Hulk, and Capitan America and Batman.80 Competitors became complementors as it was clear that customers found value in seeing Marvel and DC comics universes combined. In addition, for the first time in its history, the comic book industry had to face the threats arising from CD-ROMs, stronger video game platforms, unlimited cable and satellite television, and the Internet. However, alternative forms of entertainment did not completely substitute comic book characters but complemented them. These new media forms served as another channel through which to present comic book characters to new generations. During the 1990s, Marvel and DC Comics continued to benefit from the consolidation of complementors, such as video games. According to Marvel executives, video games enhance the sale of comics and working in partnership with video game developers results in gains from comarketing, co-character development, and design sharing. 81 Starting in 1989, Marvel Comics started to fortify its presence in the video game market. The first X-Men video game was released in 1989 for Chapter: The Perelman Years: 1989-1998
80 81
McAllister, M.P., Sewell, Jr., E. H., & Gordon, I, Comics and Ideology, Peter Lang, 2001. Rhoads, Op.Cit., P. 199
80
the Nintendo Entertainment System (NES). That same year, a computer game based on the mutant characters was also developed and games on other platforms later followed.82 During the 1990s, Sega Genesis and Super Nintendo also developed titles that featured two of Marvels top characters: Spider-man and Hulk. In addition, the Marvel vs. Capcom arcade series was very popular, featuring various Marvel Comics characters fighting against characters from Capcom games. Video games were also good complementors of comic books on the advertising front. Approximately, fifty percent of Marvel's advertising revenue originated from video game marketers, followed by trading card companies, which accounted for another 25 to 25 percent.83 Movies also reinforced sales of products based on comic book characters. According to Marvels management, the 1989 "Batman" movie benefited Marvel comic book sales more than those of DC Comics, which publishes the Batman comic book titles. DC's Batman-related titles doubled in sales during two months prior to and during the nine to 12 months after the "Batman" theatrical release. Marvel and DC Comics shared shelf space in the specialty stores. Therefore, shoppers looking at Chapter: The Perelman Years: 1989-1998
82 83
Ibid, Op.Cit., P. 200 Lowe, Op.Cit.,P. 25
81
Batman-related comic books also purchased Marvel comic books. This phenomenon repeated itself when "Batman II" was released in 1992. DC Comics had taken the lead in using other sources of media, launching movies and television series in the 1980s. After Perelman took over Marvel, the company quickly caught up in its overall drive to become a diversified media company. In the 1990s, animated series featuring Spider-Man and The X-Men were launched on Fox Childrens Network. These series more closely resembled the comic book and had high success.84 Comic book issues were launched to coincide with events in animated and live series. In 1996, Superman and Louise Lanes wedding in DC Comics book series was coordinated with the television wedding in ABCs Louise & Clark television series. 85 The coordination of comic books and television plots tended to affect the quality of the former, as they had Chapter: The Perelman Years: 1989-1998 to be adapted to the demands of the television medium. The 1990s also saw the emergence of web comics, sequential art storytelling presented on the Internet. The first web comics were T.H.E. Fox, published on CompuServe and Quantum Link in 1986, and Where the Buffalo Roam, published on FTP and Usenet in 1991. However, industry experts consider Doctor Fun, released in 1993 on the World Wide Web, as
84 85
Rhoades, Op.Cit.,P. 285 McAllister, Op.Cit., P. 30
82
the first true web comic.86 The number of web comics increased considerably in the second half of the nineties. The convenience of carrying a comic book around and the unavailability of mobile Internet devices limited the potential threat posed by this medium. In fact, Marvel and DC comics used the web to their advantage by using it to connect with readers and preview some of their work. Marvel's site on the Internet (www.marvelzone.com) allowed fans to chat on line with Stan Lee, the legendary creator of Spider-Man, the Hulk and the XMen.87 Recognizing the importance of new technologies, Lee also launched a venture in 1999 to publish books exclusively over the Internet.
Under Perelmans management, Marvel sought to position itself as a diversified youth entertainment company, featuring content based on developing the powerful brand equity of the more than 3,500 Marvel characters and other major sports and entertainment properties.88 In order to turn a comic book publisher into a diversified entertainment group, Perelman embarked on a series of debt-financed acquisitions and joint ventures listed in Exhibit 6. Chapter: The Perelman Years: 1989-1998
Ong Pang Kean, Benjamin, Economics and Comics: How webcomics fit in? Newsorama, June 2008.
86 87 88
Bryant Adamn, Pow! The punches that left Marvel Reeling, The New York Times, May 1998. Marvel Entertainment, Company Annual Report, 1995.
83
As of the end of 1995, Marvel had become a diversified entertainment company. It had six main line of business, four of which were approximately equal in size: Sports and Entertainment Cards: Sold picture cards featuring athletes and entertainment figures through the Fleer / SkyBox Subsidiary (22.4 % of the revenue). Toys: Designed and manufactured toys based on Marvel character through its Toy biz subsidiary (21.7% of revenues) Childrens Activity Stickers: Sold picture stickers of sports, comics, and entertainment figures through its Panini subsidiary (20.7% of revenues) Publishing (comic books): published comic books (17.8% of revenues) Chapter: The Perelman Years: 1989-1998 Confectionery: Produced and distributed bubble gum though Fleers confectionary division (10.9% of revenues) Consumer Products and Licensing: Licensed characters for merchandise and movies (6.4% of revenues). 89 During the 1990s, Perelman strived to emulate some of the activities of Marvels largest competitor: DC Comics. Since DC Comics was part of Time Warner, a large media conglomerate, it had been more successful
89
Esty and Auerbach, pp. 5
84
at taking advantage of the synergies originated from the utilization of comic book characters in other types of media, such as television and films. Time Warner was able to release the Batman film through Warner Films, release the comic book adaptation through DC Comics, produce a sound track through Warner Records, and advertise the film through its TV Networks.90 Even the recently created Image Comics, had been able to put one of its characters, Spawn, on film in 1997. Nonetheless, the consolidation of a diversified entertainment group through acquisitions coincided with the industry crisis and burdened Marvel with a very large amount of debt that it could not repay. At the end of 1995, Marvel reported its first loss and started firing staff and cancelling projects. The company spent the two years (1996-1998) mired in bankruptcy proceeding as Perelman, and the majority debt holder, Carl Icahn, fought an intense legal battle for ownership. At the end on October 1, 1998, the plan of reorganization for Marvel Entertainment Group that had been confirmed. In July of the same year, ToyBiz completed the acquisition of Marvel Entertainment Group. ToyBiz changed the name of the Company to Marvel Enterprises Inc.91
90
MacAllister, pp. 27
91 Toy Biz, Marvel become Marvel Enterprises, 1 October 1998, Reuters News.
85
In the last three years of the decade, the Company realigned its strategy, selling many of the companies that had been acquired in the first half of the 1990s in order to reduce debt and realign its assets with a new strategy that focused on managing the character library (see next section). Marvel straddled back to pure comics by selling the assets that Perelman had acquired (See Exhibit X)
ACTI VITY SYSTEM
Marvels activities during this period continued to revolve around maximizing revenue per reader through multiple purchases, and leveraging existing intellectual property in other media (See Exhibit 2D).
Trimming creative process: Marvel diverted resources away from the development of new characters in order to concentrate on its best sellers. During the first half of the nineties, Marvel and other companies paid less attention to the creative aspects of the business to take advantage of the speculative frenzy in comic books. In order to capitalize on this speculative bubble Marvel implemented the following activities: Patching of increased number of monthly issues at higher prices: Marvel increased the number of monthly titles from 45 to 140 and increased prices from $.125 to $3.00.92
Esty and Auerbach, pp.4
92
86
Patching of limited and special editions: In addition to expanding its number of monthly offerings, Marvel continued to periodically introduce special annual issues and "limited story" editions (a story line that is told over three to five issues, rather than continually evolving month to month). A number of these specials incorporated a value-added approach such as enclosing a poster, a pack of trading cards, or printing a unique cover.93 Patching of cross selling of characters: In the 1990s, Marvel and DC teamed together to launch special `cross-over' editions in which the super-heroes in their respective universes to battle one-another to determine superiority. Coasting of work for hire: Marvel downsized creative teams and continued to rely on artistic work for hire (artist compensation on per Chapter: The Perelman Years: 1989-1998 page basis and with limited royalties) and on the outsourcing of printing activity. In addition, Marvel reduced costs by dismissing personnel that was not involved in core creative activities and cancelling questionable projects.94
93 94
Hopkins M.M, pp. 7 Raviv, pp.37
87
With the company under the ownership of Perelman, Marvel was run as a cash cow business. Perelman had no personal interest in the artistic aspects of the comic book industry and underestimated the negative implications of his business decisions on the creative power and fan following. Under his management, Marvel, for the first time, entered into the sports and entertainment cards, stickers, toys, and confectionary businesses.
Marvel wanted to increase its control over promotion of comic books and increase the intensity of marketing and shelf space in specialty stores, where it enjoyed the higher margins. Thickening of direct sales: De-emphasize the retail and subscription channels: Marvel prioritized the direct distribution channel over retail and subscription because it resulted in better profit margins (specialty stores could not return unsold books).95 Between 1988 and 1991 sales through the direct channel grew at a 33% annually compounded rate, from $29.9 million in 1988 to an estimated $71.1 million in 1991. Patching exclusive distribution: Marvel established direct exlusive distribution to specialty retail stores through Heroes World. With this move, the Company expected to improve the display and publicity of its books
95
Esty and Auerbach, pp. 3
88
in specialty stores. However, this activity also resulted in some collateral damage in the form of disgruntled buyers.
Patching of re-targeting young customers: In 1996, Marvel began a marketing campaign to support the release of "Heroes Reborn," a series developed to make their core super-heroes (The Fantastic Four, Iron Man, Captain America, and The Avengers) consistent with the 90's. For example, over the years, Spider-Man had grown up to become a 24-year old married man with one daughter. Other heroes had been born in the 1950s and 60s and needed a more modern context.
LICENSING AND ALTERNATI VE MEDI A
In the 1990s, Marvel sought to enhance equity value of Marvels characters through the use of other types of media. Perelman wanted to turn Marvel into a major American media conglomerate and transform it in a mini Disney. The immediate objective: roll the 3,500 characters that Marvel had through all possible media: collector cards, stickers, TV productions, video games, and ultimately movies. 96 Even though marvel still held a third of the market in the direct sales channel, the share of comic book sales in overall company revenues decreased markedly from 86% in 1991 to 15% in 1996. At the same time, licensing fee revenue went
96
Raviv,Op.Cit.,.P.37
89
from $500,000 in 1992 to $15 million three years later.97 Activities related to this strategic theme included: Patching related entertainment products: Marvel directly invested in sports and entertainment cards and stickers, as other media forms on which marvel characters could be featured. These forms of media complemented Marvel comics offering because they were targeted at the same demographic, had the same distribution channels, and had similar production systems. Patching direct film and TV show development: In the past, Marvel had made a lot of very detrimental deals involving the sale of television and movie rights for its main characters. For example, the rights to SpiderMan were entangled in an intricate web of companies that had different pieces of the cinematographic rights. In the 90s, Blade and Men in Black Chapter: The Perelman Years: 1989-1998 were the only major movies based on Marvels characters. Marvel sought to enhance the economics of these agreements and launch movies with the main characters: Spider-Man and the X-Men. However, it wanted to better control the process and do it without putting too much capital at risk. This resulted in the re-entry of Marvel into the motion picture and television business through the creation of Marvel Studios.
97
MacAllister,, Op.Cit., P. 28-29
90
Patching direct Video Game development: In early 1996, Marvel created a software division to lead the development of video games based on its characters. Patching in-house toy design and development: In 1993, Marvel acquired a 46% in ToyBiz, granting it an exclusive, worldwide license to develop and manufacture toys based in Marvel characters. By doing so, it acquired a direct interest in the licensed products. Patching other licensing activities: In the 1990s Marvel invested heavily in developing general licensing activities outside of media. It developed a new restaurant chain in partnership with Planet Hollywood called Marvel Mania. Marvel also joined forces with Universal to create a new Marvel section at its Orlando Theme Park.
91
THE REBIRTH: 1998 2009
The beginning of the 2000s was a time of rebirth for the comic book industry. The speculative boom in the early 1990s had created a huge inventory of unsold collectible comic books, causing hundreds of specialty comic book stores to shut their doors. The end of the 1990s thus was a marked period of declining comic book sales, and this forced comic book publishers to search for new ways to reenergize sales. This spawned concentrated efforts to target different segments of readers with new titles. The 2000s also brought on a new set of challenges. Comic book sales overall was the lowest its ever been in history. The industry seemed to undergo a strategic inflection point as consumer preferences permanently shifted. The major publishers Marvel and DC were no longer Chapter: The Rebirth: 1998 2009 recognized to be as mass and mainstream as they were historically known.98 Literary columns were paying more attention to graphic novels, and this focus, along with its inclusion at bookstores and libraries, introduced new readers to genres outside of the traditional American comic book. The rise in popularity of graphic novels in the traditional literary community led to major publishing houses owning subsidiary comic
98
http://en.wikipedia.org/wiki/American_comic_book
92
companies. This change in the competitive landscape forced Marvel and DC to retool their marketing strategies to compete on a broader scale with large publishing houses. Under the companys new name, Marvel Enterprises, Marvel truly built the foundation to be a multimedia company based on its content library. Two blockbuster films featuring Spiderman, with a worldwide total gross over $1.5 billion99, was the real impetus to bring Marvel fully out of bankruptcy.100 The success of these movies brought about increased demand for related merchandise, increasing licensing opportunities. More meaningfully, the success of Spiderman on such a mass scale meant that Marvels character library of more than 5,000 characters could be monetized and used to attract consumers of a broad age group. This movement from a purely comic book firm to a prominent characterbased entertainment company101 was reflected in DC Comics as well. It came as no surprise to many in the industry when in August 2009, news broke that Disney would be acquiring Marvel for $4 billion. Both parties could learn from what the other is good at Disneys multimedia empire appeals to the broadest age group of any multimedia conglomerate, and Marvels content library has potential to follow a
99
http://www.the-numbers.com/movies/series/SpiderMan.php Cowen & Co Analyst Report, December 13, 2004 http://marvel.com/company/index.htm
100 101
93
Chapter: The Rebirth: 1998 2009
similar path. While some Marvel loyalists wonder if Marvels edge will be lost under new management, the merger will likely have a synergistic effect and broaden both firms consumer base. While Marvels previous rise to fame was developing creative content, it currently is focused on finding ways to monetize its full content library and extend in separate series to appeal to different segments. Marvel still has a controlled development of new content, but this is not the focus of their strategy. The companys success may lie in utilizing Disneys expertise in constantly renewing its classic characters for each generation.
INDUSTRY AN ALYSIS SUPPLIER POWER: INTERMEDI ATE
The most important supplier is creative talent writers, artists, and other labor. However, the leverage given to these suppliers have been Chapter: The Rebirth: 1998 2009 mitigated with firm-wide imposed standards and legally binding agreements. For example, Marvel has made it a core part of their strategy to execute control over the creative process by hiring well-known artists and mitigate the strength of their influence by implementing style guidelines that the artists must follow. In addition, Marvel has signed exchange contracts with these writers and artists to prevent them from gaining too much control over the creative content.
94
BUYER POWER: LOW
While the relationship with the consolidated distributors is important, their demand is dependent on final consumers. As superhero characters became more popular, the consumer buyer power declined. In this time period, Marvel turned its focus to monetizing its existing content library through licensing agreements and managing its library of characters through character extensions. In doing so, they broadened their appeal to a wide range of consumer segments. This decreased their reliance on any one segment and thus buyer power overall. Since both Marvel and DC are now paired with broader entertainment groups, they will continue to broaden their customer base and further decrease the influence of this group in a macro sense. The value appropriated to buyers can be said to be high. Consumers have a high willingness to pay for superhero-based entertainment and items, and firms thus have leeway to price in order to maximize their own share of value. Chapter: The Rebirth: 1998 2009
BARRIERS TO ENTRY: HIGH
The barriers to entry are extremely high for this industry and will only continue to get higher. The largest impediment for entry is the high level of character and storyline recognition that is needed. Key characters have had well-developed, lengthy histories, and this type of character
95
development has been built since the inception of each character. In addition, significant investments in marketing may need to be made to popularize new character-based forms.
INDUSTRY RIVALRY: INTERMEDI ATE
Rivalry for the industry character-based entertainment is moderate. The major players for superheroes are still Marvel and DC, now a division of Time Warner, but other movie studios and creative developers still have competitive content. On a high level, all characterbased content can be said to be competing for audience mindshare, but each characters story is so developed that consumers do not really view them as direct competitors. Rivalry thus becomes much broader, in which superheroes compete with other genres of entertainment. Rivalry also significantly differs depending on the business division. For Comic Book Publishing, the rivalry is low (see Figure #). Comic books Chapter: The Rebirth: 1998 2009 are distributed in specialty comic book shops and also mass bookstores, such as Barnes and Noble. The two largest players in specialty comic stores are Marvel and DC Comics, but they do not compete for shelf space, since both are considered anchors within the store. In a traditional bookstore, there is more competition for shelf space, and the competitive set has broadened to include a slew of smaller publishers. Marvel, however, still dominates.
96
The Toy division is arguably the division with the highest rivalry. Licensors are not directly responsible for negotiating for shelf space in toy stores, but the toys success is contingent on if and how much shelf space distributors can get. That said, the competition for the limited shelf space is fierce. Rivalry for licensing is low, since the licensing agreements are based on the popularity of each character.
The industry is comprised now of character-based entertainment, and the substitutes can be said to be low. For example, Marvel has an established base of characters that prevent substitutes (other superherobased novels, movies, etc.) from being much of a threat. There is no true substitute for following the story of Spiderman or X-Men.
COMPLEMENTORS
The three divisions of Marvel, Comic Book Publishing, Toys, and Licensing, operate as mini-conglomerates but still fall under the umbrella of Marvel Universe. As such, these divisions all adhere to the same strategic positioning. It can be said that all three divisions, while falling within the Marvel Universe, are complementarities. The increase of licensing in movies featuring Marvel characters drives up sales of both the Toy and Publishing divisions. All three divisions are complements of each
97
other. As Peter Cuneo, Marvels vice chairman and former CEO, clearly states: 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.102
Comic Book Publishing
Toys
Licensing
Other complementarities in the industry are other superhero-based media. The success of the DC Comics and Warner Brother movies invariably boosts up audience interest of Marvel superheroes; thus, success for one firm temporarily increases the pie for all players.
Marvels strategic positioning has shifted from its initial needs-based Chapter: The Rebirth: 1998 2009 positioning to one that is variety-based. The firm has a large content library, but their success has been contingent on their superhero characters, and the firm has introduced different versions of the characters to appeal to a wide group of customers. The company views its own strategy to be: to leverage its franchises in a growing array of opportunities around the world, including feature films, consumer
102
Elberse, Anita. Marvel Enterprises, Inc. Harvard Business School Publishing, 2005.
98
products, toys, video games, animated television, direct-to-DVD and online.103 Upon entering this time period, Marvel struggled to attract new comic book readers without turning away loyal followers.104 This served as the foundation for many of their new releases during this time, such as Marvel Knights, which involved a single storyline with several distinctive characters. The differentiating factor of Marvel Knights from previous releases was that it was outside the realm of Marvel Universe, so Marvel could experiment with edgier content without influencing the image of top Marvel characters. During this time period, Marvel sought out opportunities to use recognizable characters from their portfolio on the silver screen. The release of Blade, a character who originally appeared in the Spiderman series, by New Line Cinema created a segment of movie fans who were Chapter: The Rebirth: 1998 2009 already engaged in the Marvel characters. The release of the movie version of X-Men in 2000 was met with huge box office success, and this prompted Marvel to focus one of their strategic pillars on monetizing their content library. The theatrical release of Spiderman and Daredevil quickly followed in 2002 and 2003, and Spiderman became Marvels most
103 104
http://marvel.com/company/index.htm http://www.comicbookbin.com/Marvelhistory007.html
99
successful film to date. This success persuaded Marvel to follow an aggressive strategy of releasing three films per year. The resulting success of these decisions allowed Marvel to redeem its remaining long-term debt and become completely debt-free by mid-June of 2004105. Meanwhile, Marvel continuously sought out other avenues to monetize their library content and manage the library of characters. Animated series were released on television and exposed yet a different segment of consumers to Marvels characters. The success of the Marvel movies proved that the Marvel characters could be adapted to appeal to both loyal readers and a new audience base of a wide age range. Thus, the three, reinforcing, strategic pillars of Marvel became: Monetizing Content Library licensing to media, toys, and other
consumer products Manage Library of Characters actively reaching out to multiple Chapter: The Rebirth: 1998 2009
consumer segments in order to expose them to appropriate characters Control Over Creative Process developing Marvel style guidelines for
artists106
105 106
Elberse Ibid
100
Marvel characters also have made the leap to emerging media, being featured in computer and video games. Additionally, Marvels website allows users to access archived comics for a monthly fee. From strictly a comic book publisher to a multi-platform entertainment corporation, Marvel has undergone a significant broadening of its business. The company announced in September 2009 that it is considering a merger with Disney. Marvels CEO says that Disney is the perfect home for Marvel's fantastic library of characters given its proven ability to expand content creation and licensing businesses."107 With that, its clear Marvels focus is to continue building on its content library to appeal to a wider audience base and licensing opportunities. Further, both firm' management believe that the merger will strengthen their respective strategic positions and allow meaningful growth opportunity into their current consumer segments108. Disney has an elaborate and well-developed licensing, sales, and distribution infrastructure all of which Marvel can now tap into. Disney also holds key account relationships with international partners, which Marvel can benefit from as it expands its multi-media reach to new consumer segments. Cuneo previously stated, There is nothing close to
107 108
http://online.wsj.com/article/SB125172509349072393.html Stern Agee MVL Analyst Report, August 31, 2009
101
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 60sthey all enjoy Spider-Man. I wish all our characters were that broad.109 With Disneys help, Marvels library of characters could achieve that level of recognition.
ACTI VITY SYSTEM ARTISTS AND CRE ATIVE PROCESSES
During this time period, Marvel patched control over creative process as a core component of its activity system. Exercising control over the creative process was particularly important to the Publishing division. A highly level of quality was demanded of artists, and thus consistency in characters and stories was heavily emphasized110. With its roots in comic books, the company still viewed its Publishing division as its source of Chapter: The Rebirth: 1998 2009 credibility, and thus hired experienced, well-known artists and writers in the publishing and film and television industries to put a multimedia perspective to the creative process. To ensure access to key talent and to mitigate the power of these suppliers from rising, Marvel signed exclusive contracts with the most well-known artists.
109 110
Elberse, Ibid
102
As Marvel emerged from bankruptcy in 1999, the company brought on several members of senior management that would help them grow in their licensing business. Marvels new board included former Toy Biz owners Isaac Perlmutter and Avi Arad. Perelmans figurehead was not replaced and thus trimmed. Marvel currently has a Planned strategic management model that typically embodies the senior management and board of director setup. As such, artists do not have power as they did when Marvel was just a comic book company. In 2008, Marvel formed an international advisory board comprised of business leaders who possess deep knowledge of consumer preferences in key international markets, such as China and India.111 This advisory group will help the senior management team have a longer, Chapter: The Rebirth: 1998 2009 more global perspective. The company believes that this will guide expansion and drive long-term demand for Marvel-branded products.
The relationship with distributors and retail outlets differ depending on the division. For the most part, relationships with distributors and retailers were thickened. For the Publishing division, Marvel was distributed
111
2008 Annual Report
103
through 3 ways: 1) specialty bookstores, called the direct market, 2) traditional retail outlets, called the mass market, and 3) on a subscription basis112. Marvel continues to be the dominant player with 46% of unit share in the direct market, which consists of over 2,500 independent comic books113. Because of Marvels size, these comic book stores are reliant on Marvel and thus willing to carry the 60 titles that Marvel prints out each month. For the Toy division, Marvel signed an exclusive agreement with a Hong Kong-based company to manufacture and sell toys based on Marvels characters, and in return, Marvel received a 15% royalty from the wholesale price114. Marvel retained control in design and quality of the toy and only licensed out the manufacturing of the toys. Because several members of Marvels senior management team were formerly from Toy Chapter: The Rebirth: 1998 2009 Biz, Inc, success in the toy industry came easily. Outlets for toys included specialty toy retailers, mass merchandisers, mail-order companies, and variety stores. The top 5 retailers, Wal-Mart, Toys R Us, Target, Kay-Bee
112 113 114
Elberse, Op.Cit, 2008 Annual Report Eberse
104
Toy Stores, and Kmart, comprised 66% of Marvels toy sales in 2003115. The overall toy division generated over $20 billion in sales in 2003. Marvels licensing division previously licensed its characters out to movie studios. However, in late 2005, the company built a $525 million film facility to produce its own movies116. This decision was based on the companys strategic pillar to control creative content.
Marketing for Marvel takes a very multimedia approach. Sales for the publishing division are heavily affected by exposure to other media, particularly films. Movies tend to produce double the amount of demand in corresponding comic books.117 To appeal to a wide fan base, managing the long-term value of characters was thus patched onto the activity system. This element involved introducing new series targeted to different consumer segments while using the same characters. Chapter: The Rebirth: 1998 2009
LICENCING AND ALTERN ATI VE MEDI A
Licensing is a major revenue drivers of Marvel and was thickened. We contribute our characters and our knowledge of the characters, we
115 116 117
Ibid 2008 Annual Report Elberse, Op.Cit, P.
105
work hard to find the right partners, and we approve the products for quality, but we dont contribute any capital. We just collect checks, Allen Lipson, Marvels president and CEO.118 Currently, significant licensing activities include licensing characters out to consumer products, films (Sony Entertainment), television programs, promotions, and other forms of media. In 2008, licensing made up the largest portion of Marvels revenue ($293 million of a total of $776 million).
FUTURE PROSPECTS
With Disneys premium $4 billion acquisition of Marvel earlier this year, it is clear that Marvel seeks to utilize Disneys competencies to expand its empire. Disney has been successful with the female youth target and has managed to derive long-term value from this relationship. Marvels content library has so far not appealed to the female youth market and its expected for both sides to leverage each others content Chapter: The Rebirth: 1998 2009 libraries. Disney also has deep expertise in keeping its characters fresh for each incoming generation. That said, its clear that Marvel is looking for ways to thicken its core activity of Managing the Long Term Value of its Characters. With the merger, Marvel will thicken its Licensing activities and utilize Disneys long-standing accounts to grow this integral part of its business. In
118
Ibid
106
addition to a broadening of customer base, Marvel will likely leverage Disneys expertise to begin building its internal media production capabilities. Until recently, Marvel has primarily licensed out movie and other media production; however, in order to thicken the Creative Control pillar of its strategy, Marvel will begin bringing all production activities in house. With the Disney and Marvel merger, it is likely that the combined market served will be the broadest that the entertainment industry has ever seen.
107
CONCLUSIONSKEY TAKEAWAYS
Marvels strategic positioning evolved from a point of low cost and low differentiation in the 1930s and 1950s, to a point of high differentiation -achieved through the development of iconic characters and of a unique form of managing character equity- and focus on quality in the development of different forms of media and entertainment expressions to effectively leverage its character equity. The initial scattershot / low cost strategy was not sustainable, as it did not involve choosing what not to do: Marvel published all types of comic books aimed to all sorts of target audiences from the 1930s through the end of the 1950s. During this time, the Company did not made any tradeoffs and focused instead on building operational efficiencies to which all other players in the industry had access. It is clear that the initial focus of operational effectiveness was to lower production costs. The main focus was to keep fixed cost low by outsourcing printing activities to external contractors, using low quality paper and unsophisticated printing technologies, and using limited advertising. Labor costs were also lowered by maintaining a small number of salaried employees and outsourcing most creative activities to contractors that received compensation on a per-page basis. The main Chapter: ConclusionsKey Takeaways
108
criteria for the hiring and management of artistic labor was high volume production for low pay, rather than on artistic ability.
119
During the Great Depression and the World War, the product was undifferentiated and inexpensive, reflecting the financial constraints of the target customers and the concentration of themes. However, operational effectiveness fell short when customer sophistication grew, macroeconomic conditions improved, and the end of the war demanded the creation of more innovative characters (not only heroes in the fight against the war enemies). Marvel than decided to pursue a Needs-Based Positioning and created an activity system to support this strategy. However, catering to different needs did not create a differentiated position for Marvel because it continued to rely in the same set of activities as before. The Chapter: ConclusionsKey Takeaways activities developed during the first part of the Silver Age continue to give priority to volume over creative differentiation. Therefore, the company would only achieve a high peak in the competitive landscape in the second part of the Silver Age, when a change in the strategy and activity system supporting it was forced from the outside.
Mayfield M, Mayfield J., and Genestre A., Strategic Insights from the Comic Book Industry: A Comparison of Italy, Japan, France, Mexico, and the U.S., American Business Review, 2001.
119
109
Two inflection points in the industry positively affected the ability of Marvel to create additional value through means different than lowering its production cost. These events allowed Marvel to generate a higher willingness to pay through differentiation (creation of complex and highly innovative super-hero characters) and to access the specific segment of the client population that eventually developed a high capacity and willingness to pay (older readers and collectors). The first inflection point corresponds to the marked decrease in circulation brought about by the regulatory restrictions imposed in 1954 and the distribution glut of 1957, which forced Marvel to limit its monthly distribution to eight titles. The second inflection point corresponds to the switch in comic book distribution from mass retailers to specialty comic book shops. After 1957, Marvel was no longer able to profits from the high volume, and low cost strategy that had hitherto prevailed. Marvel did not voluntarily made this trade-off, but was forced to do it given its deteriorated financial condition and constrained distribution. Marvel then pursued a value based strategy aimed at increasing the willingness to pay for its own comic books based on new characters (X-Men, Fantastic Four), while at the same time reducing the willingness to pay of the competitors customers.
110
Chapter: ConclusionsKey Takeaways
This strategy paid of as we can see a marked increase in the sales of marvel after 1959 and the consolidation of a positive growth trend that would prevail until the beginning of the 1970s (See Exhibit 10). Eventually, competitors, including DC Comics, copied the Marvel Method and the gap in sales started to close down. Later, during the 1980s, the industry evolved through a system of distribution based on specialty-stores. This improved Marvels ability to capture value away from mass retailers, which had traditionally enjoyed the ability to return unsold comic books, hurting publishers profitability. In addition, the emergence of specialty stores allowed Marvel to have direct access to customers who only cared about comics (as opposed to any type of magazine or form of entertainment), and who therefore had a high willingness to pay. As a result, Marvel was able to extract a higher share of value than before by reducing cost (no returns) and increasing willingness to pay. This discussion leads to another takeaway related to the way in which companies adapt their activity systems to respond to internal and external shocks. On the internal front, the Company had to reorganize its activity system following two near death experiences: first in 1957, when a failed change in distribution almost result in bankruptcy; and forty years later in 1997, when excessive leverage and over-expansion made the Chapter: ConclusionsKey Takeaways
Formatted: Highlight
111
company file for chapter 11. It seems that often-radical changes can only be brought about by shocks. In the 1990s, the Companys activity system was fundamentally changed to extract value from a temporary external situation (collectibles bubble in the early 1990s), but the new system lacked internal coherence. New activities were patched to generate additional sales revenue, but these not connected well with the organizational structure, culture, and activities that Marvel had developed until then. The new activity system was supposed to it with the new external environment of mass entertainment, but it did not fit with the expectations of the comic book fans, or with the internal activities of the creative staff. The activity system developed by Perelman was not sustainable because it was rooted in external and temporary success factors: the Chapter: ConclusionsKey Takeaways collectible craze, the ability to cheaply leverage Marvels healthy cash flows from publishing, and the inorganic growth offered by the collection of a set of business that were only related in form, but not in substance (confectionary, trading cards, stickers, etc.). By abandoning the activities that were at the core of the artistic and creative process and focusing on churning titles and licensing characters, Perelman destroyed the main source of advantage of the firm: its ability to create value by delivering quality stories to a loyal fan base.
112
Another takeaway is that it is difficult to imitate other companies activity systems. During the 1990s, Marvel tried to imitate the successful activity system of DC Comics and the large media conglomerate to which it belong: Time Warner. Nonetheless, activity systems are difficult to imitate, particularly when the activities show a high degree of fit, as it was the case for Time Warners comic character business. A final takeaway has to do with Marvels ability to turn potential competitors into complementors. New forms of media, such as television, films and video games turned into complementors rather than competitors because it was more valuable for comic book fans to see their hoes on the big screen or in arcades. At the same time, it was also valuable for comic book companies to reach a wider and younger audience through these emerging forms of media. These technologies were not disruptive for comic book characters, becoming just another medium through which their adventures could be presented. Chapter: ConclusionsKey Takeaways
113
EXHIBIT 1: FIVE FORCES INDUSTRY ANALYSIS EXHIBIT 1A: THE EARLY YEARS
114
Chapter: Exhibit 1: Five Forces Industry Analysis
EXHIBIT 1B: THE SILVER AGE
115
EXHIBIT 1C: THE BRONZE AGE
116
EXHIBIT 1C: THE PERELMAN YEARS
117
EXHIBIT 1D: THE REBIRTH
118
EXHIBIT 2: ACTIVITY SYSTEM EXHIBIT 2A: THE EARLY YEARS
119
Chapter: Exhibit 2: Activity System
EXHIBIT 2B: THE SILVER AGE 1950-57
120
EXHIBIT 2C: THE SILVER AGE 1957-68
121
EXHIBIT 2D: THE BRONZE AGE
122
EXHIBIT 2E: THE PERELMAN YEARS
123
EXHIBIT 2F: THE REBIRTH
124
EXHIBIT 3A MARVEL SUPERHERO CHARACTERS
Human Torch
Namor the Sub-mariner
Iron Man
Captain America
125
Chapter: Exhibit 3A Marvel SUperhero Characters
Fantastic Four
Hulk
Spider-Man
EXHIBIT 3B MARVEL CHARACTERS DURING THE SILVER AGE
Homer the Happy Ghost
Homer Hooper
Ringo Kid
Black Rider
126
Chapter: Exhibit 3B Marvel Characters During the Silver Age
Sergeant Barney Barker
Millie the Model
The Monkey and the Bear
Patsy Walker
127
Chapter: Exhibit 3B Marvel Characters During the Silver Age
EXHIBIT 4 MARVEL TOYS
EXHIBIT 5 RECENT SALES DATA
128
Chapter: Exhibit 4 Marvel Toys
September 2009 Comic Book Sales Figures Estimated Comics Sold to North American Comics Shops as Reported by Diamond Comic Distributors
Comic-book Title 1 2 3 4 5 6 7 8 9 10 11 12 Blackest Night Captain America Reborn Batman And Robin Green Lantern Wolverine Giant-Size Old Man Logan Blackest Night Batman New Avengers Green Lantern Corps Dark Avengers Blackest Night Superman Batman Dark Avengers Uncanny X-Men Exodus 515 606 2 603 2 Issue Price 3 3 4 46 1 2 57 40 9 2 690 $3.99 $3.99 $2.99 $2.99 Publisher DC Marvel DC DC Est. sales 140,667 108,240 106,835 103,579 93,744
$4.99 Marvel $2.99 $3.99 $2.99 $3.99 $2.99 $2.99 DC Marvel DC Marvel DC DC
$3.99 Marvel $2.99 Marvel $2.99 Marvel $3.99 Marvel $3.99 Marvel $2.99 DC
75,598 73,523 70,118 68,539 65,210 64,032
13 Uncanny X-Men 14 Amazing Spider-Man Ultimate Comics 15 Avengers 16 Thor 17 Blackest Night Titans
129
Chapter: Exhibit 5 Recent sales data
87,564 85,526 83,042 79,662 78,700 76,936
18 Amazing Spider-Man 19 Amazing Spider-Man 20 Amazing Spider-Man
604 605 607
$2.99 Marvel $3.99 Marvel $2.99 Marvel
63,382 62,778 62,517
Source: http://www.comichron.com
Source: http://www.cbgxtra.com
Market Share
Comics, Magazines & Graphic Novels
130
Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06
Marvel 27.17 22.54 21.08 25.33 38.80 31.86 31.05 41.60 38.12
DC Image Dark Horse Crossgen Others 26.47 13.88 5.59 0.00 26.89 34.34 10.26 7.87 0.00 24.99 31.06 13.48 7.21 0.00 26.63 33.19 9.08 8.31 1.47 22.62 25.38 5.66 8.14 3.03 18.99 29.45 7.91 4.59 4.48 21.71 30.35 4.27 7.12 2.16 25.05 25.69 3.54 6.96 0.00 22.21 32.32 4.49 4.16 0.00 20.91
Total Sales Publisher MARVEL COMICS DC COMICS DARK HORSE COMICS IMAGE COMICS TOKYOPOP Dollar Share 36.54% 30.63% 5.58% 3.90% 3.00%
Total Sales Unit Share 43.19% 32.23% 4.08% 3.94% 1.13%
Total Reorders Dollar Share 23.09% 34.41% 9.93% 4.31% 7.44%
Total Reorders Unit Share 25.57% 37.87% 7.53% 5.25% 5.09%
Source: http://www.comicbookresources.com
Top 10 Comics of 2004

Qty. Rank 1 Retail Rank 6 In Stock ** Item Code FEB040241 JUL046034/ SEP041723/ 2 15 ** OCT048022/ NOV048028 JAN040225/ 3 3 ** 5280/5299 APR040316/ 4 1 5288/5290 IDENTITY CRISIS #1* $3.95 DC SUPERMAN BATMAN #8* $2.95 DC NEW AVENGERS #1* $2.25 MAR Title SUPERMAN #204 Price $2.50 Pub. DC
131
MAR045193/ 5 5 ** 1647/ APR045028 6 7 8 9 10 16 8 4 5410 27 17 ** ** APR040291 FEB040242 SUPERMAN #206 SUPERMAN BATMAN #9 $2.50 $2.95 DC DC ** ** MAR040293 MAR040294 MAY040321/ IDENTITY CRISIS #2* $3.95 DC SUPERMAN #205 SUPERMAN BATMAN #10 $2.50 $2.95 DC DC ASTONISHING X-MEN #1* $2.99 MAR
Source: http://www.comicbookresources.com
EXHIBIT 6: MAIN ACQUISITIONS AND DIVESTURES IN THE 1990S
132
Chapter: EXHIBIT 6: Main Acquisitions and Divestures in the 1990S
Acquisitions In July 1992, Marvel bough Fleer Corporation, a top producer of sports and entertainment trading cards and a much larger company than Marvel at that time, for $286 million. In the spring of 1993, Marvel acquired a minority part of Toy Biz, a designer and manufacturer of toys, in exchange for a perpetual and exclusive royalty-free license to use all of Marvel characters. In the winter of 1994 Marvel acquired regional comic-book distributor Heroes World in order to use it as its own exclusive distributor (see buyer power discussion in five forces analysis). In July 1994, Marvel also acquired the Panini Group, an Italian company that printed the photos of athletes, movie stars, and comic book heroes on stickers that children collected in albums. The transaction amount was $150 million. During 1994, Marvel acquired other four comic book publishers including Harvey Comics, Welch Publishing, and Malibu Comics. In the winter of 1995, through its recently acquired Fleer subsidiary, Marvel bought sports and entertainment cards company Skybox International for $150 million. In July 1996, Marvel and Toy Biz created a joint-venture called Marvel Studios to facilitate the development and financing of live action and animated motion pictures and television programming based on the Marvel Characters. Divestures In February 1997, after failing to manage a nationwide distribution network, Marvel closed down Heroes World. In the summer of 1998, Marvel sold the division that produces Double Bubble gum to Concord Confection Inc. for $ 18.7 million. Chapter: EXHIBIT 6: Main Acquisitions and Divestures in the 1990S
133
In February 1999, Marvel completed the sale of Fleer/Skybox International, its trading card business, for a purchase price of $26 million in cash to a newly formed private company. Chapter: EXHIBIT 6: Main Acquisitions and Divestures in the 1990S In October 1999, Marvel completed the sale of Panini to an Italian Company. Panini remained as licensee for some of Marvel characters
134
(2006-2009)
Source: The Comic Chronicles

EXHIBIT 8: COMIC BOOKS ORDERED BY COMICS SHOPS IN NORTH AMERICA (IN DOLLARS)
135
Chapter: Exhibit 7: Publisher Market Shares of Sales of Comic Books, Trade Paperbacks, and Magazines (2006-2009)
EXHIBIT 7: PUBLISHER MARKET SHARES OF SALES OF COMIC BOOKS, TRADE PAPERBACKS, AND MAGAZINES
Formatted: Heading 1, Add space between paragraphs of the same style Formatted: Font color: Red

EXHIBIT 9: COMIC BOOKS ORDERED BY COMICS SHOPS IN NORTH AMERICA (IN UNITS)
136
Chapter: Exhibit 9: Comic Books Ordered by Comics Shops in North America (in units)
Formatted: Font color: Red Formatted: Heading 1, Add space between paragraphs of the same style

EXHIBIT 10: COMIC SALES (MONTHLY AVERAGE IN MILLIONS) FOR MARVEL AND DC COMICS (1950-1987)
137
Chapter: Exhibit 10: Comic Sales (monthly average in millions) for Marvel and DC Comics (1950-1987)
Formatted: Font color: Red Formatted: Heading 1, Add space between paragraphs of the same style
Source: Enter the Story
138
Chapter: Exhibit 10: Comic Sales (monthly average in millions) for Marvel and DC Comics (1950-1987)
Formatted: Centered

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Strategy and Competitive Advantage

Chapter: Executive Summary

THE EARLY YEARS: 1939-1950

Chapter: The Early Years: 1939-1950

SUPPLIER POWER: LOW

Chapter: The Early Years: 1939-1950

BUYER POWER: HIGH

BARRIERS TO ENTRY: I NTERMEDI ATE BUT INCRE ASING

Chapter: The Early Years: 1939-1950

INDUSTRY RIVALRY: LOW BUT INCRE ASING

THRE AT OF SUBSTITUTES: LOW

Ibid., p. 187. Ibid., p. 187 Ibid., p. 213

STRATEGIC DECISION M AKING

ARTISTS AND CRE ATIVE PROCESSES

Ibid Jones, Oc.Cit.,P. 170

REL ATIONSHIP WITH DI STRIBUTORS AND RETAI L OUTLETS

CBW Comic Book Story, The Silver Era: 1956-1969,Comicbookwebsites.com.

CRE ATI VE BOOM (1957-1968)

Chapter: The Silver Age: 1950-1968

Chapter: The Silver Age: 1950-1968

SUPPLIER POWER: LOW BUT INCRE ASING

BUYER POWER: HIGH BUT DECRE ASING

Chapter: The Silver Age: 1950-1968

BARRIERS TO ENTRY: INTERMEDI ATE

THRE AT OF SUBSTITUTES: LOW

Chapter: The Silver Age: 1950-1968

STRATEGIC DECISION M AKING

ARTISTS AND CRE ATIVE PROCESSES

REL ATIONSHIP WITH DI STRIBUTORS AND RETAI L OUTLETS

Chapter: The Silver Age: 1950-1968

STRATEGIC DECISION M AKING

ARTISTS AND CRE ATIVE PROCESSES

REL ATIONSHIP WITH DI STRIBUTORS AND RETAI L OUTLETS

MARKETING AND FAN-B ASE DEVELOPMENT

THE BRONZE AGE 1970-1989

Chicago Review Press.

BUYER POWER: LOW

Chapter: The Bronze Age 1970-1989

BARRIERS TO ENTRY: LOW

THRE AT OF SUBSTITUTES: LOW BUT GROWING

STRATEGIC DECISION M AKING

Ibid Raviv, Op.cit, P. 33

Chapter: The Bronze Age 1970-1989

Cadence executives made the business decisions now that they

ARTISTS AND CRE ATIVE PROCESSES

Chapter: The Bronze Age 1970-1989

REL ATIONSHIP WITH DI STRIBUTORS AND RETAI L OUTLETS

MARKETING AND FAN-B ASE DEVELOPMENT

LICENSING AND ALTERNATI VE MEDI A

Chapter: The Bronze Age 1970-1989

THE PERELMAN YEARS: 1989-1998 COMICS INDUSTRY BOOM

Chapter: The Perelman Years: 1989-1998

COMICS INDUSTRY DECLINE

Raviv, Op.Cit., P. 71 Elberse,, Op.Cit., P. 3

Chapter: The Perelman Years: 1989-1998

BUTCHER & SINGER, INC.

SUPPLIER POWER: HIGH

Raviv, Op.Cit., ppP.37

Chapter: The Perelman Years: 1989-1998

BUYER POWER: LOW BUT GROWING

Raviv, Op.Cit.,, ppP. 67-68

superheroes, September 29, 1996