Mickey and friends. (Source)

How to build a character universe

Announcing Lightspeed’s investment in AWA, a modern character-driven entertainment studio built for and by creators.

Iconic characters come around once in a blue moon. When they do, they quickly become part of popular culture.

Today the WSJ announced Lightspeed’s investment in Artists, Writers, & Artisans (aka AWA Studios). The company’s aim is to build a cohesive universe of characters from scratch, leveraging modern context and technology. It also seeks to compensate creators fairly for their contributions and has already attracted world class talent to the platform.

We are just beginning to talk about what AWA is working on. To provide context, I need to go back to the very first blockbuster character of the modern age: Mickey Mouse.

The house that mouse built

Mickey Mouse came to life in the age of the “talkies.” His origin dates back to Walt Disney’s Steamboat Willie cartoon, released in 1928:

Image from “Steamboat Willie,” by Walt Disney. (Source)

Every now and then, a character like Mickey gives birth to a “universe.” These big bang moments occur when a character has such cultural resonance that it launches its co-stars into careers of their own. Mickey’s success launched a seemingly endless stream of characters that shared the same universe and artistic style, including Minnie Mouse, Goofy, Donald Duck, and Pluto.

Scenes from a Disney Christmas. (Source)

The Walt Disney Company leveraged its scale of distribution from these early successes to build a character-driven empire that monetized in every conceivable way. The brilliantly detailed flow chart below shows the strategic linkages of different business units at Disney:

Flow chart, supposedly drawn by Walt himself, showing the strategic connections between Disney’s various businesses. (Source)

Today, Disney has an enterprise value of $255 billion and trailing revenues of $59 billion. To achieve its scale, the “house of mouse” has diversified away from its principal Mickey Mouse universe, mainly through acquisition. Recently, the most notable of these are Pixar ($7.4 billion, 2006), Marvel Entertainment ($4.0 billion, 2009) and LucasFilm ($4.1 billion, 2012).

Avengers, assemble!

Marvel has intentionally leveraged the universe phenomenon to build a massively valuable franchise. At the time of its acquisition by Disney, Marvel had just relaunched its characters in the Marvel Cinematic Universe (MCU). For the next decade, the audience was sequentially reintroduced to classic characters like Iron Man, Hulk, Thor, and Captain America, who were united in the Avengers series. Marvel also revitalized a number of forgotten characters from the comic dustbin and created blockbusters in Black Panther ($1.2 billion gross) and Captain Marvel ($1+ billion gross). All these heroes will soon be smashed together soon in Avengers: Endgame —the capstone moment of the MCU.

It all ends on April 26th! (Source)

The network effects of the MCU have been remarkable. It has literally, and figuratively, saved dying superheroes. Spider-Man, one of the most beloved comic book characters of all time, was losing cultural relevance until his 2017 reboot and inclusion in the MCU with Spider-Man: Homecoming, which boosted domestic box office sales by over 60% from the prior release:

Inclusion in the MCU drives the success of new characters too. Take a look at the below data for less known titular characters in Hulk, Doctor Strange, Black Panther, and Captain Marvel:

Sequels do increasingly well by reinforcement in MCU. Also, every new character does better than the last. Note: “Captain Marvel” may beat “Black Panther” when adjusted for time. (Source)

The movies were released in that order, each with a higher gross than the last (save Captain Marvel, which is only a month old, but off to a great start). What you can see is a clear upward trend of increasing success with more recency. More characters in the MCU means more revenue for all characters, including new ones.

The need for a modern universe

I give Disney massive props for making transformative acquisitions and leveraging them to build valuable media franchises. That said, like many of you, I have serious Marvel fatigue right now. I find it hard to get excited about the same old characters and storylines getting reinvented over and over.

Furthermore, few compelling competitive universes exist. A lot of the IP is dated. The most well known is the DC Comic Universe, which originated in 1934 and is now owned by Warner Brothers. It has produced hits and misses with little consistency in the past few decades. Batman v. Superman: Dawn of Justice really sucked. So did Justice League.

The time is ripe to start from scratch and build a universe rooted in modern sensibilities, built natively for direct-to-consumer distribution. Closer connections to consumers, mediated by technology, means faster feedback on characters and storylines that resonate, as well as faster growth of ideas that break out. An entertainment studio that anticipates the fast character iteration cycles of the internet has a shot at building a next generation universe.

At Lightspeed, we are excited to back AWA to chase that opportunity. We led the Series A last year, and I joined the board, along with Jon Miller (former CEO of Digital at NewsCorp), who is also a co-founder.

Axel, Jon, and Bill chatting about comics, probably. (Source)

Who is AWA?

The founders of AWA are the leaders that brought Marvel from its post-bankruptcy dark ages into the MCU. Bill Jemas was Marvel’s COO and Publisher. Axel Alonso was its Editor-in-Chief.

Among Bill and Axel’s many claims to fame are reinventing the core characters of Spider-Man and X-Men. Axel brought world class creative talent back into comics, collaborating to reboot titles like Black Panther (Ta-Nehisi Coates), Punisher (Garth Ennis), Wolverine (Mark Millar), and Deadpool (Daniel Day). In addition, the team proudly pushed Marvel to champion diversity by including characters of myriad ethnicity — a biracial Spider-man, a Korean-American Hulk, an African-American Captain America, and a Mexican-American Ghost Rider.

AWA has brought many of the founders’ favorite creators back into the fold. The company’s creative council, and some of our first creative partners, include Reginald Hudlin (Black Panther, Boondocks), Margaret Stohl (Black Widow, Captain Marvel), Gregg Hurwitz (Orphan X, Wolverine), Garth Ennis (Preacher, The Punisher), and J. Michael Straczynski (Babylon 5, Sense8).

AWA is excited to build an entertainment studio that puts the creators at the center — enabling them to retain economics and creative control. In Axel’s own words, we are offering creators the opportunity to “bet on themselves without putting it all on the line.” We are greater than the sum of our parts.

I am thrilled to be part of the journey and plan to reveal more of the company’s plans in the coming year. Until then, keep your eyes peeled for some awesome stories!

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Lightspeed is a multi-stage VC firm focused on accelerating disruptive innovations and trends in the consumer, enterprise, and health sectors. In the past two decades, Lightspeed has backed 400+ companies and currently manages $10.5B across the global Lightspeed platform.

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Alex Taussig

Alex Taussig

Partner @ Lightspeed. Current: All Day Kitchens, Archive, Daily Harvest, Faire, Found, Frubana, Muni, Outschool, Zola. Past: $TDUP, $TWOU. Writes firehose.vc.

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