Photographer: Everett Collection

The Superhero Battle for the Bottom Line

Which comic-book studio can claim the super power of accounting? Disney-owned Marvel has spent less on average to earn more than DC

There's no great secret about what will happen when Marvel's phenomenally bankable superhero team confronts a mad robot intent on annihilating the entire human race. Punches will be thrown, skyscrapers will tumble, and popcorn will be spilled by excited North American fans, who are expected to crowd into multiplexes, starting Friday, to enjoy what is likely to be the summer’s biggest movie, projected to rake in $217 million over the weekend. 

The Dark Knight Rises, 2012

The Dark Knight Rises, 2012 

Photographer: Ron Phillips/Warner Bros. via Everett Collection

Marvel has been conspicuously silent about how much it is spending on Avengers: Age of Ultron. It is almost certainly a breathtaking figure, too. The Disney-owned studio invested a total of $300 million to produce 2012's The Avengers, and the film went on to make $1.5 billion worldwide, according to BoxOffice.com. Ultron has been slathered with more special effects that any previous Marvel movie, which suggests that the studio splurged even more on the sequel.

Hollywood's superhero business model—spend heaps of money to reap big box office rewards—is about to be tested as never before. Warner Brothers, owner of DC Comics and Marvel’s nemesis, has announced a plan to put out a 10-film slate at the rate of two per year,beginning with Batman v Superman: Dawn of Justice in March 2016. Marvel retaliated by unveiling a schedule for three superhero movies each year, starting in 2017. This will require both Marvel and Warner Brothers, neither of which would discuss their production budgets, to take enormous financial risks.

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So far, Marvel has demonstrated more efficient superpowers than its rival. According to BoxOffice.com, the Disney-owned studio has made 10 films since 2008, averaging production budgets of $237 million and worldwide ticket sales of $714 million. Warner Brothers, by contrast, has released seven superhero films in the past decade, including director Christopher Nolan’s hugely popular Dark Knight trilogy. But the average Warner Brothers superhero budget, at $265 million per film, runs about 10 percent higher than Marvel's to reap smaller bounties from the box office. The seven films for Warner Brothers averaged only $560 million.

What makes Marvel more financially adept? The studio is small operation obsessed with exploiting characters and storylines from its comic book universe. “I think it's their absolute focus,” says Paul Dergarabedian, senior media analyst at Rentrak, a media and entertainment data provider. “I mean, when you are a lean and mean machine like Marvel is, you don’t have to throw tons of money at everything. They are able to do more with less money than virtually anyone else.” Marvel’s executives also tend to be notoriously hands on—a practice Ultron director Joss Whedon groused about to Buzzfeed.com. 

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The money-making battle sometimes goes the other way. The Dark Knight, the second in director Christopher Nolan's mega-hit Batman trilogy, cost more to make than either film in Marvel's 2008 slate but also earned more than Incredible Hulk and Iron Man combined. Warner Brothers, one of the oldest, most respected studios in Hollywood, has a history of conjuring franchise hits such as the Harry Potter films. The studio often turning to outside sources for financing, which helps explain why DC movies tend to cost more. “It reduces the risk,” says Phil Contrino, chief analyst at BoxOffice.com. “It also enables a studio to say, ‘Well, if someone else is picking up part of the tab, we can really push this and spend a lot of money.’”

Once Marvel and Warner Brothers unleash their dueling movie slates, the chances of substantial financial losses will rise for both studios. Doug Creutz, a media and entertainment analyst at Cowen & Co., predicts that ticket sales for superhero movies will decrease as the number of films multiplies. “We saw it happen in the animation business,” he says. “We went from one to two to four major animated films a year, and now it’s like, eight. These movies don't earn as much as they used to at the box office.”

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The studio that spends the most in such a climate is likely to be the biggest loser. That might be Warner Brothers, which has already had two prominent flops: The Watchmen in 2009 and Green Lantern in 2011. Neither film recouped its production budget, according to BoxOffice.com’s estimates, which factor in the costs of prints and advertising. Marvel’s weakest performer, The Incredible Hulk in 2008, generated a modest profit.

This much is certain: Superhero movie budgets are generally headed skyward, much like their caped characters. Marvel is planning a two-part saga for its premier hero team, Avengers: Infinity Wars, while Warner Brothers has a multipart Justice League series in the works. With more superheroes and villains and mayhem crammed into this arms race, there will almost certainly be increased spending on lavish CGI effects. The last thing the studios want to do sell millions of tickets on an opening weekend, only to have audiences giggle at chintzy looking robotic enemies. Better spend the money in advance—and worry about taking write-downs later.

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