The Wall Street Journal - ‘Spider-Man:’ A $175 Million Commercial for Disney Toys
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June 30, 2017. Ben Fritz.
In a new partnership, Sony keeps Spider-Man movie profits, Disney sells the merchandise.
“Spider-Man: Homecoming” brings two of Hollywood’s biggest competitors together in an unprecedented partnership that one company hopes will revive its movie business and the other sees serving as a two-hour promotion for its toys.
Sony Pictures Entertainment paid for the $175 million production of the movie, including the writing, shooting, and editing, but the entire process was managed by Walt Disney Co.’s DIS 0.51% Marvel Studios.
Sony will keep all of the profits “Homecoming” generates following its release on July 7. Disney controls all merchandise rights to the character and is betting that a hit movie will have millions more Spider-Man toys and bed sheets flying off shelves.
“It’s an unusual thing for two companies that are so competitive, but it’s better for each to have a Spider-Man movie that really works,” said Amy Pascal, a producer of “Homecoming” and former head of Sony Corp.’s motion picture business who helped arrange the unlikely partnership.
The Spider-Man franchise has had dual masters since 1999, when Sony bought big-screen rights to the character from Marvel, then an independent company. The deal gave the comic-book publisher 5% of film revenue and called for the two companies to split revenue from related Spider-Man merchandise.
The first movie Sony made under the arrangement, 2002’s “Spider-Man,” was a massive hit, grossing $822 million world-wide, as were the 2004 and 2007 sequels. But ticket sales declined for a poorly received 2012 reboot, “The Amazing Spider-Man,” and its sequel, which grossed a weak $709 million in 2014.
In a 2011 renegotiation designed to resolve years of behind-the-scenes legal disputes and provide Sony with much-needed cash, the Japanese company gave up its share of merchandise rights while Marvel, Disney-owned by that time, agreed to forgo its 5% of film revenue and make a one-time payment of $175 million and pay up to $35 million for each future film.
Now that it kept all the profit from Spider-Man merchandise, Disney cared more deeply about that business, which declined as the movies lost momentum. U.S. toy sales of Spider-Man fell to $200 million for a 12-month period bracketing the release of “The Amazing Spider-Man 2” in 2014, from $385 million in the year around the release of 2004’s “Spider-Man 2,” according to NPD Group.
As Sony executives struggled with their next move for the character after “The Amazing Spider-Man 2,” Marvel lobbied to take back creative control. A team led by Marvel Studios President Kevin Feige that made the hits “Avengers” and “Guardians of the Galaxy” figured they could make a better movie, generating higher box-office and toy sales. Sony agreed in 2015, a little more than two months after a huge cyberhack revealed that talks were ongoing and after much internal debate, according to current and former employees.
No money changed hands under the deal. The only tweak to the prior arrangement was that in exchange for its producing services, Marvel gets to reduce the $35 million it would owe on “Homecoming” if the movie grosses more than $750 million, said people with knowledge of the arrangement.
“Homecoming,” which portrays Spider-Man as a high-school student and is meant to echo director John Hughes’s 1980s teen comedies, plays up the character’s inexperience and insecurity in comparison to the wealth and confidence of Avengers characters like Robert Downey Jr.’s Iron Man, who appears in the film.
“He sees the Marvel universe from the ground level, which is who he is in the comics but not something that we’ve seen in a movie before,” said Mr. Feige, who also is a producer.
Disney is hoping “Homecoming” audiences will skew younger than prior “Spider-Man” or Marvel films and provide a further jolt to toy sales, a person close to the company said.
Many fans are excited simply to see Spider-Man interact with other Marvel superheroes, as he has done in comic books since the 1960s but never before on the big screen because of the rights split between Sony and Disney..
Sony, which closely watched Marvel’s work on “Homecoming” and had final say on all decisions, is headed for its biggest hit in years, according to market research. It is in the midst of a prolonged box-office slump, ranking it last or second-to-last among Hollywood’s major studios for three straight years.
The studio is also planning to take advantage of “Homecoming” by launching its own related but distinct cinematic universe using its rights to more than 900 characters who have appeared in Spider-Man comics. In addition to an animated Spider-Man feature, it is working on “Venom,” an anti-hero who will be played by Tom Hardy, for release next year and “Black Cat and Sable,” about a pair of super-heroines.
Sony hopes its comic-book movies will stand out from those made by Marvel, as the two companies will be competitors if also business partners.
“They won’t be like any Spider-Man movie or Marvel movie that has been made before,” said Sanford Panitch, president of Sony’s Columbia Pictures label.
Marvel and Sony have the right to terminate their cooperation on Spider-Man movies at any point, but for now have no plans to do so. The web slinger will make brief appearances in a pair of coming “Avengers” sequels and Marvel is already developing a sequel to “Homecoming,” which Sony will pay to make with its release scheduled for the summer of 2019.
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