Marvel Entertainment Inc sees its international business as its biggest driver over the next five years, with rapid growth expected particularly in India and China, a top executive said.
The media company, which started making its own films last year with “Iron Man” and “The Incredible Hulk,” said on Tuesday it had set up an international advisory board as it plans to capitalize on the global visibility its films are bringing to its characters.
With the board, Marvel aims to decentralize its international expansion, work with local business leaders and establish operations in markets outside the United States.
“If you look five years into the future, China and India, because of the population mass, are the ones that (lend themselves) to the fastest growth,” said Simon Philips, president, worldwide consumer products, from London.
Marvel realizes in order to grow locally, it needs to set up initiatives that will work locally, Philips said.
“This is something that is part of a long-term strategy to make sure we have the best foundations in every market,” Philips told Reuters in an interview.
The global push will diversify its revenue and make Marvel more profitable as its fixed costs will remain relatively the same, Wedbush Morgan Securities analyst Michael Pachter said.
Its international business could account for about 50% of its revenue over the next three to four years depending on the success of its film business, said Pachter, who noted the segment currently forms about 35% of its business.
“Iron Man” - Marvel's first self-produced film, which was distributed by Viacom's Paramount Pictures and had the second-biggest non-sequel box office opening in history - got more than half its box-office revenue from international markets.
“So that (international revenue) is going to be a gigantic piece of the business,” Pachter said.
But Pachter also had some doubts about how well Marvel's characters will be accepted outside the United States.
“It's hard, culturally, to say that Spider-Man is ever going to sell in China. I don't know.” Spider-Man, whose theatrical rights has been licensed to Sony Pictures, is Marvel's most popular character.
As it ships its characters across the seas, New York-based Marvel is adding a dash of local flavor to its characters, which it hopes might address such acceptance-related concerns.
Its partner, Japanese animation studio Madhouse Ltd, is recreating the Marvel universe for the Japanese market with new names, story lines and looks. Japan is another key growth market for Marvel.
Madhouse is in the process of making 48 episodes of Marvel anime, due to premiere in Japan in 2010.
“That is our test,” Marvel's Philips said. “We're watching this closely to see how it works.”
Philips did not say whether Marvel has plans to localize its characters in India or China. “We are not yet ready to comment on other character localization plans,” he said. “However, we anticipate making some announcements in the coming months.”
Films have been the fastest way to introduce Marvel characters outside the United States. Also, the company expects revenue from its international segment to get a leg up with two self-made films scheduled for release both in 2010 and 2011.
“These movies provide us a tremendous awareness driver that in turn enables us to develop lots of local initiatives,” Philips said.
Spearheading the company's attempt to tap talent and expertise in markets outside the United States will be its international advisory board, chaired by James Halpin, a Marvel director since March 1995 and former chief executive of CompUSA Inc.
“We've established this board primarily because it is a reflection of our growth internationally,” Philips said.
The company named Peter Yip, CEO of China's CDC Corp, and Bollywood film producer Manmohan Shetty, former chairman of Adlabs Films Ltd, to the board, highlighting the importance Marvel attaches to China and India.
“They are both significant growth markets for the company and we are putting a considerable amount of attention into expanding our presence and business opportunities in those regions,” Philips said.
Marvel plans to name members representing the Europe, Middle East and Africa and Latin American regions, Philips said. (Reuters)