After Iron Man, Should Marvel Go Into Games?

When Marvel Enterprises announced plans to begin financing its own film productions, the skeptics had a field day. But with the surprise box office success of “Iron Man,” many of those same skeptics are now questioning whether the company should abandon its franchise model and bring development of video games based on its characters in house.

On the surface, it might make sense. Top tier games typically cost less to produce than films—and the reward can be greater if you have a smash. Also, by using remnant ad space in the company’s comic books to promote the games, the company could reduce marketing costs while zeroing in on the target audience.

Marvel, though, says is has no plans to compete with traditional publishers in the video game business.

“We are obviously extremely happy with our videogames and frankly our overall gaming approach," said David Maisel, chairman of Marvel Studios , in an earnings call Monday. "For console games … we are continuing looking at a licensing model."

Part of the reason for that is necessity. Two of Marvel’s biggest franchises—Spider-Man and the X-Men—are locked up by Activision until 2017. Sega, meanwhile, has secured rights to Iron Man and The Incredible Hulk – along with Thor and Captain America, the focus of Marvel’s film projects slated for 2010 and 2011. The company’s deal also gives it rights for future games using those characters.

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While Marvel’s library runs more than 4,700 characters deep, that’s a big chunk of its A-team. But even if it had free and clear rights to all of its characters, there would still be several major obstacles: First up, the analysts.

“Were they to do that, I would have a sell rating on them,” said Michael Pachter, senior vice president of research for Wedbush Morgan Securities. “They understand [the film business]. They’ve participated in movies like ‘Daredevil’ and ‘Electra’ that have had moderate to marginal success and they’ve had blockbusters like ‘Spider-Man’. The film business is hard to do but well understood. The video game business is very hard to do and not well understood. … It would be really stupid for Marvel to do it.”

Audience resistance could also work against the company. While super heroes and video games seem a natural fit, there have been very few hit games based on a license using characters from Marvel or rival DC Comics.

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Activision has had the biggest success with titles that were tied to the “Spider-Man” films. THQ , though, failed to find success with “The Punisher,” whose basic origin storyline (man turns vigilante after his family is murdered) has been lifted for innumerable other games.

Some companies have put millions into super hero game development, only to walk away from the titles without ever releasing them. Electronic Arts abandoned work on a Marvel Comics-based fighting game last year, with the two companies prematurely severing a multigame deal in January.

CONTINUED: Running Through Walls Isn't Always Fun

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