The Key Question for Sony: Can the Spider-Man Movie Franchise Be as Profitable as The Avengers?

A plan to bring viewers a new Spider-Man movie has merit, but it’s also late in coming.

Mar 16, 2014 at 4:10AM

Sony (NYSE:SNE) wants to bring you a new Spider-Man movie every year. Walt Disney (NYSE:DIS) is already developing two new Marvel films a year, with at least one tied to its now-established Avengers franchise. Are Sony executives crazy to be thinking the Wall Crawler can draw so well as to merit the same theatrical treatment as Earth's Mightiest Heroes? Let's take a look at history.


Your friendly neighborhood Spider-Man returns to theaters on May 2. Source: Sony Pictures.

The story so far ...
Before we get to where we've been, let's talk about where we're headed. "We are expanding the Spider-Man universe into The Sinister Six and Venom, so that we have Spider-Man movies every year," Sony Pictures Entertainment co-chair Amy Pascal said in a recent interview with Variety.

How will the plan play out? Marc Webb will return to direct the next film in the series -- The Amazing Spider-Man 3, due on June 10, 2016 -- while Drew Goddard writes The Sinister Six and Alex Kurtzman, Roberto Orci, and Ed Solomon develop Venom.

At this point, it's unclear whether Webb will continue to plot Spidey's future beyond the next film. What we do know is that Sony has commissioned what it calls a "franchise brain trust" to continually develop the Spider-Man movie universe. The team includes Webb, Goddard, Kurtzman, Orci, Solomon, writer Jeff Pinkner, and producers Avi Arad and Matt Tolmach.

Why The Avengers is so special
They've a big hurdle to clear. Spider-Man movies are no longer the standard by which we judge the success of Marvel-branded films. The Avengers and Iron Man 3 changed that when they earned more than $1 billion each at the worldwide box office. Even so, the two franchises stack up well: 

Avg. Spider-Man Movie
Avg. Marvel Cinematic Universe Movie

Domestic gross

$343.96 million

$295.16 million

International gross

$468.14 million

$413.04 million

Production budget

$206.75 million

$171.25 million

Estimated box office break-even

$827.0 million

$685.0 million

Avg. box office gross profit



Sources: Box Office Mojo, TMF estimates.

While the overall earnings power of Marvel Studios is undeniable, it's important to note that outliers such as The Avengers are what makes its results so special. By contrast, all Spider-Man movies tend to draw well, and at a higher average gross -- $812.1 million worldwide versus $708.5 million worldwide.

By my estimates, sharply higher production costs have kept a lid on box office profits for recent Spider-Man movies. But that's also not as big a deal as it might seem. Hollywood makes most of its moola after films leave theaters. High-margin Blu-ray, DVD, and on-demand sales and rentals, as well as merchandising and TV and streaming distribution, usually account for most of the take-home. And in that respect, Spider-Man movies have been a huge winner for Sony over the years.

The Disney deal everyone forgets, but which you shouldn't
Today, the stakes are higher because Sony no longer gets a cut of merchandising tied to its Spider-Man movies. Why? A late 2011 deal in which Disney traded Marvel's producer fee for new Spider-Man movies for the exclusive right to profit from all merchandise with the Spidey imprint.

Practically, what this means is the Amazing Spider-Man franchise is no longer burdened by Sony having having to pay a hefty percentage of the theater gross to Marvel and Disney. But it also means less residual revenue for Sony Pictures, the company's third-largest source of operating profit in fiscal 2013.

Verdict = there's no choice but to bet big
"With great power comes great responsibility" is the phrase long associated with Peter Parker's transformation into the superhero we know as Spider-Man. Turns out the mantra applies just as much to Sony executives.

In striking a deal with Disney two-and-a-half years ago, Sony gave Pascal and the team at Sony Pictures greater power to earn from the Spider-Man movie franchise than they've ever had before. And with it: greater responsibility to fill theaters.

Thus, the question isn't whether Sony's franchise-building efforts with Spider-Man movies are smart or ill-considered. Rather, it's why didn't the studio act sooner?

The not-so-sinister six stocks that could help make you rich
Motley Fool co-founder David Gardner was one of the first to spot the Marvel opportunity nearly a decade ago, and he's been piling up remarkable stock gains ever since: 926%, 2,239%, and 4,317%, to name a few. One of his picks has even returned more than 100 times his buy-in price. Find out more about David's process in a new special report that includes six more of his picks poised for outrageous growth. Don't worry, it's free -- just click here now for your copy.

Spidey faces off against at least three villains in The Amazing Spider-Man 2. Sources: Sony Pictures, YouTube.

Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Walt Disney at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool recommends Walt Disney. The Motley Fool owns shares of Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information