Motley Fool took a walk back to last year as they analyzed what two of their writers had to say about Marvel Entertainment (MVL) and their prospects for the future.
If you judge it by the last year's performance, Marvel has surged in a big way. In the share price alone, they scored a great 34 percent increase. They've also been buying back a large portion of their stock over the last year. So far they've spent $100 million, and have authorized another $200 million in May.
Most of the friendly battle over Marvel Entertainment was the concern over their becoming a model based upon making films. If that was the overall case, I'd be more concerned too.
A lot of their future success will be based upon the percentage of funds they allocate toward making movies. I think they need to look at Disney (DIS) as a model in this area, since they're similar in the demographic they serve.
Disney made the decision to cut back to only about 8 movies a year. I think they believe they can make much more on the backend sales of merchandise than they will from the movies; something Marvel should do really good at as well.
Disney has projected consumer sales to grow to $26 billion this year, an increase of 13 percent. They added that they expect that to double by 2014. If that happens, it would result in $52 billion in consumer sales alone.
If Marvel focuses strongly on the consumer sales side, they should be able to ride these types of sales in a big way. The major thing to consider there is Disney has a much more well-rounded assortment for boys and girls, while Marvel has a much narrower demographic in primarily boys and young men.
In the end, Marvel won't do that great in my estimation if they overly rely on blockbuster films as their primary engine of growth. If they put together the right blend and mix of what they have now, along with films and consumer sales, they could have a bright future ahead of them.
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