The Marvelution

Originally published March 31, 1995, in Comics Buyer’s Guide #1115

Chik… Chik… Chik… the sound of dominoes starting to fall…

I gotta tell you, it was loads of fun coming back from a two day think-session/retreat with Marvel editors and fellow creators, plotting out ways to put major focus on the launch of the Marvel “Edge” line in July. This will be, after all, our one and only shot at a major PR blitz for the “Edge” titles (of which Incredible Hulk is one.)

So imagine my joy upon coming home and learning that the odds were snowball-in-hëll likelihood that anyone in the industry would think of July as anything other than the month that Marvel embarked on self-distribution. Editorial content? A distant second to the concern over getting the books into the stores in the first place.

But then, what else would one expect from a Marvelution, if not revolting developments?

What amuses me are the people who greeted this revelation by saying, “The other shoe has dropped!” That implies some notion of closure, as if nothing more could happen.

A mere two shoes doesn’t begin to cover the magnitude of what we may be in for. A lone pair of dropping shoes? Fah. We’re standing at the brink of a major shoe storm. Or, at least, some sort of “sh” storm.

With Marvel’s announcement of exclusive distribution through Heroes World, I find I’m put in mind of three things.

The first is the film The Paper Chase, based on the book about Harvard law students. The formidable Professor Kingsfield (John Houseman) warns the students in his contract law class of law school’s wash-out rate with the following pronouncement:

“Take a look at the person on either side of you. At the end of this year, one of you will not be here.”

And there’s Diamond and Capital… and scads of retailers… all looking at each other and wondering, “Who’s it going to be? Which trooper in line is going to take the bullet?” Because let’s not kid a kidder: People are likely going down the tubes this year. The only question is who, when, and how many.

That’s the first thing.

The second thing is, I remember the days when I was in the sales department, first as Carol Kalish’s assistant and then as direct sales manager. We instituted and administered all manner of retailer support programs: Co-op advertising, rack credits, cash register, books on marketing, support of retailer education seminars. You name it. But even as we did all that, distributors always looked askance at such activities. And I think of them saying to me, “We don’t like you having all these dealings with our retailers because we’re worried you’ll start trying to deal with them directly and cut us out.”

And I would tell them, “That’s ridiculous. First off, it’s impractical; how is Marvel supposed to service 3000+ retailers? And second, Marvel is simply interested in having retailers be as strong and business-wise as possible. Here we are trying to help, and you guys let your paranoia run wild, casting anything we do in the worst light.”

That’s how I felt back then, and more, that’s how it was back then. But I also remember that Carol’s major concern about the direct sales market was what would happen if too much of the distribution power fell into the hands of too few distributors. She was worried about the position that Marvel would be in if just a couple of distributors held that much power over Marvel.

But did she foresee something as extensive as this? Not that I recall.

How could she, after all? Because when all is said and done, we’re still left with the question: How can Marvel service over three thousand retailers? It makes no sense. Marvel doesn’t even know where all of them are in order to send out solicitation packages. The Heimlich maneuver couldn’t get Diamond and Capital to cough up their account lists. For that matter, how would it be feasible for the regional Heroes World to process and ship that many books to that many drop points? It’s insane.

Or is it?

And look at the mathematics. Retailer profits are going to shrivel even more than they have before now. Elements such as discount and free shipping are predicated on quantity. If a retailer’s orders drop by thirty percent (because he’s getting his Marvels from Heroes World as opposed to, say, Diamond), retailers forced to split their orders will find their cost of doing business skyrocketing. Many are marginal as it is. Retailers will go under.

Or retailers currently paying on term basis (seven days, or as much as thirty days) may find themselves faced with having to pay for their Marvels COD. No cash, no Marvels. Will fans purchase more DCs and Image comics to make up the difference? Or will they simply leave in disgust or boredom? Maybe the former… more likely the latter. Again, retailers go under. Remaining distributors can suddenly experience major cash flow problems. They go under. Small publishers lose valuable retailer outlets and market penetration, or distributors. They go under.

Chik… chik… chik… more dominoes…

Again… it’s insane.

Or is it?

Ronald Perelman, Marvel’s owner, at 52-years-old, is a self-made billionaire with a personal fortune of $6 billion. Whatever else he is, stupid he’s not. Nor is he insane.

But then what the hëll is Marvel thinking? What could they be up to? And how are they going to service three thousand retailers?

Well…

…maybe they’re not. Maybe Marvel has no intention of doing so. Maybe Marvel never did.

Let’s back up.

The problem with a lot of the speculation is that people act as if Marvel operates in a vacuum. That the activities and decisions made therein have no analog outside of the comic industry.

Not so.

What if, for example, Marvel was releasing a new “X” book. And the following offer was made: Anyone purchasing the first issue of the new title directly from Marvel would receive an exclusive limited edition print, not available through the direct market otherwise. Oh, the hue and cry that would follow. Oh, the shrieking and rending of garments and the reactions that would seem to indicate such a maneuver was unprecedented in the history of commerce.

Meantime, go to your local Disney store and you’ll find people who pre-order The Lion King video tape picking up their limited edition print. Blockbuster hasn’t got it. K-Mart hasn’t got it. Just Disney. And the public doesn’t think twice, or care about the inequity.

I believe that kind of thinking might be exactly the mindset one needs to anticipate where Marvel’s going. Just as it was once commented that Image wanted to be Marvel in the worst way (and succeeded), so too–I think–does Marvel want to be Disney in the worst way. And might very well succeed.

What’s instructive is reading the January 9, 1995 issue of Electronic Media, which has a lengthy article entitled, with no trace of irony, “Ronald Perelman’s brave New World.”

The article mostly focuses on Perelman’s branching out into TV station ownership and program production via New World Communications, of which he is Chairman. Some of the comments made therein, however, are easily applicable–and even telling–when it comes to his worldview. For example:

“I think you have to be innovative in any business and in any industry. Sometimes an outsider can do that more easily because he doesn’t have some of the history associated with transactions or situations that someone else has who has been in the industry for years.”

There y’go. What matter the retailers who have been on the front lines, taking the risks, breaking the ground, trying to bring in new readers and expand Marvel’s audience base? What matter the direct distributors, who picked up the ball fumbled by the newsstand distributors and–it is generally conceded–saved the comic industry from collapse? Far better to have decisions made by outsiders who have no ties, no loyalty, no care for the people who built and maintained the marketplace.

Or there’s New World CEO William Bevins commenting, “Warner and Paramount are saying the same thing we are. Since there no longer is a back-end, you have to be the producer, the distributor, and the exhibitor. You just can’t make it on one plane of the business. You have to spread around the risk.”

Indeed. Makes sense. The more control one exerts over every aspect of the company–from the manufacturing to getting it in front of an audience–then the smarter one is from a business standpoint. Again, television was being discussed… but the application to comics is clear. Even ominous.

Because, you see, we’re all going on the assumption that the publication of the comics matters. That the retailers matter. That the comic buying fans matter.

But… just for laughs… just for argument’s sake…

What if they don’t?

If they don’t, then we have to figure out what does matter in the brave New World of Ron Perelman.

Stock. The stock market doesn’t know from, or care about, the direct market. Nor will retail losses on the direct market bother Perelman. He bought New World for $145 million in 1989, and plowed in another $100 million over four in-the-red years. You think he’ll give a dámņ about dropping whatever it is–$15 million, who knows?–off the Marvel comic retail line? Not likely.

Remember those dominoes chiking down? Let’s see how that would play in a hypothetical report: “Marvel took bold leadership of the comic marketplace with its ground breaking self-distributing plan putting the company squarely in charge of its own destiny. While smaller, hapless publishers went out of business, Marvel steadily picked up market share, and is poised to continue its ever-growing supremacy in the field.” Sounds pretty good, huh? And the stock market just looooves companies with growing market share.

So what if Perelman loses $15 million in retail, if he brings in millions more through increased stock activity?

Licensing. I’ll never forget a parent wandering into a comic book store some years back during the height of Teenage Mutant Ninja Turtle mania, noticing the Eastman and Laird title, and saying, “Oh, there’s a comic book, too?”

Comic books for Marvel could simply become a means to an end. An incidental. Even an irrelevancy. Look at the X-Men toys. The odds are deliriously high that the average kid buying an X-Men action figure has never read an issue of X-Men. Because the interest is feeding off the successful TV series, which has tens (if not hundreds) of millions of viewers. What’s the comic book circulation? Couple hundred thousand. Peanuts. Chump change.

Diversity. We have an inflated idea of the importance of Marvel Comics, but a quick look at Ronald Perelman’s holdings deflates it dámņ fast. Marvel is merely part of Marvel Holdings, which is part of Four Star Holdings, which in turn falls under the Andrews Group as does New World Communications Group. Under NWCG, there’s New World Television, New World Sales and Marketing, and New World Entertainment which includes Guthy-Renker Corp. (an infomercial producer), Four Star International (which markets and distributes films and TV shows to foreign markets), and Genesis, an independent domestic syndicator of TV programs.

Feel insignificant yet? Wait! There’s more! There’s Coleman Holdings, Consolidated Cigar, Malco Worldwide, First Gibraltar Holdings, not to mention the MacAndrews & Forbes Group, the Revlon Group, Revlon Worldwide, Revlon Consumer products, Meridian Sports and (if all this makes you sick) National Health Labs.

The retail end of Marvel is a blip on the radar grid of Ronald Perelman, and not a particularly significant one at that. In the meantime, New World television is angling to produce one-hour syndicated dramas. If Perelman can grab the brass ring of entertainment mogul… well, that leads us to…

Disney the Role Model. Again, pure speculation.  However, Marvel was awfully anxious to get its hands on the Disney Comic license. Anxious in a way all out of proportion to the retail value of such an endeavor. A worthwhile project for the marketplace? Iffy. But a valuable first step in building an ongoing relationship with Disney that could lead to major co-productions, similar to the abortive Disney/Henson Associates merger? That sounds a lot more likely.

And if we hold Disney up as the role model, then suddenly it all falls into place. Imagine, if you will, the following hypothetical, with the chik, chik, chik firmly in your mind.

Smaller retailers, and at least one major distributor, go belly-up, leaving behind the following: the strongest retailers, and the strongest publishers. That status remains quo, with Marvel’s increased market share bringing great joy and happiness to stockholders. Retail sales may have dropped, but hey, so what? Everything else is going great… and fewer retailers just leaves interesting doors open, as we’ll see.

Marvel, via New World, expands the inroads already made into television. Blocks of animated programs do well, just like Disney. Who knows? Maybe there will even be a live action Marvel film that doesn’t blow chunks. Most certainly, an X-Men animated movie, sure to do a few brisk weeks of business before hitting big on the home video animation market (which has served Disney well.)

A Marvel theme park, perhaps. And then, as long predicted, and dreaded: Marvel starts opening retail outlets, with a clearer field thanks to retailers who have gone out of business. A prototype “Marvel department” already exists in New York’s FAO Schwartz. Maybe deals could be cut with other toy stores for similar set-ups. Or maybe they’ll just open the stores full blown.

And the surviving indy retailers will provide a valuable service: Their very existence would help Marvel pinpoint likely places for retail endeavors. Just open Marvel stores nearby those retailers who are doing well.

What, you think Burger King always opens near a McDonalds just by happenstance? That a Disney Store opens in a mall and is surprised to find a Warners Store there? Get real. If they know where the business already is, that’s where they’ll go.

Ah, but Marvel doesn’t have the diversity of characters as does a Warner or Disney. True. But who knows what tie-ins await from possible co-creations with Disney. Or Harvey. Not to mention that New World has a film library of 2000 hours which could be marketed, plus tie-ins to other future New World programs. By the time the first Marvel store opens, there could be a dazzling spectrum of crossover potentials.

Which would mean that beleaguered retailers would have even more competition, just like small video stores have to contend with Blockbuster, and local hardware stores have to slug it out with Home Depot. But hey, there’s room for all.

Or is there?

Could retailers weather such a scenario through aggressive promotion of DC, Image, and whatever small publishers might have been able to withstand the scorched-earth firestorm of the next year? Could they develop the needed business savvy? Emphasize in-store service? Bite the bullet and call a moratorium on, and the elimination of, new comic discounts for customers, since their own shrinking profit margin renders such perks unfeasible? Put aside old rivalries, team-up on ordering, share information, work together… do whatever it takes to survive?

Maybe. If they start immediately. Maybe.

I said, way at the beginning of this little worst-case scenario, that I was put in mind of three things. Here’s the third:

I was looking again at the ad directed to retailers that says, in big letters, “It’s Just You and Marvel for a Change.” And I thought of that scene from The Princess Bride, wherein the intrepid Man in Black, having defeated both Inigo Montaya and Fezik, comes face to face with the mastermind, Vizzini. And Vizzini announces the impending duel-to-the-death by saying, “So… it is down to you… and it is down to me… ”

Or Agatha Christie’s Ten Little Indians, with victims dropping one by one until…

Well…

As former direct sales manager, I desperately want to believe the best of Marvel. I fervently want to believe that there’s not some great master plan afoot… just as I know there wasn’t, lo those many years ago when I was assuring distributors such as Comics Unlimited that they were just being paranoid.

But still…

“It’s Just You and Marvel…”

What if, in the brave New World of Ron Perelman… that’s one citizen too many…?

Chik…

(Peter David, writer of stuff, can be written to at Second Age, Inc., PO Box 239, Bayport, NY 11705. Last second updates to this column thanks to our ever changing situation. First, Capital City’s quick settling of its lawsuit with Marvel reignites the speculation of Marvel purchasing the company. Should that happen, at least Marvel would then have access to a nationwide retailer base… which might be the latter’s best shot at longevity, although that would do nothing to mitigate retailers’ shrinking profit margins (unless, of course, Diamond and Capital merged). And second, Marvel’s announcement of the purchase of Skybox… effectively giving Marvel control over the card company that produces its major rival’s character cards. The web of Spider-Man spins ever wider… )