What Marvel Studios set out to do was a gamble. Then it changed Hollywood.

The Gamble

The year was 2003. In a compact office on Santa Monica Boulevard, a small group of staffers were writing script notes to studios who were making films about some pretty popular comic book characters—characters which were technically owned by their employer. This was Marvel Studios then, a tiny operation whose biggest products were the agreements that said other studios now had the rights to bring their characters to life on the big screen.

A majority of these films went on to become box office hits. Marvel, however, only earned a pittance from them. In 1998, Blade became a sleeper hit, grossing over $131 million worldwide. Marvel’s yield? A mere $25,000. The first two Spider-Man movies made a staggering $1.6 billion globally, and yet Marvel only took home $62 million. And the studio barely profited off of the X-Men movies because it negotiated a flat fee from 21st Century Fox.

This peeved Ike Perlmutter, who had gained control over Marvel Entertainment in 1997. Why wasn’t his company making money off of their own properties? Why did they have to be subjected to the whimsy of temperamental studio heads? Perlmutter, who is notorious for being a cheapskate, was becoming more and more impatient with this arrangement. So when Creative Artists Agency alum David Maisel pitched Perlmutter a plan for Marvel to own 100 percent of the movies made about its characters, the stingy businessman let Maisel roll with it.

Maisel’s main thesis was simple: Marvel had to start making its own movies. And in order for them to do that, Maisel had to figure out how to finance this new direction. Filmmaking isn’t cheap, and he had to be creative—he had to figure out how to get Marvel the money without putting the financial health of the company on the line. An impossible feat, some would say, but not for Maisel.

After some clever maneuvering, that’s exactly what he did. Maisel managed to negotiate a $525 million financing deal with investment firm Merrill Lynch for Marvel to make movies over the course of seven years, granted that the movies were PG-13 and did not cost more than $165 million each. But what was impressive about this deal was what Maisel managed to put down as collateral: the rights to make the movies of whatever characters Marvel had not licensed out to other studios yet.

The logic to this arrangement was incredibly simple. If Marvel produced consecutive flops, this would severely affect the viability of the superhero genre. Therefore, if the company would not be able to repay its debt, what it would have to give up would essentially be worthless: an unprofitable set of film rights to the rest of their character portfolio. Marvel did not have to put up any valuable assets on the line, and this pleased Perlmutter immensely.

With the financing secure, Marvel’s top brass now had to choose which among its second-tier characters would be the first to be shown on the big screen. A series of lucky breaks softened the ground for what was now a funded movie studio—first, New Line Cinema’s option with Iron Man ran out, and Marvel opted not to renew the contract; and second, Universal agreed to return the Hulk to Marvel after the disappointing critical and box office performance of Ang Lee’s Hulk in 2003. Compelled by the potential profitability of Iron Man toys, Perlmutter agreed to make Tony Stark the world’s introduction to the next generation of superhero movies.

Production on Iron Man wasn’t smooth sailing, but it still went better than expected. Kevin Feige, who had risen quickly to become the president of Marvel Studios in 2007, managed to balance the film’s creative demands and budgetary constraints. With director Jon Favreau, he prevailed upon the Marvel executives to set aside their reservations and offer Robert Downey Jr. the role of the titular character (which would later on prove to be crucial for the studio’s future). He also helped the production navigate through Perlmutter’s financial chokehold and still deliver artistically.

Off the set, Feige worked to broaden the studio’s horizons. Perlmutter and other Marvel heads were excited about the business potential of interconnecting the movies by having different characters—not necessarily the main superheroes themselves—pop up in other films produced by the studio. To Feige, this was just par for the course, as far as the source material was concerned. Creatively, it had never been done before, and that was an exciting prospect.

So when Samuel L. Jackson’s agent called Feige to see if there was a way Jackson could be part of the movie, Feige pounced on the opportunity. Seeing as Jackson was the inspiration for the super-spy Nick Fury in the Ultimates run of the Marvel comics, Feige did not hesitate to cast the actor as Fury for a cameo in Iron Man. But rather than risk the entire film being overshadowed with his appearance, Jackson’s scene was put after the credits, foreshadowing the future of Marvel Studios.

Iron Man opened to $99 million domestically, and would go on to earn a whopping $585 million worldwide. This was a clear victory for the studio, and a signal from audiences that maybe, just maybe, Marvel was on to something. But Iron Man wasn’t just the start of a new era for Marvel Studios—it would also change the trajectory of the motion picture business for decades to come.

The Revolution

For the most part, moviemaking is like any other trade—when a system works, everyone sticks to it. But once in a blue moon, something triggers a revolution and upends the industry. In the late 1940s, the emergence of the television and the creation of new antitrust laws put an end to the machinery that stimulated the “Golden Age of Hollywood”—the studio system. This paved the way for a new generation of filmmakers to experiment with different approaches and types of storytelling. Hollywood in the post-classical era produced movies that were not only wholly original, but were also critical and financial successes. But as audiences gravitated more and more towards big-budget spectacles, Hollywood once again had to adjust to the times.

In the 21st century, studios no longer compete for the best talent, nor are they making movies solely to win Oscars. Hollywood is now in the age of the franchise film era, where the characters are the main currency, and the studios that own the most profitable brands dictate the industry’s direction. A movie now has to be part of a larger “cinematic universe” to guarantee positive results at the box office and a return on the studio’s investment.

Having an overarching narrative set in “shared universe” for various characters and their individual stories is not a new phenomenon in the literary world. Even in cinema, this style of storytelling can be seen as far back as the 1930s with Universal Pictures’ Universal Monsters series that produced Dracula, Frankenstein, The Invisible Man, The Wolf Man, along with its various sequels. But it was Jackson’s cameo in Iron Man that formally launched the “cinematic universe” as a new species of film. And while Feige and company were only beginning to imagine the implications of Fury’s prophetic words (“You’ve become part of a bigger universe—you just don’t know it yet.”) for the future of their fledging movie studio, they had already put Hollywood at a point of no return.

The Walt Disney Company bought the entirety of Marvel Entertainment for a cool $4 billion in 2009. Marvel Studios was allowed to sit comfortably under the umbrella of Disney’s movie division, along with Pixar. Lucasfilm followed suit in 2011, and most recently, 20th Century Fox. Even prior to the acquisition of 20th Century Fox, Disney already owned the most profitable entertainment brands in the industry. The company has certainly made a killing on them—Disney movies have been topping the global box office since 2015.

Other studios have enthusiastically hopped on the same train, afraid to be left behind. Warner Brothers immediately began to play catch-up with Disney, bolstering its franchise game by growing its slate of DC films, as well as expanding J.K. Rowling’s beloved magical stories through the Wizarding World movies. Universal Pictures continues to build on its The Fast and the Furious and Despicable Me franchises. Sony Pictures, however, has yet to find its footing outside of the Spider-Man character.

This focus on franchises not only changed what kind of movies were being made, but also transformed the way they were being made. Lines between the physical side and the creative side of the production have blurred, with producers and studio heads becoming heavily involved in the creative process. No single director, or actor, or writer drives the film—production is a much more collaborative experience, ensuring that the greater vision of the cinematic universe is served well by the individual films.

In a sense, the ascendancy of the franchise film saw Hollywood revert back to the studio system, where production is more regimented, fewer creative risks are taken, and the films follow a tried-and-tested formula. There is a lot of valid criticism that can be said about this new era, especially since the last time the studio system dominated the industry, it produced classics such as Casablanca, Rebel Without A Cause, and It’s A Wonderful Life, among many others. That discussion certainly merits 1500-word essay of its own. But it’s still important for us to acknowledge how much the moviegoing experience has changed because Samuel L. Jackson appeared for 30 seconds at the end of Iron Man and opened up the world to the idea of cinematic universes.

This week, audiences around the world will finally be able to see the culmination of Marvel’s decade-long experiment that inadvertently launched a radical shift within the motion picture industry. Never has there been a more anticipated movie than Avengers: Endgame. And while box office success is a certainty for the studio’s 23rd feature film, the future is not set in stone. We don’t know how long our love story with franchises will last, but until Hollywood turns itself upside down once again, Marvel Studios can pat itself on the back and reap what it has sowed for turning a gamble into a revolutionary triumph.

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