Hard-core gamers and denizens of video game discussion boards (I cop only to the latter) know that game characters can be as real as anything created by more traditional fantasy media like comic books and super hero movies. A lucky few digital do-gooders even cross over from the cartridge to the celluloid arts. (Think of Final Fantasy or gunslinger Lara Croft.) But for the most part, these characters remain stuck inside their own fantasy worlds, like super heroes glued to the page.
Yesterday, comic book publisher-turned licensing powerhouse MarvelEnterprises (NYSE:MVL) and No. 1 video game maker Electronic Arts (NASDAQ:ERTS) (both Motley Fool Stock Advisor recommendations) announced a deal that will bridge their two universes. The agreement licenses over 100 Marvel characters, including Spider-Man, to EA for use in a new generation of fighting games. In return, Marvel can utilize characters from EA for use in comics and other products.
Those familiar with the Marvel story know that its characters have appeared in lucrative movie tie-ins from Activision (NASDAQ:ATVI) (also a Motley Fool Stock Advisor recommendation) and Vivendi (NYSE:V). None of this will change, since the new EA agreement covers only fighting games, not the adventure genre spawned by films. (And it appears that Hulk and Punisher are not part of the new deal.)
Financial details were not released, but at first glance, this looks to be a win-win situation. EA will reap the benefit of Marvel's immensely popular characters. It's an even better deal for Marvel, because EA assumes the cost of making the games, while, as usual, Marvel sits back and cashes licensing checks.
I'm not so sure the checks will be huge from this deal, though. I suspect Marvel's real reward will be increased visibility of its characters. The firm's true potential as a cash generator relies on revenues from hundreds of product licenses -- like Hulk chocolate syrup or Spidey's mug on a bag of chips.
The EA deal, along with Marvel's recent acquisition of school products purveyor Cover Concepts, is clearly aimed at keeping Marvel's characters in the public eye between movies. That will not only provide increased licensing opportunities overall, but it should help dispel the myth that Marvel's future revenues depend only on successive cinema blockbusters.
David Gardner has recommended Marvel, Electronic Arts, and Activision for Motley Fool Stock Advisor. Since the inaugural April 2002 issue, David's total average return is 68.53% versus the S&P 500's 18.16%.
Seth Jayson owns shares of Marvel. Reach him via email.
