Creative Stock: Why Intellectual Property is Africa’s Most Valuable Resource
On August 31, 2009, Walt Disney Company announced that it had purchased Marvel Entertainment Inc. and its more than 5,000 characters and universe, for $4 billion. Disney Chief Executive Bob Iger said “adding Marvel to Disney’s unique portfolio of brands provides significant opportunities for long-term growth and value creation.” Little did the world realize the kind of long-term growth, Disney and Marvel had in mind.
Over the course of the next 10 years, executed in what are now understood to be the 3 phases of the Marvel Cinematic Universe (MCU), film producer and President of Marvel Studios, Kevin Feige, has turned a $4 billion dollar intellectual property investment into a $20 billion success for parent company The Walt Disney Company. Under Feige’s careful watch and artful creative architecture, the MCU has become the most valuable film franchise in the world.
The beauty of this journey lies in the intellectual property. Now in Hollywood, more and more producers are looking for content based on recognizable intellectual property, stories that have a built in audience, or an audience that can be activated with a quality film or television adaptation. Another mindblowing example of intellectual property powerhouses is HBO’s Game of Thrones, a international success, a $1billion dollar television show, and a major tourism generator. Northern Ireland’s screen agency invested about $18.3 million dollars in to Game of Thrones and has seen nearly $224 million dollars return to the country in the form of filming expenses, tourism, and more.
The World Intellectual Property Organization defines intellectual property as creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce which can be protected by copyrights, trade marks, and patents and allow owners of IP to gain recognition and financial benefit from their creations. Without the ability to own the expressions of their ideas, Marvel would not be able to license the rights to their characters to other companies for a fee to make the action figures and the T-shirts. If someone were to use Marvel’s comic books to create a notebook and sell for profit without Marvel’s consent, Marvel would have no way to stop the sales, or demand their fair share of the profits. For any product that is made, the T-shirt, or notebook, the reason it is valuable is because of the character whose story was created by Marvel. Without the character, the shirt may be 100% cotton, and the notebook may be really nice paper, but it wouldn’t be as cool, it wouldn’t be able to command the same price, it couldn’t benefit from a fan’s loyalty to a particular character.
So what does that have to do with intellectual property, and the Marvel Cinematic Universe? Let’s think about intellectual property like stock, creative stock to be exact. So, if we view Marvel’s catalogue of characters, and the Marvel Universe as creative stock, and the initial purchase price by Disney of $4 billion as an investment in the catalogue, then the subsequent activities of Marvel Studio increased the value of the creative stock to where it is today. Now, the MCU is one piece of IP, but if you were to look at the US like an index, where you collect all the intellectual property activities together and took the average of all the activities, then the US’s creative stock index would be very high. From theme parks, to concerts, there are endless entry points for the development and the growth of creative stock in the United States. Additionally, intellectual property activities would not only include finished products or projects but also access to top-notch training, laws that protect intellectual property, traditional and nontraditional distribution pathways to exploit intellectual property, and access to various forms of financing for creative projects.
Now, it is great to have IP, even better to have a collection, or an index of creative stock that raises the overall value of a nation’s creative index. But, there is one more thing that makes IP a particularly fascinating asset. IP not only increases value for successful present day adaptations — present-day success has a regressive impact. So after Marvel’s Cinematic Universe took off, old comic books were being purchased by customers so they could learn about their favorite character’s origin stories, or epic battles. Therefore, the present value of the films, made past editions of the comics books way more valuable. Or stated another way, creative stock that is low today, could rise tomorrow, and the rise in tomorrow’s creative stock can cause old IP content to also rise in value.
So far, Hollywood has enjoyed a competitive advantage in this area. In a place where high quality training exists for creative practitioners at every level, and government policies facilitate and encourage the ongoing development of creative works as a means of soft power there are already benefits to developing intellectual property in the US. When coupled with finance strategies that ebb and flows with the evolution of the industry, and strong legal protections exists to safeguard owner’s rights and ensure that the maximum economic benefit can be realized from each piece of intellectual property — it would appear that no other nations can compete.
The reality is that many emerging nations are looking to compete in a very big way. In recent years, the most notable country to enter the fray is China. Leading with strong protectionist policies to encourage local consumption of local films, as well as major government spending in the training, production, and distribution of content, China is making a concerted effort to bolster their local box office. While it can be argued whether there is free exercise of creativity, and whether their legal system stands strong in the area of protection, China has embraced the soft power of creativity and has gone as far as hiring Hollywood elite behind the camera to come and train their citizens on how to make films. The results thus far are telling. 2018 saw a 10% rise in the box office to $8.9 billion dollars, which catapulted the sleeping giant to the third and sometimes second largest box office in the world (depending on the year) after the US and Canada. For a country that just started focusing on the creative sector,again, less than a decade ago, that is cause for celebration and hope for other emerging regions.
In the event the development of creative stock were to lead to gains in soft power, and improved, or higher quality entertainment, is that enough to invest in the creative sector? How can real dividends be realized through creative stock for nations bold enough to dedicate significant attention to it? What does creative stock mean for economic development? Why should emerging markets look to invest in their creative sectors? A 2015 report by EY indicated that the creative and cultural industries, those driven by creativity, and cultural traditions(think tourism, entertainment, and leisure) are responsible for $2,250 billion in revenue and the creation of 29.5 million jobs globally. Not only are these industries major economic drivers and job creation machines, they are also uniquely positioned to employ young people, and serve as a means to mediate gender disparities since these industries also favor participation of women. Further, for industries that are seen as service driven, the advent of the digital economy has resulted in diversifying creative and cultural offerings, thereby allowing more individuals to participate in these industries. Asia-Pacific and North American regions are the number one and two contributors to the global creative and cultural industries. Asia-Pacific beats out North American region simply by the impact of the population.
With those statistics in mind, it makes sense why a country like China would want to train local creative entrepreneurs to develop local and international content that can generate significant revenue, and drive their nation’s GDP up. With population on their side, similar investments in distribution, training, and legal protections can have massive impacts on job creation and economic development.
For a continent like Africa, with mythological Gods and Goddess abound, where the political intrigue could put House of Cards to shame, and the stories go back to the dawn of time, there are ample opportunities to develop creative stock. Not only is there value in developing untold stories into successful intellectual property franchises, there is also a very real need to find solutions that can address economic inequalities across the continent. With a growing youth population, and rising unemployment and gender disparities, investment in creative stock is an obvious choice.
African storytelling is emerging again at the most egalitarian time to be a content creator. No longer is distribution simply about networks and media cartels. Social media has enabled the creator to speak directly to their audience. Netflix has flattened the path from concept to viewing in a way we have never seen before. Creative stock is vital to the economic potential of this next generation of young Africans. There is no more valuable resource than African stories, that is what African countries need to be mining, and polishing — -otherwise someone else will come dig the stories up and polish the stories themselves. Before they know it, the economic value will land in other continents entirely.