If Hollywood were to make an action flick about the toy industry’s recent history, this is just about the time when the good guys would step in and save the day.
Plagued by age compression and retail consolidation, it’s no secret that the biz has hit a rough patch. And despite the breakout success of properties like Spider-Man, the traditional boys toy categories – including action figures, vehicles and building sets – have been particularly hard-hit over the last few years.
According to the NPD Group’s 2003 sales count, the US$1.2-billion action figure category finished down 14.6% over ’02; and as of November 2004, sales had decreased another 4%. Meanwhile, building sets were down by 18.4% in 2003, and had only eeked out a 1% gain by November ’04. Likewise, vehicles experienced a 11% drop in ’03 and had fallen another 2% by November ’04. Although December 2004 sales hadn’t been tallied at press time, there’s no indication that the picture will change significantly.
But this is the year of kid-targeted action flicks and toyetic family films. And refreshed programs for mega franchises including Batman, Harry Potter and Star Wars – bolstered by new entries such as Marvel’s Fantastic Four, Fox’s CGI flick Robots and Peter Jackson’s King Kong – are poised to come to the rescue. While the good guys are battling the bad guys on-screen, is it possible that they could bring some superhero muscle to the toy aisle?
‘I think [these films] can definitely infuse some energy into the toy industry,’ says Anita Frazier, entertainment industry analyst with the NPD Group in San Diego, California. She says it might even have a trickle-down effect, moving from core boy categories to fatten up sales in outdoor games and toys & puzzles as well.
Frazier says the lineup of properties driving the action figure category has been surprisingly static for a while now. ‘Every year, it’s Star Wars, Spider-Man, Power Rangers and Transformers,’ she says, adding that the top five is usually rounded out by one other film-linked contender. But this year might be different.
It’s not just the sheer number of boys action films coming out that makes for an interesting forecast; it’s also the timing of the releases. According to Frazier, while summer is typically a dead zone for toy sales, three huge releases (Star Wars: Episode III – Revenge of the Sith, Batman Begins and Fantastic Four) could drive traffic on the retail front well before the usual frenzy in the final quarter.
But these properties are entering an already crowded market, with considerable turf already staked out by TV mainstays such as Power Rangers and Pokémon. And toy industry analyst Sean McGowan, managing director of Harris Nesbitt in New York, has seen one too many sure bets crash and burn at retail to be overly optimistic. ‘One thing the toy industry has learned is that a movie can do extremely well at the box office and not translate into big-time toy sales.’ He points to Men in Black (1997) and Godzilla (1998) as examples of this frustrating phenomenon.
Besides, says McGowan, buyers still haven’t rekindled their ardor for film-based property merch, which cooled down in the mid-’90s. Even timing can make the prospect of success dicey: No retailer wants to build up a bunch of inventory only to have the property fall flat. Summer movies, even if they are successful at the box office, don’t often get much in-store shelf space because buyers don’t believe consumers will purchase many toys at that time of year.
However, he’s quick to dismiss concerns over whether there’s room for all the competing TV and film superheroes battling it out on-shelf. ‘They want it all,’ he says of kids. He points to the action figure heyday when boys clamored for several properties at once. In 1987, for example, there were seven boys action figures out at the same time – including Transformers, G.I. Joe and Thundercats – and each posted more than US$100 million in sales that year.
For McGowan, the real litmus test of the strength of the ’05 properties will be their endurance into 2006 and beyond. ‘I think it’s going to be a better year for the category, but I’d look to 2006 and wonder whether they’ll carry through for another year.’
So, what do licensors and licensees have up their sleeves for the year? How are they planning on generating excitement, carving out significant shelf space for their lines, and making a go of it in an increasingly competitive market? Here’s a look at some of the key boys action film releases of 2005 and their accompanying toy lines in order of U.S. opening dates.
Robots (March 11)
Twentieth Century Fox
March isn’t exactly a strong month for launching a film with pretensions to serious licensed toy sales. In terms of retail planning and ordering patterns, it’s a bit of a black hole, actually, as in-store planograms are set in January and revised in August. But that’s OK with Peter Byrne, executive VP of Fox Licensing & Merchandising. It was more important to secure a window for the movie that wasn’t already occupied by another boys action property.
‘We are the first major CGI film out of the gate this year,’ he says. ‘That’s critical for getting the right commitments.’ Retailers seem to agree. Wal-Mart, Toys ‘R’ Us, Target, Kmart and Rite-Aid, as well as mid-tier outlets Sears, JCPenney, Kohl’s.com, Best Buy, Barnes & Noble and Borders, have all signed on to carry product. Equally critical is the promise of a full-blown marketing program, and Fox has secured top-notch promotional partners like Burger King, Kellogg, Keebler, USPS, Kid Cuisine and Sunbeam so far.
In the film, the good-guy robots are constantly losing their parts and picking up random bits and pieces as substitutes. The bad guys want to put an end to these makeshift makeovers and overhaul all robots with brand-new, uniform pieces. Boys love to tear things apart and rebuild them with different components, so there’s a strong play pattern implicit in the film.
Master toy licensee Mattel plans to introduce a broad range of Robots toys in waves. First out this month will be action figure packs (about US$6.99) featuring two main characters. In keeping with the story line, in which lead character Rodney ends up being magnetized by mistake, the figures have magnetized feet and can pick up metal objects. Their packaging will feature a unique cog system that allows the toys to be turned around within the package to give kid shoppers a 360-degree look.
Armed with the knowledge of just how popular the role-play category has been over the past couple of years, Mattel is pinning its hopes on Roboots (US$19.99), available at the end of this month. ‘It’s our number-one item in the line,’ says Geoff Walker, VP of entertainment marketing for Mattel in El Segundo, California. The boots resemble those worn by Rodney and make robotic clanging and banging noises. To keep momentum moving, Mattel is also launching a US$40 Super City playset this fall to coincide with the DVD release.
Star Wars: Episode III – Revenge of the Sith (May 19)
Lucasfilm is playing its cards pretty close to its chest for the release of the final installment of George Lucas’s epic series. Just don’t expect a repeat of the Episode I feeding frenzy. ‘We all owned a piece of overdoing it,’ says Howard Roffman, president of San Rafael, California-based Lucas Licensing. ‘I think we understand a lot more now about how you appropriately feed a marketplace.’ Merch from Episode I (1999) brought in US$2 billion at retail, while Episode II’s take dropped to US$1.3 billion. Roffman expects that Episode III will fall somewhere in between these two benchmarks.
Frankly, Roffman says he prefers a conservative retail approach because it prevents the headaches and pressures of an overstuffed market. ‘There’s a nice self-policing effect to it,’ he says. ‘Even if you have a licensee who, in their heart of hearts, would like to sell more than the consumer is willing to buy, retail is not going to go for it.’
Lucas is revisiting its sneak preview strategy for round three, with plans to launch several figures and vehicles from Hasbro and Lego in February. ‘It’s a nice way to whet the fans’ appetite,’ says Roffman. Rob Ellis, senior VP of Star Wars at Hasbro, says the preview products are very much collector-focused. Because Star Wars is a day-in, day-out property, its popularity with collectors and kids changes depending on whether a new project is out. Ellis estimates that the breakdown between kids and collectors is about 60/40, but that split shifts to 70/30 in years in which a new movie is released.
Come April, a broad array of kid-targeted product will hit shelves, and Lucas is hinting that there will be significant changes to the line. Roffman acknowledges that Lucas and its toy partners may ‘have been too much in a one-size-fits-all mindset’ with the property in the past, and there are some untapped market niches to exploit.
For example, while the mainstay of the Star Wars line from Hasbro has traditionally been its three-inch figures, the success of 2004′s larger and less detailed Galactic Heroes line for preschoolers clearly shows the property is connecting with younger consumers as well. ‘They’re hard to keep in stock, and that’s what we’re going to be continuing next year,’ Roffman says. In addition, the company plans to launch a line that specifically plays to the five to seven set. ‘With this demo, we’re looking much more to the play value than to things like detail and authenticity, which are so important to the collector,’ he explains.
Look no further than Darth Tater (US$7.99) to get a taste of this direction. While not directly tied to Episode III, the classic Mr. Potato Head figure from Hasbro’s Playskool has been made over as Star Wars’ root of all evil. The figure, which hits retail this month, comes complete with Vader’s trademark cape, helmet and lightsaber, but the addition of cute googly eyes should help it appeal to younger kids as well as collectors.
Batman Begins (June 17)
Another year-round property will get an injection of fuel this summer with the release of the caped crusader’s origins story, Batman Begins. Mattel plans to phase out the classic Batman toys that are currently in distribution and introduce the new film-based line alongside the toy line for The Batman animated series that launched last fall on Kids’ WB! (Warner Bros. Consumer Products will continue to support the Batman franchise as a whole with toys based on the classic DC Comics Batman property, as well as Batman Begins and The Batman.)
Kelly Gilmore, VP of toys and theme park licensing for WBCP, says retailers are keen to buy new Batman product because it’s a proven property. ‘They know Batman is important and that Batman toys sell,’ she says. The film, adds Gilmore, provides retailers with the opportunity to make a grand-scale in-store statement with a ‘wall of Batman’ featuring product from the TV show and the film, each with their own packaging and style.
Master toy licensee Mattel plans to launch a number of action figures and vehicles that tie into the new film, and the new Batmobile is a linchpin item for the line. ‘The new Batmobile is wildly different from anything you’ve ever seen before,’ says Mattel’s Walker – like a cross between a Hummer and Lamborghini. Because it’s certain to appeal to boys, there will be a variety of Batmobiles available, including Hot Wheels and radio-controlled versions.
Fantastic Four (July 1)
Twentieth Century Fox/
Marvel Enterprises/Universal Pictures
Following up its 2004 hit sequel Spider-Man 2, which generated US$373 million at the domestic box office and helped the entire Spider-Man property ring up an estimated US$750 million in merch sales last year, Marvel is betting hard on Fantastic Four. With four superheroes and a world-class villain, ‘this movie is literally made for merchandising,’ says Tim Rothwell, president of Marvel’s worldwide consumer media group. The fact that each superhero has a unique personality and special powers makes for a very toyetic property, he adds.
There’s The Thing, a huge, rock-like creature; the stretchy Mr. Fantastic, who bends his body into any shape imaginable; and Johnny Storm, the Human Torch, who can turn into a flame on command. The only arguably less-toyetic character is Sue Storm, who can make herself invisible. On the evil side there’s Dr. Doom, who, according to Rothwell, is one of Marvel’s most popular villains.
As beloved as Fantastic Four is in the comic book universe, it still won’t be easy following in the footsteps of two franchise movies. But Marvel is playing up its pic’s lightness and humor against the darker Star Wars and Batman films to retailers and promo partners. Marvel’s Toy Biz division has also earmarked its biggest promo and ad budget ever for the film, says Ralph Lancellotti, co-COO of Toy Biz Worldwide and executive VP of sales for Marvel Enterprises.
For the first time in Toy Biz history, the company is launching a 60-second awareness spot in April to introduce kids who might not know much about Fantastic Four to the characters. One of seven ads for various toys in the line will follow the spot.
In addition, Marvel has signed Burger King as a promotional partner, and the QSR giant will include Fantastic Four booklets in its kids meals for a six-week period in June/July. At the same time, the company’s publishing division will send out book covers featuring the film’s characters to nearly 50,000 schools across the U.S.
Toys will start rolling out in May, leading off with role-play items in the same vein as the hit Spider-Man Blaster from ’02 and 2003′s Hulk Hands. Launch items include Electronic Thing Hands and Electronic Thing Feet (US$19.99 each), as well as a Flame On dress-up set (US$19.99) featuring a transparent red mask and gloves that light up.
Editor’s note: The electronic version of this article has been edited from the original print version in order to correct or clarify some information that it contained.