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Business

Royal Weddings: Marvel/Epic & Nestle/Starbucks

Prince Harry and Meghan Markle are not the only royals whose union we are celebrating this week.

Nestle strikes a $7.5 billion cash deal with Starbucks for the exclusive right to sell the chain’s packaged coffees and teas around the world—not including future revenues from product sales and royalties. Starbuck’s current packaged business is worth approximately $2 billion; the alliance is expected to boost Nestle in North America (where it holds under 5% of the market) and benefit Starbucks in China, which is Nestle’s second largest market. The deal includes Starbucks-branded capsules for Nestle’s Nespresso and Dolce Gusto single-serve brewers.

Nestle will take on 500 Starbucks employees as part of the deal, which does not include industrial assets. Starbucks will use proceeds to increase planned stock buybacks to $20 billion from $15 billion through fiscal 2020; it said the deal would add to earnings per share by 2021. Nestle expects the alliance to add to its earnings by 2019.

Disney’s newest Marvel film, Avengers: Infinity War, kicks off a huge crossover with Epic Games’ Fortnite (which is being represented by IMG). Although retail sales of licensed video games/software have not been keeping pace with average industry growth (up 1.7% in the U.S./Canada for 2017), the instances of these types of marketing collaborations have been on the uptick. The reason that these collaborations haven’t resulting in big bucks is that most are pure exposure marketing deals that do not pay out flat fees or royalties, but instead are meant to boost each partner’s fan engagement by introducing them to a new audience in a meaningful way.

It remains unknown, however, if Marvel and Epic Games have negotiated some kind of revenue split in this case. But it wouldn’t be surprising if they did—the free-to-play game raked in $223 million in revenue across all platforms in March alone, according to research firm Superdata.

According to Dubit Trends, 25% of American children aged 5-15 have played Fortnite in the last week; with the highest share of players (30%) in the U.K. In comparison, 51% have played Minecraft, 39% Candy Crush, and 38% Angry Birds in the U.S.

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