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Disney's Marvel Studios Partners NetEase for Original Content

Zacks Equity Research

Disney’s DIS Marvel Entertainment and NetEase NTES recently announced a partnership to create original entertainment content based on Marvel characters.

The content, which includes games, comic books and TV series, will be developed for both Chinese users and international users. As part of the deal, around five to six mobile games will be released by the end of 2019 per Reuters.

The current collaboration follows the earlier deal in 2017, where Marvel Studios and NetEase had partnered to create 12 Marvel comics and introduce Chinese superheroes to the Marvel Universe.

The Walt Disney Company Revenue (TTM)

The Walt Disney Company Revenue (TTM)

The Walt Disney Company revenue-ttm | The Walt Disney Company Quote

Disney Looks to Keep Marvel Fans Engaged

Disney is looking to cash in on the popularity of Marvel characters by partnering with one of the most popular online gaming companies in China.

The popularity of Marvel characters, particularly among the Chinese audience, is clearly evident from the fact that Disney’s recently released Avengers: Endgame became the first foreign film and the third movie title in China to collect more the $600 million. Notably, as of May 13, 2019, the film collected about $603 million at the Chinese box office per CNN.

Additionally, Avengers: Endgame broke “more than 30 records in China's movie industry, according to local ticketing service Maoyan Entertainment.” Moreover, the film contributed to the biggest ever IMAX IMAX opening in China and broke IMAX box office records in Germany and France.

By partnering with NetEase, Disney is likely to keep Marvel fans engaged with its new content, especially after it concluded the Avengers series with Avengers: Endgame. The above deal is expected to generate additional revenue source for Disney.

Marvel’s Popularity to Aid Disney

Disney has big plans with Marvel’s content as it is looking at any opportunity to bring forth content based on Marvel Cinematic Universe (MCU).

Notably, the company is working on a TV series based on MCU characters including Loki and Scarlet Witch for its upcoming streaming service Disney+. Moreover, Disney signed a deal with Hulu to produce four animated series based on Marvel television characters. Notably, Disney owns a majority stake in Hulu following its acquisition of the majority assets of Twenty-First Century Fox.

However, Disney and Netflix NFLX terminated their five-year old licensing deal and the media behemoth pulled out Marvel shows from the streaming platform to support the launch of its own upcoming video streaming service.

Disney’s strategy to use Marvel IP across a variety of platforms and genres coupled with Marvel Studios popular film slate and TV shows is expected to aid its top line in the long haul.

Disney currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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