Ask 10 comic book fans whether they prefer Disney's (NYSE:DIS) Marvel or Time Warner's (NYSE:TWX) DC Comics, and you're likely to get an even split. The business case isn't nearly as subjective, and it heavily favors Marvel -- though probably not for the reason you think.
In Batman vs. The Avengers, the Dark Knight wins
Were you to look no further than box office grosses, 2012's Marvel's The Avengers would rank as the most impressive comic book adaptation of all time. Only Iron Man 3 and its $1.22 billion worldwide haul gets within $300 million of The Avengers. DC's top earner, The Dark Knight Rises, tops out at just over $1.08 billion.
Marvel wins, right? Not so fast. Profits matter more than box office revenue, and on that score, 1987's Batman outperforms The Avengers by more than eight percentage points:
|Best-Performing DC Movies||Box Office Profit Margin %||Best-Performing Marvel Movies||Box Office Profit Margin %|
|Batman||38.66%||Marvel's The Avengers||30.24%|
|Superman||25.58%||Iron Man 3||27.37%|
|The Dark Knight||24.12%||Spider-Man||24.44%|
|The Dark Knight Rises||20.02%||Guardians of the Galaxy||20.29%|
|Batman Forever||10.48%||Captain America: The Winter Soldier||17.12%|
What's more, the top DC movies tend to perform comparably to their Marvel counterparts. The difference is in diversity. Batman and Superman account for all five of DC's top performers, while Marvel gets big numbers from three different franchises (i.e., Avengers-related films, Spider-Man, and the space-faring Guardians of the Galaxy).
Losing worse than The Losers
Marvel's box office losses are also less painful. Only one of its projects -- Punisher: War Zone, produced by Lions Gate Entertainment (NYSE:LGF.A) -- has suffered a triple-digit loss on a percentage basis. DC can't make the same claim:
|Worst-Performing DC Movies||Box Office Profit Margin %||Worst-Performing Marvel Movies||Box Office Margin %|
|Steel||(1196.66%)||Punisher: War Zone||(494.55%)|
|Supergirl||(275.96%)||Howard the Duck||(79.95%)|
|The Losers||(137.20%)||The Punisher||(54.20%)|
Beyond the box office
I'll grant that comparing these two businesses solely on the basis of how they perform at the box office isn't fair.
On TV, DC has made impressive inroads with Arrow and The Flash. In publishing, Marvel leads the market some months while DC leads in others. In animation, DC has a long history of producing successful films and TV adaptations. And in video games, DC's various Arkham titles have set the standard for comic book-inspired fare.
So why lean on movie data? Because movies are distributed worldwide, tapping into the zeitgeist like no other medium. Box office data tells us that moviegoers are much more willing to go along with Marvel's oddball bets, which speaks well for the long-term health of this segment of Disney's business.
Optionality: a problem too big for The World's Finest
Merchandising data doesn't yet corroborate what we're seeing at the box office, but it's getting close. According to The Hollywood Reporter and data from the Licensing Letter, items using the Avengers imprint accounted for $325 million in 2013 retail sales versus $277 million for Superman. Spider-Man beat all comers at $1.3 billion while Batman accounted for $494 million. Newer Marvel movie properties are translating well across media as DC continues to rely on its "World's Finest" combo of Batman and Superman.
Don't expect that to last for much longer. There's a reason Warner's long-term plan for DC movies doesn't include new Batman and Superman solo films; optionality matters more at this point. Successful projects based on Aquaman, Cyborg, Green Lantern, The Flash, and of course Wonder Woman could unleash never-before-realized profit streams for Warner and its investors.
Marvel may be the better business right now, but DC is doing exactly what it should to even the playing field. Think I'm wrong? Have a different take? Leave your thoughts in the comments box below.