Whose License is it Anyway?

super hero

A good superhero movie in the Hollywood can command an average budget of anywhere between 100 Million and 250 million. This isn’t surprising because the comic book universe of over 8000 characters is supported by a loyal fan base.

Fans swear by one of the two main universes where heroes ensure justice prevails, the Marvel universe and the DC universe. Needless to say, we can all agree that the Justice League, the DC comics superheroes, and the X-men, the Marvel comics superheroes, will never cross paths. But what about the X-men and the Avenger? They both belong to the Marvel family; can’t we get excited to watch their epic battle? And what about Spiderman, yet another Marvel Veteran? He did make a cameo in the latest Captain America: Civil War movie, can’t we get excited to see all our favorite heroes sharing the same screen?

The answer would be a dubious no!

In the time of high budget movies and CGI animation, it is easy to forget that unlike the DC franchise, Marvel is a very young player in Hollywood. It wasn’t until 2008 that Marvel came out with its first ever movie, the Iron Man. Even then, they did not have their own production house. It was in 2009 when Disney acquired Marvel Enterprise, that the Marvel heroes finally got a home in Hollywood. However, this has created more problems for Marvel than it has solved.

Unlike the DC franchise, the Marvel has been inconsistent with licensing its characters. Marvel itself holds rights over only a few of its mainstream superheroes, though this wasn’t a big problem until 2008 when Marvel entered the film industry. Prior to this, they essentially generated revenue through comic books, merchandising and licensing.

This wasn’t the problem that DC ever faced. On the contrary, DC being a subsidiary of Warner Bros., had been consistently churning out superhero movies. Although they were generating profits in entertainment and merchandising sectors, they were bleeding cash in their comic books division.

This problem peaked in the 80s when Marvel was dominating the superhero market with their steady production of quality comic books. At this time, the unthinkable was proposed. DC offered Marvel to take over their comic books while DC continues to generate money through commercializing the characters. This deal did not go through due to other management reasons. DC reinvented themselves by issuing new comic series of its most popular heroes.

This failed deal turned out to be a blessing. DC, owned by Warner Bros., launched multiple successful superhero franchises and haven’t looked back since. Ironically, only a few years after this deal failed, Marvel dwindled towards bankruptcy.

Through the late 80s to mid-90s, the infamous speculative boom rocked the comic book market. Though significant, this event was not unexpected. The speculators identified the market correctly but did not understand it fully. As comic books were initially introduced in early 30s, they were available readily and catered to large audience. However, over time, their appeal decreased in number but increased in fervor. Their fanbase, often known for their almost cult like loyalty to their fandom, was correctly identified for its economic potential. However, identifying the commercial value in a creative industry can be a tricky affair. A dedicated fan base does guarantee a reliable income, but leaves little room for modifying the content. When the speculation rose that comic books would hold monetary value in future, the production of substandard works also increased. People began hoarding the comic books and the real audience were lost in the crowd. This resulted in rise in sales of comics, creating an illusion of rise in demand.

However, the speculators failed to address the ease of production and supply of the comic books. Plagiarism and piracy, were the least of their worries at that time.  Even before the age of internet, investment in rare comics was questionable at best. The speculation bubble bloomed by uncontrolled production “special editions” with ostentatious covers which were sworn to be a sound financial investment. These comics accumulated within the market and had little to no resale value. It did not even have a resale market. Marvel, which held majority stakes in this industry suffered the worst of financial blows.

This triggered the intricate web of licenses and cross licenses in 1994 when the then Marvel Entertainment Group had to file for Chapter 11 bankruptcy protection. To ensure survival, they were forced to take drastic measures. Putting up rights to some franchise as collateral while selling copyright bundles over various superhero franchise to different media houses. Avengers, Captain America Black Panther, among others were put up as collateral, which Marvel Enterprise ultimately earned back. Spider Man was sold to Sony and X-Men and Fantastic Four went to Fox Studios. Both Sony and Fox Studios launched their superheroes into cinematic world and started encashing millions by the early 2000s with movies like Spider Man, X-Men, Fantastic Four and Daredevil. Marvel too picked up slack with Iron Man, which was an unexpected hit, and restored their rights over Avengers, Captain America and Black Panther. In 2009, Marvel was acquired by The Walt Disney Company.

Today, Marvel has the resources and the budget to generate good movies, but they no longer hold the rights to some of their most famous characters. Marvel has begun entering cross licenses with its original licensees to gain the right to use its own superheroes in their movies. This has limited the audience’s access to their heroes. Long negotiations and unprofitable licensing agreements now govern which character will meet which one. It wasn’t until very recently that Sony decided to enter into a shared agreement with Marvel over Spider Man, and that is when the audience got a glimpse of Spider Man casting his web in Captain America: Civil War.

Another complication is with characters like Quicksilver and Scarlet Witch which are owned by both Marvel and Fox. This is because the Disney and Fox have shared agreements over these characters. These two characters are children of Magneto, who is in the X-Men owned by Fox. But they have been fighting with the Avengers, which is owned by Marvel. Therefore, both Marvel and Fox are using these two characters, but are not allowed to make any reference to each other’s franchise while including them in their own movies.

Although an exciting event for the fans, this does cast a shadow of doubt over Marvel’s future in Hollywood. Likely, Marvel regrets licensing the rights to most of its comic book stars. What may be a greater cause for concern for them is that their license agreements with Sony and Fox contains a clause which ensures that the agreement will be terminated when Sony or Fox fails to use the licensed characters. Gauging by the phenomenal success of Spider Man and X-Men series, it seems that it will be a distant future when Marvel will be able to get its hands on these heroes. It is also interesting to see what strategy Disney uses cash in the dollars while the success of superhero movies persists. Disney invested $4 Billion to acquire Marvel, but how much of it was worth if Disney is ultimately going to get entangled in figuring out the intricate licensing agreements and long, frustrating negotiations to use a single character?

Isha Dave graduated with an integrated degree from Gujarat National Law University, India in 2016, with honors. She earned her LL.M with certificate in Law and Technology from U.C. Berkeley.   In addition, Isha is a sports enthusiast and has led her college soccer team through multiple state tournaments between 2014-16. She is an avid reader and loves collecting rare editions of her favorite novels.

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Isha Dave graduated with an integrated degree from Gujarat National Law University, India in 2016, with honors. She earned her LL.M with certificate in Law and Technology from U.C. Berkeley. In addition, Isha is a sports enthusiast and has led her college soccer team through multiple state tournaments between 2014-16. She is an avid reader and loves collecting rare editions of her favorite novels.