Studios have a high-class concern as they head to the annual Toy Fair confab taking place in New York from tomorrow to Tuesday. Can they top 2015 when, The NPD Group says, the relaunch of Star Wars helped to propel a 9.4% domestic increase in movie-related toy sales?
Many industry watchers believe that they can as Hollywood prepares to flood theaters with a record number of toy-friendly animated, family, and action films. That means that the competition will be intense at this weekend’s event to ensure that movie-related products claim their moment in the zeitgeist.
“This is the end point where we will make our final decisions and work with our partners on how we’re going to execute,” Toys “R” Us Global Chief Merchandising Officer Richard Barry tells me. That includes “quantities we’ll purchase through to how we’ll market the products, how it will be presented in stores, where it will be presented in stores, how it will be represented on our web site, the content we’ll use to drive it on our web site — everything you can think for bringing that product or brand to life through Toys “R” Us.”
Movies with big toy tie-ins at this year’s Toy Fair include Batman vs. Superman: Dawn Of Justice, Captain America: Civil War, X-Men: Apocalypse, Doctor Strange, Star Trek Beyond, Finding Dory, Rogue One: A Star Wars Story, Angry Birds, Trolls, The Little Prince, Independence Day, The Jungle Book, Alice In Wonderland: Through The Looking Glass, Ghostbusters, and Warcraft.
“There’s a particularly strong line up of licensable properties this year — things with track records,” says Marty Brochstein, SVP of LIMA – the International Licensing Industry Merchandisers’ Association. That gives industry execs hope that U.S. consumers will spend more than the $19.4 billion they shelled out for toys in 2015, a 6.7% increase.
Still, studios, manufacturers, and retailers have to bet on how much to invest in them. “The risk comes in with bets on how big, big will be,” he says. “You have to make those evaluations of how much stuff to order or make, or whatever. So there’s risk everywhere, even with the big properties….You’re depending on consumer reaction, which is notoriously fickle.”
Disney Consumer Products may have the safest bet with Star Wars. Last year it generated more than $700 million in domestic toy sales, making it the year’s top property, NPD Group says. For perspective, the research firm says it “brought in more sales and contributed more growth than Jurassic World, Minions, and Avengers combined.”
Disney reported this week that Star Wars helped its Consumer Products and Interactive unit set a record in the last three months of 2015 by generating $860 million in operating income, up 23% vs the same period in 2014.
And Star Wars continues to be a force.
“The next wave of Hasbro Star Wars product is on-shelf today and new product will continue to be available in 2016, supporting both the Spring Home Entertainment window for The Force Awakens as well as the December ’16 release of Rogue One,” Hasbro CEO Brian Goldner told analysts this week.
He added that the toy makers’ revenues from the franchise this year “could be on par with 2015.”
Disney will also attract a lot of attention this week with its toy plans for Finding Dory. The studio almost has to sell it as a new property even though it’s a sequel to 2003’s Finding Nemo. Retailers prefer to bet on products based on sequels, and that limited the ability of Pixar (which Disney bought in 2006) to cash in on the original film.
Warner Bros. Consumer Products hopes to challenge Disney, especially with toys based on movies based on its DC Comics. The studio “definitely is entering the superhero genre in a big way where they had been relatively quiet,” Brochstein says . “If you spoke to people at Warner in a moment of candor, they’d tell you that last year was a transitional year.”
The studio has put a spotlight on Batman Vs. Superman, and a new franchise, DC Super Hero Girls. The latter initiative, a collaboration with Mattel, “brings the most iconic female Super Heroes and Super Villains from DC Comics together in a universe that gives young female fans the chance to play, watch, read and be inspired to discover their full super power potential,” the studio says.
Mattel President Richard Dickson told analysts this month that the company’s parnership with Warner is “enjoying resurgence,” adding that they have a “multi-year plan to build out their DC licensed Comics Universe.”
The toy maker also is crowing about its deals with Disney for two of its most durable playthings-related franchises: In January it renewed its license to make toys tied to Pixar’s Cars, with a sequel planned for 2017. It also has Toy Story 4, due in 2018.
“We’re working pretty closely with Disney on how to ensure we don’t just have a huge spike and drop-off,” CEO Christopher Sinclair says.
It’s becoming harder to do that as competition grows with playthings based on characters from TV as well as online. For example, last year’s top selling traditional toy came from Shopkins, a line from Australia that developed a huge following with unboxing videos on YouTube.
“We have to be prepared to think of all the ways kids are consuming entertainment properties, because it’s not just at the box office,” Barry says.
With so much competition for shelf space, many manufacturers try to win retailers by offering exclusive products — toys that you can only buy at, say, Toys “R” Us, Target, or Sears. There’s also a sense of urgency to keep up with hot products including drones, toys that interact with video games, and other electronics.
Ultimately, though, manufacturers have to put as much creativity into their toys as studios put into their movies.
“There have been many fantastic movie properties that haven’t sold a significant amount of consumer products or toys,” Barry says. “When it really works you have engaging stories and a great movie, but then the toy manufacturers can bring it to life in a kid’s hand so they can either live out the characters, be the characters, or play with the vehicles that are in the movies. That’s the difference between what makes a strong toy entertainment property and a weak one.”