"Iron Man" Makes War on Mediocre Films, Mediocre Profits

Iron Man isn't a soldier. He's an army.

Marvel Entertainment (NYSE: MVL  ) scored big with the first movie released under the company's own production label, pulling in an estimated $104 million domestically and $201 million in worldwide box office receipts. Shellhead has already covered the reported $140 million production budget and ensured himself a sequel or two. And that's just during the first week in theaters for this movie critics' favorite.

Fellow Fool Tim Beyers has explained in great detail how the financial structure of the in-house production deal works out for Marvel. Iron Man is already being compared to Spider-Man in terms of the franchise potential, which means that Marvel could reap $200 million or more in plain profits from this first installment alone.

That estimate includes DVD sales, revenue-sharing rental fees from the likes of Netflix (Nasdaq: NFLX  ) and Blockbuster (NYSE: BBI  ) , distribution fees to Viacom's (NYSE: VIA  ) Paramount Pictures, and a host of other pros and cons.

This is a great example of filmmaking done right. Start with an iconic American hero -- and Tony Stark is about as red, white, and blue as it gets -- and put him in the hands of top-notch movie talents like Robert Downey Jr. and Jon Favreau.

Let them work without the "death by committee" strangulation of a cautious production house that doesn't fully understand what the movie is about (though in all fairness, Sony's (NYSE: SNE  ) Columbia Pictures did give Sam Raimi a slack leash on the Spider-Man films), and you're more likely to end up with hits like Spidey or Iron Man than relative duds such as Elektra or The Punisher.

The Golden Avenger has struck a massive blow for his creators, giving immediate credence to Marvel's strategy and sending the share price up by more than 7% on Monday. Now it's up to a self-produced version of The Incredible Hulk and a Punisher sequel to keep the good times rolling. My bet is that they will do just fine under Marvel's kinder, gentler machine-gun hand.

Further Foolishness:

Netflix and Marvel Entertainment areMotley Fool Stock Advisor recommendations. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Anders Bylund owns shares in Marvel and Netflix, but holds no other position in any of the companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure could use a new suit of flying, fire-throwing armor.


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