Tuesday, January 10, 2006

What Hasbro's New Deal With Marvel Might Mean for RPGs

Hasbro and Marvel have entered into a 5-year licensing agreement, "under which Marvel has granted Hasbro toy and game rights to its renowned Super Hero universe that includes franchises such as Spider-Man, Fantastic Four, X-Men and Captain America. Through the agreement, Hasbro has obtained the rights to develop products based on Marvel’s globally-known universe of over 5,000 characters in a wide range of toy and game categories -- including action figures, role play and preschool toys, board games and puzzles. The agreement covers both the “classic” comic book look of the characters as well as product lines inspired by Marvel-themed movies."

Ordinarily such a licensing agreement would, while financially a big deal, not be seen as particularly out of the ordinary, but there are some interesting factors to consider with regard to this event.

First of all, the license guarantees Marvel $205 million in royalty and service fee payments, of which $70 million would be payable on the theatrical release of Spider-Man 3 and $35 million upon the theatrical release of Spider-Man 4. This is of particular importance given tha Marvel has recently decided to fund it's own film studio by creating an independent funding entity worth $525 million last year.

The second important consideration is Marvel's historic connection to Toy Biz Inc. Especially since according to the Toy Biz website Toy Biz is a division of Marvel Enterprises, Inc. ™ & © 2005 Marvel Enterprises, Inc. All Rights Reserved. According to Marvel the new agreement with Hasbro will result in lower royalty payments from Hasbro than came from Toy Biz, which makes sense since Marvel and Toy Biz are the same company. What the shift to Hasbro signifies is a desire by Marvel to continue seeing revenue from its intellectual properties while reducing the overhead costs of production. In the past, Toy Biz was responsible for manufacturing costs and royalty costs to the parent company thus expenditures, and thus risks, as well as profits were internal. Now the risk is external and the payments are internal. This is a significant change in the Marvel model. When Marvel was going bankrupt it was Toy Biz who merged with the financially unstable company and secured Marvel's place in the market. Now that most of Marvel's debt is paid, it appears that the companies are preparing to separate.

Third, what does this mean for Role Players? According to Marvel Chairmand Morton Handel, "Commencing in 2007, a wide range of toy and game categories – including action figures, role play and preschool toys, board games and puzzles – will be produced by our new licensee, Hasbro." Role playing products are a part of the licensing deal. What the new Marvel rpg, if any, produced from this deal will look like can only be guessed at, but it does look like a bright possibility.

In good news for Hasbro, the license can be extended past the five year term, dependent on the number of other entertainment properties released during that timeframe.

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