3 Unanswered Questions About Warner’s Business Plan for DC Movies

Reading his interview with Brooks Barnes of The New York Times, it's clear Kevin Tsujihara has a lot going on as head of Warner Bros., Time Warner's (NYSE: TWX  )  TV and movie studio subsidiary.

For investors, it's a must-read that grants insight into how Tsujihara thinks about the business of entertainment. For example, he wants Warner to  be "setting the course" for the industry, even if that means pursuing hard-to-get properties -- such as new scripts from Harry Potter author J.K. Rowling.

Is a Justice League film still in fans' future? Credit: Warner Bros./DC Entertainment.

In many ways, it's a reassuring tale for Warner stockholders, in which Tsujihara comes off as an in-control executive with both hands on the wheel of a car that veers easily. Yet there's also a lot we still don't know, especially when it comes to his plan for cashing in on DC movies starring characters other than Batman and Superman. Here are three questions we wish Barnes had asked.

Leo Sun: Why isn't there a unified vision for the on-screen DC Universe?
Marvel's core strength comes from Walt Disney (NYSE: DIS  ) allowing Marvel Studios President Kevin Feige (who was with the company prior to the acquisition) to retain his visions for how the Marvel Cinematic Universe would come together. As a result, the Marvel assets that Disney owns are now cohesively connected between the films, ABC's Agents of S.H.I.E.L.D., and the comics. Film characters such as Phil Coulson travel across the entire spectrum, and events from the films resonate in the TV universe.

Meanwhile, the DC Universe is fragmented. No one (not even Arrow's producer) seems to know if Arrow and the new Flash show exist in the same universe as Man of Steel. Meanwhile, DC Comics are stuck in a cycle of reboots (Infinite Crisis, Final Crisis) without a clear sense of direction -- although the same can be said about Marvel's "All New Marvel NOW!" series of reboots and restarts, including a just-released Fantastic Four #1.

For his part, Tsujihara has acknowledged that these business segments (The CW, Warner Bros., and DC Comics) are stuck in three disconnected "fiefdoms," which is important because DC franchises matter a lot to Warner Bros. -- the Dark Knight trilogy grossed $2.5 billion at the box office and Man of Steel grossed $668 million worldwide. Dropping the ball with bombs like Green Lantern hurts, and might not have happened if DC's franchises were placed under a single business unit with a president who oversees the films, shows, and comics. Time Warner should split off the DC properties into a single unit, put some comic book talent from DC (such as Paul Dini or Mark Waid) in charge, then let them assume full creative control.

Unfortunately, Tsujihara believes in Zack Snyder instead -- a polarizing director who might not be the best choice to lay the foundations of a DC Cinematic Universe. Snyder's Man of Steel, after all, only earned a 56% rating from critics on Rotten Tomatoes, compared to 92% for Joss Whedon's The Avengers.

No box office team has ever proven so mighty as Earth's Mightiest Heroes. Credit: Marvel Entertainment.

Steve Symington: Is tackling Marvel head-on a bad idea?
Tsujihara's controlled demeanor is encouraging, but I can't help but wonder whether he could be overplaying his hand in trying to challenge Marvel too directly.

To be sure, the decision to launch Man of Steel 2 the same weekend as Captain America 3 makes it clear Tsujihara no longer wants Warner Bros.' DC movies to be playing second fiddle. But given Marvel's past performance and with such a large number of entertainment properties on Warner Bros.' massive plate, I'm concerned the numbers so far show that's a battle he shouldn't be fighting just yet.

On a broader scope, Disney's movie studios are a veritable model of efficiency; while the House of Mouse took second overall in the U.S. to Warner Bros. with $1.711 billion in gross receipts, its performance came with the help of just 17 films tracked during the year -- and only 10 of Disney's titles were actually released during calendar 2013.

On the other hand, Warner Bros.' impressive $1.863 billion domestic showing in 2013 was gathered from 34 movies tracked, of which 25 were released after Jan. 1. Perhaps a more focused approach to collecting box office receipts would serve Warner Bros. well.

Drilling down further, Marvel has already scored the world's top grossing movies in each of the past two years, including $1.215 billion from Iron Man 3 last summer and $1.519 billion from The Avengers in 2012. Meanwhile, The Dark Knight Rises arrived a distant third in 2012 with $1.084 billion, and Man of Steel only barely beat Marvel's Thor: The Dark World in 2013 for ninth place with a strong but comparatively modest gross of $668 million, especially when you consider that the newest Marvel movies seem to be earning that and much more on a regular basis.

I understand Tsujihara's desire to propel DC movies to the forefront. But fans already adore Marvel's cinematic franchises, and he's playing a dangerous game by voluntarily pitting them head-to-head. So what does DC need to do to make sure fans feel just as attached? Read on.

With Arrow, Warner is establishing a unique TV universe built around Stephen Amell's emerald archer. Credit: TheCW/DC Entertainment.

Tim Beyers: How will DC movies be different?
When it comes to DC movies, Warner's greatest strength is also its greatest weakness. Billions already know Batman and Superman. We also know Wonder Woman, Aquaman, The Flash, and Green Lantern. What we don't know? What makes a DC movie different.

Now ask yourself what makes a Marvel Studios movie. Chances are you rattled off a series of qualities: I'd guess epic, funny, and action-packed to name a few. Marvel films have a singular feel to them because they're interconnected. Call it the benefit of a using a small team to build a shared universe that, according to The-Numbers.com, has brought in more than $5.7 billion at box offices around the globe.

Warner hasn't given DC the greenlight to pursue this sort of strategy cinematically. Man of Steel doesn't feel anything like Christopher Nolan's Batman films. And yet we know Tsujihara isn't afraid to give creators the space to develop a shared universe with a distinct style. Look at the difference between Agents of S.H.I.E.L.D. and Arrow. The former tends to be grounded -- more NCIS than Heroes -- while the latter is unabashedly a comic book show developed by comic book fans.

There's no pretense. You're either along for the ride or you aren't, which is why if I had to guess, I'd say many of those who watch Arrow today will tune in for The Flash when the pilot airs later this year. Tsujihara has allowed the show's co-creators to define what it means to make a DC TV show, which, in turn, has attracted a minimum 2million-3 million vocal fans to Arrow each week.

The business lesson? Setting expectations and then paying off on those hopes can work wonders when it comes to building a franchise. Tsujihara's team at Warner and DC haven't yet defined the lens through which it hopes we view its DC movies. That needs to change, soon.

Now it's your turn to weigh in. What DC movie-related questions would you ask Kevin Tsujihara if you had the chance? Leave yours in the comments below, and be sure to also let us know whether you would buy, sell, or short Time Warner stock at current prices.

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