The Perpetual Link Between Movies & Toys

THE PERPETUAL LINK BETWEEN MOVIES & TOYS

http://playingatbusiness.libsyn.com/playing-at-business-episode-6-movies-toys

Ever since Star Wars first put toys and other licensed merchandise based on movies into the commercial stratosphere, movies and toys have gone together like, well like a horse and carriage (or even love and marriage!).

Typically, whether the toy industry has gone up by a few per cent or gone down by a few per cent has depended on the key variable of how strong that year’s blockbuster movies were and how many toys they shifted.

There are a number of key variables which define whether a movie is likely to work for toys, and we discuss these in depth in the latest episode (Episode 6) of the Playing At Business podcast.

To listen to this podcast episode, just click here: http://playingatbusiness.libsyn.com/playing-at-business-episode-6-movies-toys

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PODCAST EPISODE TRANSCRIPT:

Playing at business with Steve Reece. The business podcast with a sense of fun. To find out more about us/our Toy Consultancy business, go to www.KidsBrandInsight.com

Hi and welcome to episode 6 of the playing at business podcast. I’m your host Steve Reece and today we’re going to be looking at the symbiotic relationship between movies and toys or to put it in musical terms, if love and marriage go together like a horse and carriage then so do movies and toys.

 

We’ve seen huge success over the years with toys based on big blockbuster movies. So this podcast episode we’re going to look at this in more detail. If you look at the percentage of total toys sold which are licensed it varies around the world. But it’s a very very significant chunk – somewhere between 10 to 20 percent on average around the world depending on whose figures you believe. So it’s clearly a big part of the toy industry and within those license toys, there’s some other types of license traditionally TV driven, app driven etc. But movies is above and beyond in terms of the amount of market share.

 

One of the key benefits of licensing is generally speaking (not always but generally speaking) easier listings at retail and easier sell through to consumers with less need for marketing push. So, when you have a major movie license that clearly is going to adapt reasonably well to toys, you generally don’t have to have that real fight to get listings. Maybe you need to fight to get some of the things listed maybe. But it’s an easier path for sure. From my perspective having worked in various different guises in the toy industry over about 20 years, I can’t think of any of the roles I’ve had where licenses haven’t been a reasonably significant part of that.

 

I guess we take that for granted nowadays to some degrees. But I thought we should take a look back at where it all started in pure mass market terms. Generally speaking although there have been toys based on movies before, they tended to be more like promotional tie-ins vs full merchandising programs. The first movie which drove huge toy licensing as a standalone thing itself was the original Star Wars. When Star Wars was first released in 1977, there hadn’t really been anything like it before in terms of the story, in terms of the setting, in terms of the breadth of character. Rumour has it that the more accomplished actor involved – Alec Guinness – wasn’t so keen on being in the movie. So he was offered a slice of merchandising revenue. Which to the movie execs at the time would have seemed like a few percentage points off a few hundred or a few thousand t-shirts, but since 1977 Star Wars is generally reported to have sold more than thirty billion dollars of merchandise and toys is a very significant chunk of that When I first joined the toy industry, Star Wars was still a top-selling brand despite their having been no new movies for well over a decade. For a movie brand that launched in the seventies to still be shifting toys based on that franchise with no huge amount of activity programming or content, all that time later is quite outstanding.

 

I don’t tell this story very often, but one of my own really golden memories of toys was the huge attraction of the Star Wars toys. I remember them so well. So many people will tell similar stories. The characters had a small hole in the base and we all used to wonder why that was until we found the one friend who was fortunate enough to have been given the full play set, which included some glass stands which would actually stand the characters up. I mean nowadays you would just presume they need to be able to stand up. but you know I guess things were more basic back then. I also remember walking through a Toys R Us store back in the early 80’s with my mother, and I was desperately trying to beg for some Star Wars figures, but they were too expensive at the time for our budget. I then remember about three years later when I’d moved on from that age of toys, but buying a complete set in a jumble sale for a few pounds and finding that hugely exciting. Because all those things I’d really wanted a few years before were completely out of my reach as they were sold out in retail or they were just too expensive for the household budget at the time. So yeah my own personal experience of toys actually starts with Star Wars. So Star Wars capturered a whole generation of kids and you know to drive a thirty year plus toy franchise off the back of it is quite amazing.

The other things I would point out about the movie world is we often think that it should be easy to work out what’s going to be a huge success and what isn’t. But obviously things don’t always work that way and it would be remiss of me to talk about movies and toys without mentioning a couple of the massive surprise success stories. So I mean this sounds as I’m considering this now, this sounds so ludicrous. It’s ridiculous in fact. But the original Toy Story movie back in the 90’s, turned out to be a massive hit both as a movie and even more so as a toy brand. in fact it was so successful as a toy brand that the merchandise was very quickly sold out and hugely under forecast, and as you know it takes quite a long time to wait for retailers to place re-orders with China, China to run additional manufacturing runs, to change tooling if needed to upgrade to manufacture in higher quantities and then to ship and then for us to distribute to the stores, it will take months, regardless of how much kids, parents & the media clamour for more stock!

 

So there was a huge huge demand for Toy Story toys, with vastly insufficient supply. Which obviously we’re all here with the benefit of hindsight saying well that’s just ridiculous. But nobody really understood the technology that was used to produce the original Toy Story movie – it was the first of a kind.  We would now take for granted that type of 3D would be hugely popular, but at the time we just didn’t know and so rather embarrassingly the toys were so under sold that they even put a reference to it and one of the later movies, I remember sitting there as a paid-up member of the toy industry whilst the movie made fun of those movie execs who hadn’t expected the toys to sell first time around.

 

On a similar note, Frozen a couple of years back proved to be a phenomenal hit, both as a movie and as a toy brand, but unexpectedly so. I I’ve been fortunate enough to preview many movies and sometimes you get a feeling, sometimes you just know and sometimes you’re not sure and obviously the general sense for Frozen was that people weren’t sure quite what to expect. But you know it was a massive hit in the end and funny enough I was actually called on to national radio in the UK with the BBC to justify the stock shortage on behalf the toy industry (not that I claimed to have a remit to represent the toy industry, but they called so I answered!). As someone interested in the toy industry I thought I would defend the industry on radio and they pitched me against an angry parent who couldn’t get Frozen toys for their child who desperately wanted them, it was all supposedly just a scheme to increase sales (!) As any toy industry person will tell you this is complete rubbish. We want to sell as much as we can on movies and licenses whilst the heat is hottest. so yeah even nowadays in this sophisticated world of forecasting and movie greenlight processes and all that kind of stuff, Frozen was an unexpected hit.

 

Fast forward even further into this year (2018) Black Panther has been a surprise hit as a movie and also a toy success as well and that’s despite a very unfashionable release date in February and with a soon to be less rare ethnicity mix.

 

The reality is that despite all the people, despite all the budgets, despite all the combined expertise of the licensing world both toys and non-toys and also the movie studios we sometimes just don’t know when a movie is going to be a hit and oftentimes the thing that really moves the needle in terms of the overall toy market size are those surprise hits. So oftentimes when the toy industry has gone down a few percent or stayed static. You know these unexpected movie hits are often what makes the difference. There normally are one or two major movies in a year that you can really point to that have added that three to five percent of growth.

Now onto the next section in this podcast. I often use a phrase which doesn’t really make sense. I don’t think it’s in the dictionary, which is toyetic. I don’t think I invented this. I’m pretty sure I heard colleagues speaking about this many moons back. This word toyetic is really important in a sense that it summarizes something which is likely to lead well to toys is likely to convert well to toys & is likely to lead to toy sales in good quantities. So one of the big questions I always ask/get asked is whether this movie is toyetic. Can you quite obviously transfer the characters in this movie and turn them into a successful toy range?

 

When I’m doing consultancy work, this is obviously one of the major themes when people are originating content. They quite often miss one of the most obvious, most critical categories of toys you need. If you miss a category of toys worth 10 to 15 percent of the total market, maybe you’re not going to get a master toy licensee. Maybe you’ll have to settle with a collection of smaller licensees, which may or may not be the aspiration. So just for example, if you want to have a movie which is a hit in the toy aisle, you need to include some kind of vehicles, something that the characters can get around in. The characters themselves, generally speaking you probably want to have a reasonably broad character matrix and you want to have different types of characters. You maybe want some soft and fluffy characters, which would lean more easily towards plush toys for instance. Maybe you’d want some more hard and aggressive toys, which plays to the traditional stereotype of rough & tough boys – whether that’s acceptable to us or not, for boys certainly in some countries that stereotype definitely still applies. But regardless of gender some kids like soft and fluffy, some kids like hard & aggressive. The reality is that if you have a character matrix which is very very simple and has very similar types of characters, you’re going to find it harder to have a broad toy line. Also you’re going to want some physical environments for the characters to be in which are iconic, which are inspiring and which are going to be easy to make however injection molded plastic in a factory in China or India or somewhere.

A classic example of what to include to allow for a full toy range is Star Wars. One of the main reasons for the enduring appeal of Star Wars in the toy aisle to my view is clearly the vast array of all those things I’ve just mentioned. There’s a huge array of characters. You’ve got good and bad which is a proven perennial theme. You have a collection of heroes. If you go back to the original movie you had the young and perky one in Luke. You have this older, wiser more sarcastic one maybe a bit more mature one in Han Solo. You had a sassy female character in Princess Leia. You had the ultra baddy in Darth Vader and a whole host of other mascots and icons throughout and the ultimate mascot would be the Ewoks as per Return Of the Jedi. So Star Wars is just amazing and oftentimes when I watch that film you’ll see a scene like in the hanger of the Death Star and you just look at the array of different types of space craft, the different types of uniforms and space armor, the different blasters and saber weapons. It’s almost like as if it was designed to be the most toyetic movie or franchise of all time. Which is why lo and behold it’s one of the most successful toy franchises of all time.

The next point to look at is metrics i.e. box office takings and also the sequels versus toy sales things. So, the first thing to say in this day and age, is that a movie which is mass-market entertainment as opposed to being purely an animated feature primarily for kids, but like a family blockbuster type movie will need to be doing more than around four hundred million dollars worldwide to be seen as being a box-office reasonable performer and to really drive significant toy sales and not leave excess inventory on shelves. Obviously there are various examples where you that needle has moved above a billion dollars and those tend to the movies that drive ridiculous levels of toy sales. But the other thing to look at actually it’s something to take really, a really hard look at if you’re a toy company is the whole sequel and prequel model. Now obviously if we look at movies as a business, it’s a huge risk to make a new movie. The budget may be anywhere from for a blockbuster movie anywhere between hundred million and two hundred three hundred million dollars. So obviously you need to be as sure as you can that it’s going to perform at the box-office and it’s going to perform in terms of what you’d call ancillary revenue. Licensing and toys being part of the licensing revenue and so obviously in a way bearing in mind when it comes to spending huge amounts of money in a big corporate environment, corporate management who are accountable to the stock market will be more likely to back a movie with high licensing potential.

 

It sometimes seem less risky for studios to develop a sequel or a prequel, those great expense levels on approving franchise versus investing at pretty much a hundred percent risk into another fresh franchise. The classic example in the last decade to two decades is the X-Men franchise. There’s been something like 11 movies released to date at the time of recording. In terms of box office takings,  obviously inflation has an impact here but somewhere in the region of 300 million to 750 million dollars worldwide. Looking at $five billion+ at the global box office over the space of a decade or two, which is just huge. And mirroring that kind of consistency of box office performance, X-Men has become a major ongoing toy franchise and a major ongoing feature of the toy aisle in stores around the world of all kinds both mass-market retailers and specialists. I guess frankly the practical benefit of having sequels and prequels is if the stock doesn’t clear through on the movie and DVD releases, you know sometimes it will sell through when the next sequel or prequel comes around and some old stock in the back will find its way on the shelf. The major issue though, the major challenge with the whole sequel prequel model is what happens when an episode tanks at the box office – does that mean that franchise is effectively dead, does is it mean it needs to have a quieter couple of years before it can be brought back?  If a major toyetic movie like say an X-Men or Transformers, or Star Wars movie and it doesn’t perform and it leaves stocks on shelf that can to a degree damage the franchise in retail which is obviously a really bad thing all around. So you know this is kind of like the biggest ongoing issue at the moment is that the sequel prequel model is so proven overall. But you know the risk is what happens when one of them doesn’t work.

 

In conclusion but also to take a look forward, if I can get my crystal ball out, I think one of the major challenges for the movie industry, for the TV industry and for the toy industry is the huge shift, the kind of seismic shift of a viewing from kind of formally produced, formally distributed entertainment to more informal YouTube style content. Kids now will spend as long looking at clips on YouTube as they used to watching TV & movies, if it’s a kid who is into soccer they’ll be looking at soccer clips,  if it’s a kid into gymnastics, they’ll be looking at gymnastics or they might be just looking at YouTube vloggers general output and so there is a major threat here.

 

I guess the counter-argument would be that you know movie viewing is kind of a different occasion.   It’s a different need state if you like. So classically during the holidays when you know parents are desperate to occupy the kids, that’s a classic time for movie visiting and when the really big movies launch. So yeah it’s going to be interesting to see how that develops. I guess the reality is the YouTube content revolution is , historically speaking, if we take that kind of perspective it’s probably still in the early stages. So the shift is going to continue and that’s a major challenge to movie studios and you know movie marketing has always been a massive noise creator in a short period of time and that’s definitely going to have to continue.  I guess the one thing you would say is that the cult of personality has only been exemplified by the rise of social media and YouTube. So I guess in a way the age old movie marketing models for toys are still likely to work, the only question is to what degree….

 

So that’s about it for today’s episode of the podcast. I’ve been your host Steve Reece and as ever if you have any topics you’d like us to cover, please do get in touch.

 

Also, in case you’ve wondered what we do, what I do for a day job, we run a toy business consultancy offering general consultancy, product representation and sourcing. We help people to find factories effectively. So if you’re interested in some of those services, you can find out more about what we do there. Its www.kidsbrandinsight.com  or just search ‘Steve Reece toys online’ and you’ll find some kind of reference there to what we do. Please keep listening and we’ll see you next time thanks and bye. www.KidsBrandInsight.com

 

 

Playing at business with Steve Reece. The business podcast with a sense of fun.

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