Even before it was officially announced in 2016, we knew that Marvel Land was coming to Disney California Adventure. And due to the contract in place with Universal Orlando Resort, we figured that pretty much all of the super-powered characters and places that will be a part of this eventual land would be exclusive to the west coast, thanks to some interesting quirks in the original contract that was signed in the mid-90s. And while you may think it might be a little awkward for Disney and Universal to essentially share custody of these characters, this situation actually benefits both parties. And here’s how:
Origin story
Marvel Comics began in 1939, but its glory days started in 1961. That’s when the former Timely Publications and Atlas Comics switched over to the Marvel brand name. A 39-year-old writer and editor named Stan Lee spearheaded the change, and his new comics upended the industry. By this time, he’d already worked for the publication since he was 19, only taking time off to fight in World War II.
The most impressive thing that Lee did was anticipate a counterculture in his industry. DC Comics was the overlord, a virtual monopoly that was decades old by this point and perceived as stale. Lee took several of the premises from the more established DC Comics and pulled back the layers to find new story ideas. The billionaire playboy by day/crusader by night became Iron Man, the group that he led became The Avengers, and the too-young crime-fighter became Spider-Man. During a period of five years, Lee and his cohort, Jack Kirby, created these characters, all of whom are iconic today. And he did it by noting that Batman, the Justice League, and Robin were all in a creative rut at the time.
As great as Lee was as a writer, he faced a problem as publisher at Marvel. He became publisher in 1972, at which point he basically stopped writing. That was more than 45 years ago, yet his impact lingers today. When Lee became the figurehead for Marvel, history repeated itself. The company faced the same saturation that once stifled DC Comics, causing Marvel to meander listlessly into the 1990s.
The money monster
By the early 1990s, Marvel was in financial peril. Comic book sales in the industry had plateaued, and the lack of quality Marvel stories wasn’t helping the situation any. Marvel’s leadership team adapted a new strategy. They wanted to get into the movie-making business. What they didn’t appreciate was how the industry worked. Blade, the first Marvel release in the 1990s, earned more than $130 million worldwide. What was Marvel’s cut? They received $25,000. That happened in 1998, and it wasn’t even the worst frustration for the company.
In 1994, Marvel execs had already deduced that their money burn-rate was nightmarish. They also knew that Hollywood was about to come knocking for some major Marvel properties. This had happened once previously, but the ill-conceived Howard the Duck in 1986 had scared off a lot of potential producers. Eight years later, Marvel had finally clawed its way back into the movie industry conversation. Tom Cruise was perennially rumored to want to play Iron Man in a movie, and James Cameron went so far as to write a Spider-Man script before dropping out of the project.
By 1996, Marvel’s financial problems reached a breaking point. The company had to file for bankruptcy. As part of the filing, they had to lay off a third of their staff. It was the low point in Marvel history, and one they tried to learn from. The focus of the next dozen years at the company was monetizing every property possible.
Their ultimate goal was to self-finance movies. That way, they could receive all of the box office earnings and ancillary revenue rather than the pittance they’d gotten for Blade. In order to finance these grand ambitions, Marvel needed money immediately. Universal had an open checkbook and a need for something spectacular…like Spider-Man.
The dreaded words “in perpetuity”
When Universal Studios approached Marvel with an offer in 1994, they found a company that was incredibly receptive. What company wouldn’t love the idea of someone offering money just to cement the popularity of trademarked characters? At the time, the owner of Universal Parks was MCA, Inc. Their lawyers negotiated a strong deal with Marvel, a company that wasn’t in a position to say no to much of anything. Universal had all the bargaining power in these conversations.
The output of the discussions was a signed contract. It entitled Universal with some fairly epic rights. Universal’s second gate, Islands of Adventure, would have the rights to Marvel characters. Specifically, they’d enjoy exclusive “use of the characters on the east coast of the country to Universal Orlando with even tighter restrictions within a 60-mile radius of the Orlando parks.”
And here’s the key sticking point. Universal would retain these rights “in perpetuity” as long as they did nothing to destroy the Marvel brand. Lawyers today are extremely reluctant to give away rights in perpetuity, because it’s a terrifying legal precedent. Another company keeps these rights for as long as they want. In other words, Marvel signed a deal with no fixed end-date. Universal is ostensibly the other company that can cancel the contract.
An important caveat is that a few exceptions are in the contract. Universal has responsibilities in using Marvel characters. The main one is that they must maintain the attractions in a way that doesn’t damage the brand. Insiders suggest that the entire reason why Universal recently renovated The Hulk was to prevent any such accusations, something Marvel could use in a breach of contract claim. These clauses are the only bargaining chip that Marvel has over Universal.
Iron Man teams up with Disney
Marvel’s fate improved dramatically in the dozen years after its bankruptcy. They found a bank that would help them finance their own productions. In exchange, Marvel was able to scrape together enough money to make Iron Man, and even if you’ve been living on a deserted island for the past 20 years, you still know how that turned out.
Iron Man is now the anchor character in the Marvel movie universe, arguably the most successful new film franchise of the past 20 years. The Walt Disney Company saw an opportunity to increase their revenue by adding Marvel toys to their library. They could also, you know, make Marvel movies. Capitalizing on a rare opportunity in the marketplace, Disney acquired Marvel for $4 billion.
Disney was now in the strange position of owning characters on full display in Universal theme parks.
The awkward marriage of Disney and Universal
This situation isn’t an uncomfortable and inconvenient as it seems. In fact, it’s a great deal for Disney. Their primary competitor in Orlando, Florida, sells products featuring Marvel characters that make Disney money. Universal also has multiple rides based on Disney characters that heighten their appeal. That’s particularly true of Spider-Man, as The Amazing Adventures of Spider-Man is one of the best dark rides ever made. In other words, the perception that this Marvel-Universal contract hurts Disney is not based in fact.
If anything, the situation is more awkward for Universal. They are the younger sibling with an inferiority complex about their older, much bigger sibling. Comcast recently purchased controlling interest of NBCUniversal for 16.7 billion. Disney market cap hovers around $175 billion. Universal is a bug attacking their windshield rather than a threat.
The inconvenience for Disney is that they bought a product with immediately limited applications. Disney has two core businesses, financials notwithstanding. It was first an entertainment maker in the fields of movies and television. Then, Uncle Walt expanded into the theme park industry by building the Happiest Place on Earth. The Parks and Resorts division is always integral to The Walt Disney Company. The fact that Disney couldn’t expand its newest brand, Marvel, into its theme parks was problematic in that regard.
The next theme park battle
Disney has done some things over the years that are best described as boundary tests. They have held a meet-and-greet for characters from Guardians of the Galaxy as well as Doctor Strange, being careful not to violate the terms of the contract by calling it a Marvel superhero event. They also added monorail tram ads for The Avengers and other Marvel films, and to the best of our knowledge, faced no legal action from Universal.
When Universal signed a deal with Marvel, they were interested in several primary characters. The Guardians of the Galaxy were largely a punchline outside the comic book industry until the release of the 2014 movie of the same name. They weren’t part of The Avengers, and Spider-Man was never a member of that particular superhero group. Universal had no reason to care about those characters other than potential financial gains if they could prove that Disney violated the terms of the contract.
For Disney, they were offering a show of strength. They knew that the contract permitted Marvel characters on West Coast, the permanent home of Disneyland. But interestingly, they doubled down with the announcement that a Guardians of the Galaxy roller coaster was coming to Epcot.
And that’s where the story gets more interesting. It’s also where the story ends for now. Universal has announced plans for a new Nintendo themed land in Orlando. It’s their next power move, a kid-friendly area that will sell a metric ton of merchandise and concessions. Many people love Nintendo in a rare and impacting way. Universal is laying the groundwork to move away from its current Marvel composition at Islands of Adventure just as Disney starts to add one.
Fifteen years after the Universal and Marvel parties signed the contract to bring Marvel Super Hero Island to life at Islands of Adventure, Disney became the full owner of Marvel. Universal has made sure to honor their part of the contract to maintain the rights to Marvel characters in perpetuity. Disney is now ready to introduce Marvel characters at both of their North American theme parks. How is this possible? And what will happen next? Stay tuned…
