How Marvel Studios Became a $54 Billion Franchise and the Most Valuable IP in Movie History

It would have been laughable to think, back in the 1980s, that Marvel Comics would ever become a major player in the movie industry — even with the rising popularity of DC Comics’ movie properties Superman and Batman jumping to the Silver Screen in the ’70s and ’80s. Back then, Marvel Comics wasn’t exactly a movie-making powerhouse, with their only licensing efforts by then being the black-and-white Captain America serials in 1944, then, four decades later, selling the Red Sonja comic for a 1985 film that spun off Conan the Barbarian. Stan Lee had moved to Los Angeles in the early-80s, hoping to develop Marvel’s TV and movie properties, but some early disasters like Howard the Duck made Marvel’s movie prospects seem grim, at best.

In the late ’90s, Lee founded Stan Lee Media, an internet-based marketing studio for his comic book characters, with a money partner named Peter Paul. Paul was a millionaire financier who turned out to be involved in several shady business dealings, and by the end of 2000, investigators discovered illegal stock manipulation by Paul and corporate officer Stephan Gordon at Lee Media. Stan Lee Media filed for Chapter 11 bankruptcy protection, and the outlook for the creation of a Marvel film studio had never looked worse, at least from Stan Lee’s end (Lee had, nonetheless, been smart enough to ink crucial contracts to secure his IP in the ’80s).

After Nearly Getting Sunk by Bankruptcy, Marvel Plots a Course Towards Iron Man

Marvel Comics, even during Lee’s quasi-rule in absentia (he remained Chairman Emeritus), had grown all the wiser in the movie market. Only eight years after Lee’s bankruptcy filing, the fledgling Marvel Studio’s fortunes changed dramatically with the release of Iron Man — which became a major success and set the Marvel Cinematic Universe on a path toward becoming the most valuable intellectual property in the movie business in the 2010s (discounting multimedia properties like Pokémon and Mickey Mouse & Friends).

Earlier, in the 2000s, Stan Lee had become merely a figurehead at Marvel, still maintaining a role on the board, with a hefty annual salary and creative input — but Lee was essentially being phased out of the day-to-day operations of the company. The successful 1998 release of Blade, a Marvel character created in the 1970s, had proven to Marvel execs that the development of their own studio could be a profitable venture, and respecting Stan Lee’s legacy would prove to be the gateway.

They didn’t yet have the physical framework in place in the ’90s, however, and ceded much of Blade‘s substantial profits to New World Pictures — who had licensed the IP. While DC’s box-office stock had cooled considerably, thanks to diminishing returns in the Batman franchise (remember the Clooney nipples?), Marvel still felt that their IP had tremendous potential for profit beyond the flat-topped, R-rated badasses like Blade or another profit-diversified Spider-Man movie.

Blade Was Much More Responsible for the MCU Than You Think

One crucial success in the development of Marvel movies was that of the Blade franchise. While Marvel Comics sold the rights to the film to New World Pictures before the development of a Marvel studio, its success was a key cog in proving the bankability of Marvel properties in film. It was also a missed opportunity, as Marvel shared only a flat fee of $25,000(!) for the film’s success. Marvel Comics wouldn’t make such a dramatic licensing mistake again. The next link in Marvel’s chain to success came with Spider-Man. The year after Blade‘s release, Sony Pictures bought the IP for Spider-Man from Marvel for the much more substantial sum of $7 million. Though the property was undervalued by Marvel, nobody had predicted that Hollywood was heading into a superhero-driven market.

Spider-Man‘s subsequent success was another writing-on-the-wall moment for Marvel Comics. While they had earned a tidy profit from the film, they had yet again under-sold a significant movie property. By 2005, Marvel Entertainment, the precursor to the MCU, was planning to now produce their own films independently and distribute them under Paramount Pictures. Avi Arad, then head of Marvel Entertainment, made the decision to form Marvel’s own independent studio (the first economically significant studio founded since Steven Spielberg and Jeffrey Katzenberg’s DreamWorks launch in 1994).

Arad then began to fund the new IP powerhouse. Marvel borrowed over $500 million from Merrill Lynch, initially planning a superhero crossover film — like Avengers: Endgame eventually became — though that was much later. The timing wasn’t right for a superhero renaissance in 2005, but Marvel honcho Kevin Feige’s long-game economics would prove to be not only patient — but industry-disrupting.

Kevin Feige’s Marvel Takeover Made Downey Jr. the Man

Arad’s second-in-command in the mid-2000s, Kevin Feige, eventually took over the Marvel studio in 2007, renaming it the Marvel Cinematic Universe, with plenty of intent — as the re-brand was part of a long-term marketing campaign. Various scripts for an Iron Man film had bounced around Hollywood in the ’90s, and Feige hired Jon Favreau early in 2006 to helm a new Iron Man movie. This would come to be known as Phase One of the MCU’s feature-film rollout. The project faced major issues, however, and the comic book IP wasn’t a proven commodity. For one thing, Favreau was dead set on Robert Downey Jr. playing Tony Stark in the film. Downey Jr. had faced substance abuse issues, ill-repute splashed across the trades and tabloids — even some jail time in the previous decade, and Feige was understandably skeptical of the actor despite Favreau’s unwavering support.

Another major hurdle was the lack of a working Iron Man script. Favreau essentially planned production by worrying about the film’s CGI set pieces first and allowing the cast to improvise much of the film’s dialogue by shooting these moments around carefully choreographed, action-packed, and very visual scenes. The script was mostly written as they shot the movie, and Favreau sold Downey Jr.’s talent to the studio based on Downey’s improv superpowers and the actor’s own life — which sort of doubled Tony Stark’s duality. “It was my job as a director to show that it was the best choice creatively,” Favreau explained, “and everybody knew [Downey] was talented… and certainly by studying the Iron Man role and developing that script I realized that the character seemed to line-up with Robert in all the good and bad ways.”

Iron Man Changed Movies for the Following Two Decades

All the studio’s fears were assuaged upon the film’s release in 2008, with Iron Man earning $585 million and launching Phase One of the MCU into the stratosphere. Downey demonstrated to the MCU executives a new approach that was highly profit-conscious — using big stars in superhero roles rather than launching new major film franchises around arguably B-list actors like Tobey Maguire and Wesley Snipes. That formula worked for Blade and Spider-Man, but Marvel could ill-afford even a single major flop at the time, so debt-leveraged was the entertainment company.

Even Terrence Howard’s casting as War Machine was of-the-moment in 2008, after the success of Hustle & Flow during the film festival/awards show season the year prior. Included in the Phase One rollout were new films like Thor, Captain America: The First Avenger, and two more Iron Man films. Most would at least double their budget, validating Feige and Arad’s over-funding approach. The culmination came in 2019, as the MCU’s decade-long plan for combining superheroes into an ensemble film resulted in Avengers: Endgame — to that date, the highest-grossing film ever made (before Avatar took its mantle away).

Avengers: Endgame Rewrote Hollywood Economics

By 2019, Feige and Arad had built the Marvel Cinematic Universe into the highest-grossing movie franchise in the world, with total box office revenue north of $28 billion, and according to Marca, the franchise itself is roughly estimated to be worth $54 billion. While Feige had successfully played the long game by using Marvel’s total ownership of The Avengers IP to strategic perfection — heavy lay the HollyWeird crown — and maintaining the MCU’s utmost dominance, since then, has proven difficult. Phase Two had big problems producing the same box-office numbers as the initial rollout (yes, Phase Three essentially restored the order). But remember, despite years of adversity — the MCU’s biggest early economic breakthrough was Iron Man, which was released during the global economic crash in 2008. The company usually flourishes during times of economic adversity, just as theatrical films usually do, en masse.

Much of the Marvel Cinematic Universe’s quantum leaps came during two major moments of Hollywood economic turmoil. The sea change produced by the pandemic of 2020 again proved to be an opportunity for the MCU — re-focusing on streaming and getting ahead of straight-ahead superhero films’ streaming market correction by ‘true crime’ series and the super-saturation of online content during COVID. These new streaming platforms didn’t have the same budgetary requirements as Marvel films and, therefore, greater profit potential. Also, Marvel couldn’t even shoot planned projects at some of the company’s most fateful moments in the early 2020s.

Marvel Fell From the Top but Remains a Preeminent Property

The COVID-19 pandemic changed streaming, full stop. Because Marvel films were doing comparatively well at the time, and Marvel IP was so perfectly catered to Netflix and Disney+’s newly-upgraded viewing platforms — Marvel still flourished. 2020 may not have seen a lot of film production, but it saw many butts-in-seats — nameably audiences binging old Marvel shows like The Punisher from the comfort of cozy home furniture during the ‘at-home’ revolution after COVID. During this same period, the Marvel Cinematic Universe maintained steep profits even as film crews weren’t allowed to convene, while WGA/SAG/AFTRA strikes put further Marvel projects into serious jeopardy.

It’s not a coincidence that some of the MCU’s least-profitable films (accounting for inflation adjustment) came during this pull-up-your-stakes moment in Hollywood. Still, Marvel outright canceled a bunch of movie and TV projects during this period to cut their losses, and they have never truly recovered their pre-2020 dominance, in part due to COVID happenstance — but also for failing to capitalize, fully, on the move towards series-streaming inevitability. Phase Four simply did not perform the way the company had hoped, either — owing largely to a Millenial Generation maturing into a group who may not care about the sanctity of theatrical releases the way their forebears have.

The $2.8 billion haul for Avengers: Endgame may have been the high watermark for Marvel movies — maybe even for theatrical movie releases as a whole. At times, movies themselves appear headed toward outright extinction. If there is one studio that has proven its ability to adapt to the medium and format, it’s this comic-book-borne juggernaut. For all the critics of the superhero film’s effect on Hollywood, in the end, those may be the properties that keep the business afloat. Expect Marvel to always be at the forefront. The MCU is streaming on Disney+.