"Iron Man" Rakes In the Gold

Marvel released Iron Man to wide acclaim and a $98 million opening weekend. Before the armored hero packed away his metal vestments, the movie had grossed $585 million worldwide -- and I'm not even counting DVD sales or on-demand rentals.

So the sequel is a very big deal to Marvel's new owner, Walt Disney (NYSE: DIS  ) . Due to a legacy distribution deal signed before Marvel had a big, rich, and mouse-eared sugar daddy of its own, Viacom (NYSE: VIA  ) subsidiary Paramount Pictures stands to collect 8% of box office sales -- the rest belongs to Disney. The opening weekend for Iron Man 2 is expected to collect as much as 50% more than the original, thanks to improved brand awareness and the growing star power of Robert Downey Jr, who plays Iron Man himself.

Jumping to conclusions from previous successes and wild guesses is always a tricky business, but I dare say that Iron Man 2 will work out very nicely for the studio. The international launch last week already pulled in $100 million in box office receipts, and the movie is a lock to make its $170 million budget back -- with interest -- very, very swiftly. The rest, as they say, is just gravy for Disney shareholders like myself.

What's even better is that the franchise is walking on muscular legs. Unlike Avatar, which makes the accountants at News Corp. (NYSE: NWS  ) studio 20th Century Fox very happy, the Iron Man franchise is built on strong characters and quality storytelling. Avatar is a technical tour de force but lacking in true creativity. Hence, Iron Man 2 is set to make lots of money without the 3-D gimmickry that propelled Avatar ticket prices to unheard-of levels. The movie still looks great, and I expect it to serve IMAX (Nasdaq: IMAX  ) very well, too, but you don't need overly fancy and expensive visuals when you have good actors telling a great story -- and that's what Marvel is presenting, here.

The Marvel juggernaut continues to rock and roll, setting the stage for another Iron Man blockbuster in 2012 and a plethora of related Marvel hits elsewhere. This was $4 billion well spent for Disney, as Marvel is establishing itself as a hit-making machine -- the Pixar of live-action movies. IMAX is happy to ride Marvel's coattails, along with future heirs of the entertainment dollar like Netflix and Coinstar's RedBox.

Fool contributor Anders Bylund owns shares in Netflix and Disney, but he holds no other position in any of the companies discussed here. Walt Disney is a Motley Fool Inside Value selection. IMAX is a Motley Fool Rule Breakers pick. Walt Disney and Netflix are Motley Fool Stock Advisor recommendations. Try any of our Foolish newsletters today, free for 30 days. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.


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  • Report this Comment On May 14, 2010, at 7:44 PM, Glycomix wrote:

    When David Gardiner recommended Disney and Marvel around a year ago, their stock price doubled within a few weeks. That's mesmerizing!

    Yet... without knowing the guru's 'hot tip', I'd like to get information that would to allow me to make better decisions about investing in a company.

    Would Motley Fool writers do a wonderful job considering that they only have 4 paragraphs to make their point.

    However, Disney is a huge, diversified company: movies, television, parks, and more. It's one of the few venues that laudably develops its child-actors.

    I'm STILL wondering about context:

    - What percentage of the company is this sector that has blown past the competition?

    - Are there any sluggish parts of the company that isn't doing well that could drag down overall performance?

    If there are more sluggish parts, like their park's performance, are the less-stellar poritions just "good" instead of "outstanding" or are they a sea-anchor that negates all of the good that their all-stars and could drown the company?

    It would be helpful to this investor if the Fool Administration would ...

    A) break a diversified company like Disney down by competitive sector

    B) give the average investor following the experts here the free cash flow of each section, and

    C) compare the company's profits by product with their competition in both their domestic and export markets

    I would most like a combination of pithy, succinct explanation combined with tables and graphs to back up the judgments expressed with convincing data.

    Justice Ginsberg once said, "it's not too difficult to write clearly about a decision; it's really takes a lot of thought to summairze your opinion in one or two paragraphs."

    Fool On!

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