A Business Lesson from Avengers 2: How One Great Hire Can Be Worth $596M

April 29, 2015

How much is a great hire worth?

Well, in the case of Robert Downey, Jr. and Avengers: The Age of Ultron, about $596 million or so.

The movie starring the actor as Iron Man is set to open this Friday in the United States, and it will likely be one of the highest-grossing movies ever. After all, the first Avengers movie raked in $1.5 billion – making it the third-highest grossing movie ever – and Age of Ultron has already made $200 million in 44 overseas markets.

Some people mistakenly think that the success of comic book movies like Age of Ultron is inevitable, that they capitalize on a product – Marvel’s beloved characters – that have been in our lives since our childhood. And yet, when you really analyze the numbers, that isn’t the full story.

Yes, the name recognition of a Spider-Man or Captain America helps, but Marvel isn’t just capitalizing on its characters. It’s also capitalizing on the talents of the Downey, whose proven himself to be a revenue-generating superstar.

2008: A bleaker time for Marvel’s movies

At the start of 2008, movies starring Marvel’s characters had a much different reputation. The past seven major motion pictures featuring a character from the comic book company had an average Rotten Tomato score of 35 percent, meaning most critics didn’t like them.

And while they made money, they were making less money than what the company expected. Overall, those seven movies – which were released from 2004 to 2007 – brought back roughly $2.60 for $1 spent on them.

That sounds good, but the historical return for a movie featuring a Marvel character to that point was $3.02 in for every $1 out.

Then came Downey

That abruptly changed in 2008 with the release of Iron Man, starring Downey. The movie earned $585 million off of a $140 million budget and garnered a 93 percent rating on Rotten Tomatoes, the second-highest score ever for a movie featuring a Marvel character (the first is Spider-Man 2 with a score of 94 percent, in case you were wondering).

The main reason Iron Man was so loved? Well, look at this quote from Rodger Ebert’s review of the film:

“At the end of the day it 's Robert Downey Jr. who powers the lift-off separating this from most other superhero movies,” Ebert wrote.

Since Downey’s first appearance, there have been 14 more major motion pictures featuring a Marvel character without him in it. While those movies were critically successful, averaging a Rotten Tomatoes score of 67 percent, they returned just $3.10 for every $1 spent on them, or about 3 percent higher than the company averaged before.

Meanwhile, the four Marvel movies starring Downey averaged a stellar Rotten Tomatoes score of 84 percent and made a total of $3.92 billion (almost $1 billion a movie!). Two of them – the first Avengers film and Iron Man 3 – are among the six highest-grossing movies of all time.

$596 million

Here’s the bottom line: there have been 31 major motion pictures featuring Marvel characters that didn’t have Downey in them. In those 31 movies, for every $1 spent on them, they’d bring back $3.06.

Compare that to the four Marvel movies Downey has been in. In those movies, for every $1 spent on them, they brought back $5.19 – a 70 percent higher return-on-investment than average.

Bringing it back to the beginning, we often ask how much hiring top talent matters. Most of the time we say it’s incalculable, it’s too hard to put a price on.

Well, with Downey, using trend data, we can make a pretty informed guess what he’s worth to Avengers: Age of Ultron, which has a $280 million budget:

  • Without Downey, the movie should expect to see a 306 percent return-on-investment: $280M X 3.06 = $857 million
  • With Downey, the movie should expect to see a 519 percent return-on-investment: $280M X 5.19 = $1.453 billion

When you subtract $857 million from $1.453 billion, you realize the “Downey effect” is worth $596 million. Not too shabby.

Guess hiring the right person really matters after all.

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* image by The Avengers movie

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