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Consumer Products

From the mag: Why small toycos are punching above their weight

In the Licensing Expo issue of the mag, Kidscreen explores how smaller toycos are bringing a unique skillset to executing master toy licenses.
June 16, 2015

For licensors, there’s no shortage of reasons to partner with one of the major toycos. Companies like Mattel and Hasbro have deep pockets and a wealth of other resources at their disposal when it comes to taking on a master toy license. But is bigger always better? There’s a crop of small- and mid-sized toy companies that have, of late, been using creative tactics to outmaneuver their larger counterparts and score key licenses. Tenacious, efficient, innovative and nimble are just a few of the words used to describe the little guys who are holding their own against the big boys.

Going the distance
Take Bristol, Pennsylvania-based Wicked Cool Toys, for example, which makes toys based on some of the biggest properties in the business, including Teenage Mutant Ninja Turtles, SpongeBob SquarePants and Dora the Explorer. It has been aggressively pursuing big-name licenses and landing master toy deals this year for the iconic Cabbage Patch Kids property and Masterchef Junior, the series that airs on Fox and is gaining a rabid kid following.

According to Martin Kratt, co-creator of hit PBS KIDS show Wild Kratts, he and his brother Chris signed Wicked Cool as the series’ master toy partner in November 2013 because it showed an immediate passion and understanding of their brand. Wicked Cool was also willing to be patient and persistent, which was exactly what the property needed. “It didn’t need to blast everything out right away,” says Kratt. “We feel [the Wicked Cool team] made Wild Kratts a company priority, and they haven’t taken no for an answer when getting into retail.”

Jeremy Padawer, co-president and partner at Wicked Cool Toys, says Wild Kratts may have been overlooked as commercially viable at first by other toycos, and because it wasn’t a blockbuster movie, his company wanted to protect the brand by not flooding the market right out of the gate. “One of the challenges with large toy companies is they tend to want broad distribution immediately on everything, and sometimes that’s not the right thing for the brand,” says Padawer. Heading into its second season with Wild Kratts toys, Wicked Cool is now expanding in the US from Toys ‘R’ Us to Walmart and Kmart, as well as some drug, grocery and value stores. “We’ll grow it deliberately and intelligently so we can a have a long life cycle,” he says. “[Wild Kratts] is too good to blow out—the temptation to blow something out too often results in a bad outcome.”

Another example of a smaller toyco’s long-term commitment to a brand and razor-sharp focus can be found at Kahootz Toys in Ann Arbor, Michigan. Founded in 2012, the company established itself around the relaunch of Hasbro’s classic arts & craft activity brand Spirograph in January 2013. Co-founder Brent Oeschger says there was a pent-up demand for the original Spirograph, which was celebrating its 50th anniversary at the time.  The goal with the relaunch was to reposition the iconic brand as a classic evergreen toy while modernizing its functionality. And it appears the strategy is working.

The Spirograph Deluxe Set won an ASTRA Award for Best Toy in 2013, it was a TOTY finalist in two categories in 2014, and the Spirograph product line is a nominee for a 2015 LIMA Award. “We put all of our creative assets and business talent towards this brand,” says Oeschger. “For a larger company balancing upwards of 150 different brands at any one given time, it may have a number of IPs in its arsenal that need to rise to a certain sales or revenue threshold in order for it to be viable.”

Kahootz’s commitment to the reimagined vintage toy has also paid dividends at retail. Oeschger says sales have so far exceeded expectations, and later this year Kahootz is introducing the My Little Pony Spirograph Set—the first-ever character license in the brand’s history.

Best-in-class
Outside of a particular brand focus, smaller toycos can offer specific category expertise as well. Deerfield Beach, Florida-based Just Play was awarded Care Bears master toy rights in July 2014. It ultimately came down to the fact that the toyco’s owners—Charlie Emby and Geoffrey Greenberg—possessed a core competency in plush, says Janice Ross, head of global consumer products for Care Bears owner American Greetings Properties. Also, likeability, trust and their willingness to put their heart and soul into the brand helped to tip the scales in Emby and Greenberg’s favor.

“They had years and years of success with highly successful brands, many geared towards girls,” says Ross. “They manage factory partners that are top-notch on quality and on-time delivery, and their reputations precede them with property owners and retailers alike,” she adds. “They not only perform with high-quality product, but they make huge efforts to build or rebuild brands together with IP owners hand-in-hand. That kind of care and attention to detail is important for us.”

Sometimes it’s not just about showing licensors what you can do in traditional categories like plush, but how you can generate revenue for their property in an entirely new category. “A lot of what we try to do is create new categories and business opportunities that licensors don’t already have a partner for, or have not actually thought about as an opportunity,” says Ken Malouf, VP of marketing and project management for Uncle Milton. “In many cases, we can bring incremental business to a licensor that’s not already in their portfolio, and that’s a real value to them, and to us.”

The Thousand Oaks, California-based toyco’s expertise lies in science-based toys. Back in 2008, it approached Lucasfilm with an idea to make a Star Wars-themed science line. There wasn’t one in the market at the time, say Malouf, and with the franchise’s numerous science-based undertones, Uncle Milton felt there was a huge opportunity. “We still have that line to this day, and with the next Star Wars launch coming up, it’s going to be one of the biggest lines in the company,” he says. Along with a Jedi Force Levitator, the range will also feature a second incarnation of the Star Wars Force Trainer (the hologram experience), which lets kids use a wireless headset to move objects and recreate scenes from the movie with their minds. “It’s a magical product,” explains Malouf.

Speed demons
The ability to quickly turn a great idea into an actual product is another trick of the trade for small- and mid-sized toycos. After New York-based Out of the Blue Enterprises bought legacy toy brand Colorforms last September, it promptly signed a handful of new licensing deals, including portfolio agreements with Disney and Marvel and a license for Despicable Me with Universal. It is launching products at Toys ‘R’ Us in July, starting with an end cap, before moving into the regular toy section. TRU will carry the Colorforms products exclusively throughout the summer, and then they will be available at specialty and mass retailers in September.

Co-founder Samantha Freeman contends that when you work with smaller toycos, there are fewer layers of management to deal with and more collaboration in the toy-making process. “In our company, you’re dealing with owners who have a lot of expertise, and we really feel that these businesses and licenses are important to us, so we listen,” she says. “Sometimes with a bigger company, there’s more of a feeling that the big company knows better what to do in the marketplace.”

Having worked for both small and large companies, she finds the leaner ones have less overhead and their focus tends to be more on the product and innovation, which allows them to get costs down and products to market more quickly. “We’re really able to jump on opportunities and respond to market demand quickly,” she says. And in terms of scaling up when you have a hit, Freeman says it’s all about being prepared and having   inventory on-hand domestically.

Lasting connections
When it comes to unique marketing tactics, companies like Van Nuys, California-based Funrise, best-known for its Tonka line, often go beyond traditional TV ads and look to connect with fans at a more grassroots level.  For example, Funrise’s two life-sized Tonka trunks regularly show up at different events throughout the year, such as New York Toy Fair and Off-Road Racing Series locations, where it sponsors drivers and sets up a Tonka fun zone for kids.

“We take a really omni-directional approach to marketing and engaging consumers, and it has worked for us,” says Funrise CEO King Cheng. “We’re a more innovative and flexible marketing-driven supplier for the retail trade. Anything retailers think of, we can pretty much execute. We’re not set a year or 18 months in advance with a product.”

Cheng says while it may be beyond the reach of smaller to mid-level toycos to take on master toy licenses for properties such as Disney Princess, they are often better positioned to take legacy brands and run with them, like Funrise has done with Tonka for more the 15 years. “Quite often licensors are pleasantly surprised by companies like us that exceed projections quite dramatically through sustained effort,” he says. “We don’t give up on brands after one try. Licensors have lost sight of a lot of other properties out there that could bring additional dollars to their bottom lines.”

This article originally appeared in the June 2015 issue of Kidscreen

 

About The Author
Patrick Callan is a senior writer at Kidscreen. He reports on the licensing and consumer products side of the global children's entertainment industry via daily news coverage and in-depth features. Contact Patrick at pcallan@brunico.com.

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