You might not know it, but on December 27th 1996 Marvel filed for bankruptcy. It had creditors lined up out the door and had fired over a third of their staff. If you had bought Marvel shares three years earlier, they would be worth $35.75, just three years later they had sunk to $2.37.
What led to bankruptcy was the collapse of the comic book market. Comic book collecting became a false economy and by the end of the 90s, people realised comic books weren’t going to be long-term, high value investments, but simply … comic books.
Marvel tried to turn it around with Marvel Mania, theme restaurants that ended with only one location being opened (and then being closed less than a year later). They introduced trading cards and interactive CD-ROMs that went nowhere
They did have some small success with licensing their characters and stories to movie studios. Marvel seemed to lack business savvy though, their first movie (Blade) grossed $70 million but made Marvel $25,000.
For X-Men, Marvel made nothing due to how they negotiated the contract.
The Marvel cinematic universe was heading towards a black hole…
Like any good superhero story, salvation was on the horizon in the form of talent agent David Maisel. Maisel pitched what may seem like a pretty obvious idea – instead of licensing films to other studios, why not bring them in-house?
Keep the profit and have full creative vision and control.
Marvel was hesitant to pull the trigger and bring production in house. Like Netflix CEO, Reed Hastings, Maisel made the argument that Marvel wasn’t successful with what they were currently doing, so why not take a risk? They had nothing to lose.
After three years of umming and ahhing, the Marvel board decided to take the plunge and approve Maisel’s idea. They made a deal with Merrill Lynch, received $525 million in funding and began work on their first film.
It wasn’t quite as simple as that though, to get the cash they had to put up some serious collateral. Marvel ended up putting 10 properties on the line including The Avengers, Black Panther and Captain America.
If Marvel failed in the movie business, they would also fail as a business.
But, as you well know, they didn’t fail. The first Marvel Studios film was Iron Man, which grossed over 500 million dollars in sales and re-launched the Marvel Universe. Avengers Endgame (the most recent Marvel movie) is the highest grossing movie of all time.
Lucky, they listened to David Maisel.
What you can take-away from Marvel:
1) Outsourcing can be cheaper and easier, but sometimes it’s better to take back control and do it in-house.
2) You can fail either way, at least do it while trying something new.
3) Sometimes taking the biggest risk, makes you put the biggest effort in as you know just how much is on the line.