Entertainment execs hit Comic-Con to build buzz

There's a new team of superheroes in entertainment. But it isn't made up of fantastical creatures that defy the laws of physics.

Due to changes in the national mood, and savvy company strategies, publishers of comic books and graphic novels — led in the USA by Marvel Entertainment mvl, Time Warner's DC Comics twx and Dark Horse — have been transformed from mild-mannered niche businesses into muscular media forces.

Their characters, stories and writers are driving billions of dollars in sales and saving the day for film, TV and retail companies struggling in a so-so market.

"Comics are a low-cost laboratory, with instant feedback, for what's happening in pop culture," says Milton Griepp, publisher of ICv2, a website that tracks comic publishing.

Although comics have long had a presence in radio, TV, movies and licensed merchandise, he says they've never had such far-reaching impact.

For example, last weekend, movie-goers spent $158.3 million to see the Batman feature The Dark Knight— a Friday-to-Sunday record. That followed a string of summer hits derived from less well-known comic characters: Iron Man, The Incredible Hulk, Wantedand Hellboy II: The Golden Army.

They're on pace to beat the record $925 million in ticket sales generated last year from films adapted from comics. Those titles, including Spider-Man 3 and 300, accounted for 10% of the 2007 box office.

Comic book writers also created two of prime-time TV's biggest hits: NBC's Heroes and ABC's Lost.

That makes this weekend's sold-out Comic-Con — the biggest annual fan gathering, taking place in San Diego — more important than ever. Entertainment executives are flocking there to stoke excitement among its largest-ever crowd for upcoming films, including Watchmen, Caliber and X-Men Origins: Wolverine, as well as TV shows and books.

"It's a big deal and a wild show," says Michael Stone, CEO of The Beanstalk Group, a licensing consulting firm. "There are a lot of comic book companies besides Marvel and DC, and something can rise out of there pretty quickly."

Faster than a speeding wallet

Stone says consumers are spending record amounts on toys, games, clothing and other merchandise featuring characters licensed from comic books and graphic novels.

Warner Bros. Consumer Products, which handles DC's Batman and Superman, as well as non-comic book properties including Harry Potter, generated $6 billion in retail sales last year, making it the third-largest licenser — behind Disney dis and Phillips-Van Heusen pvh— trade magazine License Global says.

DC hopes to expand its reach to adults this Christmas with a Diane von Furstenberg-designed line of clothing, leather goods and footwear based on Wonder Woman.

It's also gearing up for Watchmen, a film due in March based on one of the first important graphic novels, a cult hit published in 1986. Fans are already salivating over news items about the movie, as well as its newly released trailer. The combination has led to a significant increase in sales of the book, DC Comics President Paul Levitz says.

Meanwhile, Marvel ended last year as the No. 5 licenser as sales of merchandise with characters including Spider-Man, X-Men, Hulk and Iron Man rose 14.6% to $5.5 billion.

Sales could grow as retailers gain confidence that the comics boom isn't a fad and clear shelf space.

Also adding to the buzz: Marvel is working on a Spider-Man musical with director Julie Taymor (The Lion King) and music from U2's Bono and The Edge.

All this attention to comics and their offshoots has propelled shares in Marvel, the only publicly traded comics company, up nearly 37% the last 12 months, a period when the benchmark Standard & Poor's 500-stock index fell 17%. The company just started to produce its own films, a remarkable comeback from when it filed for bankruptcy protection about a decade ago.

"A lot of people see that brand flickering across the screen in a movie, and they go, 'Oh my God. It's huge,' " Marvel Publishing President Dan Buckley says. "But we've got two offices and about 315 employees."

Executives and analysts have several theories, none of them easily provable, about what may have triggered the latest comics boom.

Perhaps people became more interested in superheroes after the 9/11 terrorist attacks. Or maybe fantasy suits an era of dazzling innovation in computers and consumer electronics. And digital video effects now replicate the incredible ink and paper imagery without looking cheesy.

Whatever the reason, comics and graphic novels generated about $700 million in sales last year, up 9.4% from 2006, Griepp says — and about 40 cents out of each dollar Marvel collects from print goes straight to operating profit.

"We have more breadth of product," Buckley says. "We have a mass-marketing machine with the movies. There's a depth of (writing and artistic) talent. And we have two legitimate retail distribution areas with the hobby market and the book market."

It's clobbering — er, shopping time

That's a big contrast to the last boom in the early 1990s.

Comics primarily were sold at hobby shops, and many people, including retailers, hoarded new issues in the hope that they'd become valuable collectors' items. Those hopes were dashed as the fan base dwindled; comics were too hard to find and too expensive for young people who just wanted a fun read.

Things started to change around 2000, when a book buyer for Borders bgp developed a passion for a Japanese genre called manga (that's Japanese for "comics"). Borders stocked up on manga books, which appeal to girls and young women — a contrast to the male-oriented superheroes.

Manga "did incredibly well for them," Buckley says. "And that opened the eyes of book buyers: 'There's something to this comic book thing. What other graphic fiction can we bring in?' We had Spider-Man (the movie) out there around the same time doing gangbuster business. They said, 'We can buy that.' "

DC, which trails Marvel in sales of traditional comic books, quickly moved into bookstores. It helped its cause last year by cutting a deal to have Random House distribute its graphic novels.

"That side of the business has … been acquiring new customers at a very swift pace," Levitz says. "They're just saying, 'I'll add some of this to my diet.' We get to be a more rounded part of the culture."

As bookstores made comics accessible to ordinary readers, publishers launched ambitious campaigns to broaden their audience.

Marvel has eight product lines targeting different age groups and sensibilities. They include one that adapts classics such as The Iliad and another that features stories from best-selling authors, including Stephen King and Laurell K. Hamilton. There's also an all-ages print line, designed in consultation with mass marketers Wal-Mart and Target.

"Marvel had not dedicated itself to an all-ages line since the 1970s," Buckley says. "These are the guys we need down the road."

Similarly, DC has five print lines, including two that launched in the last five years: manga-oriented CMX and Minx for teen girls. Novelists who also write for DC include Brad Meltzer and Neil Gaiman.

Both companies see additional opportunities to expand on the Web: Marvel makes thousands of its comics available for about $60 a year at Marvel.com, while DC offers original material for free at Zudacomics.com.

It's a bird! A plane! A … product?

The top publishers also are finding creative ways to boost advertising in their comic books.

For example, ongoing comic book series often include product placements in addition to conventional ads inside the publications and on the back cover. Marvel stories have featured ABC's Lost, Nike and Mazda, while DC has had Nautica.

"Our consumers are consuming (comics) — this is something that they enjoy and like," says Mazda North American Operations CEO Jim O'Sullivan. "We want to be where they're at, specifically if we become more of a character instead of a product placement, because that gives us more credibility."

Publishers will crank out entire comics to support an advertiser or cause.

"A number of years ago, we helped Powerade with a new flavor that was launched by (NBA star) LeBron James," says Steve Rotterdam, DC Comics' senior vice president for sales and marketing. "It was sold to retailers as a comic and collected in a graphic novel and sold in bookstores." Other projects encouraged kids not to smoke and to wear seatbelts — and one overseas warned kids to watch out for mines.

The danger for the dominant comics companies is that their success will energize rivals, including Japanese powers Viz Media and Tokyopop, and children's publishers such as Scholastic.

"All of the major publishers are trying to figure out how to do this stuff," Buckley says.

And as the business grows, they may learn that with great power comes great … well, you know.