Disney’s Marvel Cinematic Universe: an allegory of profitable circularity
The last time I gave a conference on sustainability to students of the ESSEC MS SMIB, my Alma Mater, we discussed how the perception that sustainability and circularity were too costly hindered their mainstreaming. Indeed, only 8% of the economy is circular [1].
I challenged the students to think of analogies of costly upfront investments which end up being profitable over the long term. Our creative banter led to one question: can Disney’s costly $4bn acquisition of Marvel be an allegory of investment in circularity done right?
Paying $4bn for Marvel… A terrible idea?
Back in 2009, when Disney announced that they would acquire Marvel for $4 bn, some may have quipped that Bob Iger, Disney’s-then-CEO was out of his mind and that he was overpaying for Marvel. It was too costly: the acquisition implied a share price of $50, which at the time was a 29% premium on Marvel’s shares.
Looking at the acquisition with the Circularity lense: Disney paid a hefty lot of money to acquire second-hand products (superheroes stories and characters that already existed in comic book format and in movies).
In hindsight, the initial reaction of external observers showed that they did not have a clue how Disney could revalorize Marvel’s content in a profitable way. At that time, they did not see the value that Bob Iger was sure his creatives could generate over time. Keep in mind that the acquisition costs were not the only expense needed to get it right. Disney also had to negotiate smart partnerships with Paramount, Sony and Century Fox (which was later acquired by Disney) over distribution rights or licensing rights to properly exploit the most valuable Marvel characters like Spiderman.[2]
Eventually, Disney’s Marvel acquisition has become a success and has blown away our movie-goers’ minds. They created a universe where superheroes’ stories intertwined in a web that spanned several movies over a decade. [3]
So, what did Disney do? Let’s argue that they applied the 6R on immaterial products: stories and characters. 6R stands for Repair, Reuse, Repurpose, Refurbish, Remanufacture, and Recycle. In a way, they recycled, upcycled, and remanufactured the Marvel stories to create new storylines, and new takes on characters (think of Tom Holland’s Candid millenial SpiderMan, or Robert Downey Junior’s playful yet charismatic IronMan) and turn them into one of the the biggest money-making franchise in the movie industry.
Storytelling and movie-making thrive on circularity.
Here is the circularity analogy: reusing old stories and known characters is a way to recirculate these immaterial products over and over. It’s a trope of literature and of the entertainment industry. In fine all the remakes, prequels, sequels are endeavors to make a profit on (intangible) second-hand products. Finding a way to make a profit on these recycled stories is the same problematic that traditional businesses manufacturing material product have to solve in a circular economy.
In reality, Hollywood is so big today, because they figured out that recirculating stories and characters could be more profitable than creating new stories and new characters from scratch. Initially, the industry used classics that were free of rights (think Greek myths etc) but eventually Disney’s Marvel acquisition and Lucasfilm acquisition showed in a blatant way that the business could still be profitable if you paid a reacquisition fee. See the parallel now?
In a way, Hollywood has been playing the Circular Economy game all along, only with immaterial products.
The analogy: step by step
If you think about it: why do moviemakers or theaters directors keep using age-hold “classic” stories in the business? And why do movie goers, theater goers continue to flock to see new versions of classics? Let’s see the analogy between stories and material products in a circular value chain.
- The first thing is because “classics” have inherent qualities that have been tested over time: like a high quality product made of very durable materials that can stand the test of time.
- If you use a classic story and 6R-it (reuse it, repurpose it, etc), you do not have to reinvent the wheel from scratch. The creative process is less costly because you rely on a good base that is already built: using recycled products or second-hand products should be less costly over time than extracting natural resources from scratch if you use it as an input to manufacturing.
- Basing a movie or a play on a classic story still gives plenty of room for directors, actors, choreographers, costume designers to show-off their creative genius (read: their added value). If the audience knows the story, they no longer need to focus on the story itself but they will focus on the craft. And the craft is the added value that each one of these creative bring on the table. It’s not about what is written, it’s about how it’s written, how it’s played, how it’s displayed. Reusing a story gives you an opportunity to display your added value as a creator and to eventually capture the benefits of this added value when you attract enough paying audience to see your remakes. In a parallel with the material world: it’s about how you can revalorize waste and recycled products to make a profit.
Back to the plain economy. Businesses need to figure out how to make circularity work, they need to figure out how to make a profit by recirculating their products and materials, just like Disney had to figure out how to make a $4bn acquisition of Marvel profitable, even when its core products had already been exploited over and over before… Unfortunately, it’s not easy. Reflecting on the ways you can transition your business to sustainability, using the Circular Business Models, and Circular Value Chain concepts is a first step. Game on.
References
[1] The Circularity Gap Report https://www.circularity-gap.world/2022#Download-the-report
[2] 2009 New York Time article on the Disney/Marvel acquisition https://www.nytimes.com/2009/09/01/business/media/01disney.html
[3] https://www.cnbc.com/2021/01/31/the-13-highest-grossing-film-franchises-at-the-box-office.html