Disney's $4-billion deal for Marvel Entertainment isn't simply an acquisition. It's a reinvention.
The future of Chairman Bob Iger's media conglomerate had been turning increasingly cloudy as family entertainment, especially in the movies, has evolved from old-fashioned, squeaky-clean Disney fare to the edgier, more unsettling PG-13 universe populated by Marvel's arsenal of comic superheroes.
But Monday's purchase gives Disney access to Marvel's voluminous library of superheroes, which include Spider-Man, Iron Man, the X-Men, Captain America, Thor and the Fantastic Four and about 4,995 other comic-book characters.
The Marvel deal, like the $7.4-billion 2006 pact Iger negotiated to bring Pixar into the Disney fold, is another sign that Disney's top brass realizes that the company's reign as an original creative engine for mass entertainment is over. Once an idea factory full of brilliant animators and imagineers, Disney is now a mass merchandising machine in search of exploitable product, whether it comes from Marvel, Pixar or DreamWorks, which will be releasing its upcoming slate through Disney as well.
The signals of Disney distress have all been visible for some time.
The Pixar deal was a frank admission that Disney's venerable animation factory had run out of gas. Not long after Disney bought Pixar, John Lasseter gave an especially revealing interview to Fortune magazine, where he told of Iger experiencing a remarkable epiphany when attending an opening-day parade at the ceremonial launch of Hong Kong Disneyland. As Lasseter recalled: "[Bob] was watching all the classic Disney characters go by, and it hit him that there was not one character that Disney had created in the past 10 years. Not one. All the new characters were invented by Pixar."
Iger clearly had a similar moment of brutal corporate clarity when he made an unusually frank admission to media analysts this year when attempting to explain why Disney had such an abysmal quarter with its theatrical releases when the other studios were enjoying near-record box-office returns. "It's about choice of films and the execution of the films that have been chosen for production," Iger confessed. "We've had a rough year. So in that case, it's not the marketplace. It's our slate."
While Pixar is now around to bolster the animation side of the business, the live-action end has been in the doldrums. In fact, since the studio's lucrative "Pirates of the Caribbean" series premiered in 2003, Disney hasn't been able to launch another broad-appeal international franchise. That would be a huge gaping wound for any studio but especially for Disney, which needs new mass appeal product to feed its real profit centers -- its merchandising division, theme parks and TV channel.
What went wrong? And can Disney fix it?
The studio's biggest failures in the past year showed Disney's inability to reach the new family audience that has supplanted Disney's traditional customers. Last Christmas, Disney thought it had a big winner with "Bedtime Stories," which attempted to broaden the studio's traditional family brand by marrying a kid-friendly concept to the young-male appeal of Adam Sandler. The studio tried a similar strategy recently with "G-Force," another kid-friendly film produced by Jerry Bruckheimer in a bid to connect Bruckheimer's broader-edged action brand to the traditional Disney animated audience.
Despite spending millions in TV advertising reaching out to the older-skewing (Disney-owned) ESPN sports audience, the movie failed to reach an older audience. As with "Bedtime Stories," Disney found itself unable to age up its films.
Iger goes to the movies, so he must have realized what was happening. The sweet-natured vibe of older Disney films is losing its appeal. In recent years, parents have become comfortable with a new, more intense level of violence and action. And, of course, it is Marvel more than any other film producer that has tapped into that new sensibility with its "Spider-Man," "Iron Man" and "X-Men" franchises.
"The real difference maker with Marvel," says one rival studio chief, "is that it makes movies where the parents are just as excited to see the film as their kids. That's the difference between a movie barely making $100 million -- like a lot of Disney's homegrown products -- and a movie making $300 or $400 million. It's a whole different playing field."
The purchase of Marvel allows Disney to broaden its brand.