How The Marvel-Sony 'Spider-Man' Dispute Will Be Solved One Way Or Another [Updated]

The internet lost its collective mind yesterday when several outlets reported Marvel and Sony have failed to renew a deal for keeping Spider-Man in the MCU, suggesting the wall-crawler won't appear in any more Avengers movies and won't have other Marvel superheroes cameoing in his solo films. However, reports of the Marvel-Sony partnership ending are a bit premature. And even if things don't wind up being worked out between the studios, it might not really matter much for very long anyway.

First, some context. Sony has been making Spider-Man movies under license from Marvel since 2002, when Sam Raimi's first film grossed $821.7 million worldwide. Off production and marketing costs of $200+ million, Sony's after-costs share of the receipts was roughly $200 million (not subtracting for backend points). The second film grossed $783.7 million off of costs approaching $300 million, leaving Sony with something in the range of $100+/- million after costs (and before subtracting participation points). The third film saw the highest box office yet for Spidey, topping $890.8 million off of an estimated $350-400 million in costs, netting Sony receipts of $50-100+/- million (again, prior to backend points).

When Sony rebooted Spider-Man with The Amazing Spider-Man, the result was a $758 million global cume after approximately $300+ million in expenses, leaving Sony around $100+/- million (before participation is subtracted). A sequel, The Amazing Spider-Man 2, subsequently took $709 million after an estimated $350-400 million in production and marketing expenses, with Sony merely breaking even at best, or potentially losing money.

That's when Marvel Studios entered the picture, in a deal that had Marvel essentially making the films, while Sony signed the checks and pocketed the box office, minus payment to Marvel for working on the film (reportedly at a cost of about 5% of Sony's share of box office receipts). In exchange, Marvel was allowed to use Spider-Man in team-up films including Captain America: Civil War, Avengers: Infinity War, and Avengers: Endgame, while Sony's solo Spidey movies had supporting appearances by Tony Stark — aka Iron Man — and Nick Fury.

The first Sony solo Spider-Man release within the MCU was Spider-Man: Homecoming, which grossed $880 million in worldwide box office, the second-highest of any film in the franchise at that point. Then, the sequel Spider-Man: Far From Home released this summer, and so far has top $1.11 billion and counting, surpassing Sony's previous studio-best box office results from 2012's James Bond film Skyfall.

Far From Home is still in theaters and increasing its theatrical total, including with an upcoming rerelease over Labor Day Weekend that includes additional unseen footage. The superhero sequel is one of only two Sony films to ever pass the $1 billion threshold, the other being 007's aforementioned Skyfall.

Which brings us to the current stalemate between Disney-Marvel and Sony. To clear up some misconceptions spreading on social media and some press outlets, the disagreement doesn't simply stem from "Disney wanting half of the box office," as it's been simplistically and falsely stated by certain corners of media and fandom.

Disney's actual position was that they wanted to share the costs of making the Spider-Man movies — again, Sony currently pays for the production and marketing of the solo movies, but Disney offered to pay 50% of production costs. That's why they also want to split the box office results — pay half the costs, get half the results. In addition, Disney suggested Marvel get involved in the spinoff movies (such as Venom 2), raising the potential those films might also wind up folded into the MCU as well.

In other words, Disney wanted to pay half of Sony's costs to make these films, to help in the making of the spinoffs, and would possibly open the door for spinoffs to participate in the MCU — meaning crossovers would be possible at that point — as well as also getting half of the box office.

Now, let's refer back to the previous data for a moment, to consider the implications of all of this for Sony. Sony has spent a lot of money making and marketing their Spider-Man films, and over time their pre-MCU releases saw at first static and then dwindling returns on their investments. The Raimi series wound up going off the rails due to studio meddling and disagreements over how to proceed. Then, Marc Webb's rebooted films likewise wound up slave to studio demands that hamstrung the second film and abruptly ended Sony's plans once again. Marvel's entry into things, then, came after Sony twice had a good thing going with Spidey and managed to fumble it.

Which is to say, Sony spent a combined estimated $1.5 billion to make and market five Spider-Man movies that combined to bring the studio roughly $500 million or less in black ink, before subtracting all of the participation points. That means Sony was spending an average of $300 million per film, and had to make $800 million per film just to earn back a profit of less than $100 million per film.

Let me pause here to make something clear: Several of the previous Sony Spider-Man movies were great, some were good, and even the worst of them still had much to admire. I'm not trying to bash the films themselves, all of which I've seen repeatedly and own on home entertainment in multiple forms. Raimi's Spider-Man 2 is fantastic, and the first 2002 Spider-Man is overall extremely good, too. Spider-Man 3 is a mess and the weakest film of the whole franchise by far, but still has lots of fun and some moving dramatic scenes (Sandman's origin and transformation into his super-human self, for example).

I'm also a big fan of The Amazing Spider-Man, which I feel is overall a better origin film than the 2002 picture, and I'm on record saying The Amazing Spider-Man 2 is, for all of its faults, the most faithful version of Spider-Man's personality in the first five films, as well as being far better than its reputation. And when we talk about the fact Spider-Man: Far From Home is Sony's biggest release in history, keep in mind that at their own times, Spider-Man and Spider-Man 3 both set records as Sony's biggest releases, too.

So I'm far from a "hater" when it comes to Sony's work with the character. But none of that negates the fact the studio meddled as soon as those iterations of Spidey got up and running, and studio meddling resulted in sinking both versions. And this past should serve as a big flashing warning sign to Sony not to head down that same path again. The problem is, having already ignored the warning sign the first time, can they be trusted not to ignore it again?

Anyway, back to the math and rational thinking...

It takes months to get all of the pre-production dealing out of the way and complete a shooting script, and then about a year to film, edit, add visual effects, and market a film of the scale of a Spider-Man movie. All told, then, it's roughly 15-18 months of investment before the film hits theaters, and then another few months to recoup box office receipts. So Spider-Man: Far From Home, for example, got moving in the fall of 2017, started shooting in summer 2018, and released in summer 2019. The point is, Sony is spending a whole lot of money and money, and needs these films to perform better than they have in the past to make it worth the investments.

Luckily, Marvel Studios knows how to make films that perform at the level Spider-Man needs to perform for Sony. Part of the reason these latest two MCU-tied solo web-slinger releases have been so popular is the fact audiences love the MCU and they love seeing Spider-Man interacting with the Avengers, and seeing the Avengers or S.H.I.E.L.D. appearing in the solo Spidey flicks. There's no point in trying to argue about it — Marvel Studios made the Spider-Man movies into mega-hits again, and Marvel Studios turned Spider-Man back into Sony's biggest release of all time.

The fanbase for the MCU is the biggest fanbase for any franchise of films in the world, in the history of cinema. The MCU will continue to be wildly popular and wildly profitable for a long time, with or without Spider-Man. The same, however, cannot necessarily be said for Spider-Man in relation to losing his connection to the MCU. We've seen Spider-Man movies fall from grace, we've seen the franchise experience diminishing returns, we've seen Sony repeatedly have their hands on a golden goose only to end up with their goose cooked. So the fact the past two MCU-tied Spider-Man films were huge hits doesn't remotely guarantee that the next two Spider-Man films will be the same sort of hits without connection to the MCU. Protecting the strength and success of Spider-Man, then, means the clearest, most secure, and best path forward is to remain in the MCU.

I've written previously about the fact Spider-Man is the most important IP Sony has, so much so that without it Sony's financial situation would be weak. It's also no secret that Sony Pictures is likely to wind up bought by another company at some point in the next couple of years, for all of the reasons the much larger and more successful 20th Century Fox did the math and realized they couldn't compete longterm in a marketplace requiring a larger stable of branded IP, global multimedia footprint, and marketing power than Fox had, relative to more financially successful and IP-laden studios. If and when Sony winds up in a merger with a company like Netflix, Amazon, or Apple, the Spider-Man IP will revert back to Marvel — and it's unlikely anyone currently involved with the IP at Sony will get a dime when that happens.

Which means anyone at Sony hoping to maximize the value of Spider-Man's IP and cash in on it will inevitably face a lower level of compensation without Marvel involved than they would if Marvel remained part of Spider-Man's future. A coproducing deal with Marvel (as Disney offered) means a major decrease in Sony's share of costs in making the films, while expanding the value of the Spidey spinoffs. It also increases the buzz and fan anticipation for the rest of Sony's spinoff slate, and instantly puts those characters squarely in the "must see" zone for the global MCU audience in a way that simply isn't on the same level for the characters on their own.

Initial reports about the fracturing of the relationship between Disney-Marvel and Sony made it sound as if both sides already walked away, and claimed Sony made no counter-offer besides saying they prefer to simply keep their deal unchanged. But it would be absurd for Sony not to even make a counteroffer, and to instead expect Marvel would keep making solo Spider-Man movies for Sony and letting other Marvel heroes appear in those solo films without expecting a renegotiation of terms after Marvel clearly helped carry the franchise to new heights. [UPDATE: Deadline's original version of their story reported Sony's counteroffer was merely to maintain the existing deal, but that portion of the story was changed — without a correction or update note — to say Sony made counteroffers of different changes to the deal.]

The MCU films in which Spidey appeared would've still been massive blockbuster hits without him — that's no insult to Spider-Man, but rather a testament to the power of the MCU brand. So yes, of course Marvel was bound to think Sony would see how well things turned out and agree to keep the gravy train rolling by making a deal giving Marvel more control to put their own money into solo movies in exchange for a slice of the box office pie.

Does that mean a 50/50 split of costs and revenue is the only option? Of course not, which is why Sony should've made a counteroffer instead of (if the reports are true) just suggesting keeping things as-is. Why not offer Marvel the opportunity to cover 20% of production costs in exchange for 20% of box office for the third Spidey film as a test run, with a promise to revisit the terms again when it's time for a fourth movie? Disney-Marvel would likely come back with a request to split costs and box office 40-60 in favor of Sony, to which Sony could up their counteroffer to 25%, and when Marvel inevitably said that was too small an incremental increase to the first counteroffer, Sony could go to a 30-70 split (in their own favor), knowing Marvel will come back with a likely 35% final offer that Sony has every reason to accept.

But here's a thought: Sony could reply to Marvel's final offer with their own final offer, including a twist: Marvel covers production costs, Sony covers distribution, they split the revenue 50-50, and the deal is for three more solo Spider-Man movies plus three more appearances in any Marvel Studios MCU release, and Marvel gets the same deal for covering costs on the spinoffs as well (i.e. Marvel makes them, Sony distributes them, and they split box office revenue 50-50).

That might not sound like a deal Marvel or Sony would would want, but think carefully about the numbers. If Spider-Man remains at the $1 billion level, then a revenue split will be about $200+ million to each studio, from which they subtract their expenses (production costs for Marvel, marketing costs for Sony). If Marvel keeps the films at the $150-170 million level, they'll pocket roughly $30-50 million per solo release, plus they keep using him in the other MCU films, while getting more control of the character in a deal probably spanning six to ten years. That's without considering the value of having control over the spinoffs as well, having access to creating and using those characters in ways that add to the MCU, and nabbing the additional at least tens of millions of bucks in profits from each of those as well.

Maintaining use of the character, expanding Marvel's control over the IP and spinoffs, and getting a modest profit for each film is good reason for Marvel to agree to a deal, even if it's not their ideal scenario. Losing the character now will screw up the ability to use Spider-Man in the MCU for a long time. Even if Marvel Studios eventually gets the full rights to Spider-Man away from Sony in the future, it would be after Sony made their own solo Spider-Man films again with this version of the character (the one from the MCU), so whatever happens in those films may sabotage what Marvel would want to do with him later. In fact, if no deal is made, it's in Sony's best interest to go all-in on connecting their Spider-Man movies with their other spinoff films, to build their own separate new shared Spider-verse that ignores the MCU and creates continuity nightmares for Marvel if they ever get the Spidey rights back.

For Sony, this hypothetical version of a deal is also a big win. They simply continue to market the Spider-Man films while not having to worry about the expenses and details of getting the films made. Marketing costs are lower than production costs, so in this version of the deal Sony has even more reason to agree, since their share of total expenses is lower than it would be under Marvel's offer, yet they still get half of the revenue. They don't just lower their costs in direct proportion to their revenue stream, the relative drop in costs exceeds the drop in share of revenue, and that's means profit margins increase. Add in the fact spinoffs will score higher box office than they otherwise would without MCU ties, and we are talking about significant reason for Sony to do what they have to do to make a deal like this.

If Sony walks away completely, they better be sure they can make Spider-Man movies that retain the same level of quality, audience love, and box office results they got from their connection to the MCU. Otherwise, Sony will face higher costs for lower profits, less opportunities for the stories they can tell, and a sizable fan and audience backlash over the failure to ensure Spidey remains friends with the rest of the Avengers on screen. Meaning a third time Sony will have screwed up the series' future and their investors' financial futures. Because — and I cannot say this enough times — Spider-Man without the rest of the MCU is a much worse scenario for Sony than the MCU without Spider-Man is for Marvel, in terms of brand power and financial futures.

In fact, if Sony really refuses to consider alternative offers and doesn't make a deal to give Marvel a coproduction deal and share of revenue, it's in Marvel's interest not to make any side deals to continue using Spider-Man in MCU films. There's a chance this could happen, with Sony just making solo movies that exclude any mention or cameos etc related to the MCU, but Marvel pays Sony a fee to keep putting Spider-Man in the Avengers team-ups and in other superhero solo outings. The problem is, Marvel has no real incentive to pay Sony a fee to use Spider-Man, since his inclusion in a limited capacity doesn't bring much to the table, and instead serves mostly to maintain the false impression that the solo Sony movies are still part of the MCU — meaning whatever happens in those films is perceived by audiences as being part of the MCU too, and if/when some of the solo films or spinoffs decrease in quality or underperform, it creates the impression of a stain on the MCU's reputation.

Paying Sony to use a character in ways that primarily act as promos for Sony's solo films, while taking on the risk of those solo films hurting Marvel's own reputation, isn't a scenario favorable to Marvel. If Sony balks at a deal for the solo films, Marvel shouldn't waste time or money on trying to make a deal for the MCU team-ups.

On the other hand, if Sony did make reasonable counteroffers and Marvel simply wasn't interested in any deal except their specific 50-50 split, then Marvel needs to rethink their approach on this and not let the opportunity for a continued deal slip away at this point. Things are going well for both parties, there is potential to reach a deal beneficial to both sides and that avoids a significant mess being made of the character in a way that could sabotage any future chance of reintegrating Spider-Man back into the MCU again in the future (after an initial split-up), and there's no reason to let things sour over not getting a precise take-it-or-leave-it deal at this point. [This paragraph added after updated information became available.]

Which is all why I think the news reports are premature, and that Sony and Marvel have too much at stake not to make a deal. A deal makes too much sense for both sides to walk away. I think the reports today were probably a leak by one of the involved parties, and I think it was intended to throw some cold water over the situation and wake everyone up to how bad it would be if a deal isn't reached.

All of that said, though, if in fact a deal isn't reached, then one of two things will still happen. The first possible outcome is this: Sony makes their solo movies and it all works out fine for them, which leads to another studio stepping in to acquire Sony before the buying price goes up too much (as it would if the solo films continue being billion dollar earners while the spinoffs are likewise blockbusters, even though the IP won't transfer in a sale), and then the Spider-Man rights revert back to Marvel. The second possible outcome is this: Sony makes their solo movies and it all goes badly, the studio spends more and more money on them while the box office diminishes (again), the spinoffs aren't as big of hits as hoped, the IP becomes a mess (again), and Sony's value drops until another company acquires them when the price is relatively cheap (to get their back library of content for a streaming service like Netflix, Amazon, or Apple), and then the Spider-Man rights revert back to Marvel.

One way or another, I think Sony will wind up merged into another company. When that happens, of course, even if Sony is in a bad position due to fumbling their Spider-Man IP (again), the stock value will still go up on word of the merger. So either way, Sony is part of another bigger company and investors do well in the end. But also either way, Spider-Man heads back to Marvel. The question is, what shape will he be in when that happens? Will it be a situation where the Sony folks currently involved in making the films and pocketing their paydays suddenly get left empty-handed?

Which raises the question, if Sony is probably going to be acquired in the next couple of years or so anyway, shouldn't Sony just sell Spider-Man to Disney-Marvel prior to an acquisition, to avoid losing the IP for nothing instead of getting a final payday out of it? Or alternately, should they renegotiate the current deal with Disney-Marvel in a way that reduces their out-of-pocket expenses and increases their profit margins, while including a new agreement that prior to any Sony merger into a new company, Marvel will buy back the full Spider-Man IP at a set price? That would ensure Sony folks get a nice bonus when the web-head finally leaves their hands, while keeping the revenue flowing nicely until that day arrives.

The danger for Sony is that another studio will move to acquire them sooner than expected, before Sony can put any new deals in place, which will just result in Marvel getting Spidey back in house without having to make any new deals or offer Sony any additional money. I'm not privy to the precise details of the contracts and licensing, but my understanding is the licensing isn't transferable, and that Marvel will regain full rights to all of the related Spider-Man characters if Sony Pictures is sold. If it turns out Marvel would have to make an offer to buy the rights back, or otherwise compensate Sony prior to a merger, then that would of course change some of the math here, but ultimately not much of it overall.

I think Marvel wants to keep the deal going, and it's just a question of whether Sony makes the smart choice to send a counteroffer, and whether both parties will avoid brinksmanship in order to reach a fair deal that can make everyone happy. Things have been working out great so far, and it would be foolish to let that slip away. Especially for Sony, since they stand to lose everything and gain nothing by brinksmanship or ending the relationship with Marvel.

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