The Toy War for Holiday Movies
The young wizard Harry Potter doesn’t make his first appearance on movie screens until Nov. 16, but he can already be found staring across the toy store aisles at a green, one-eyed creature named Mike Wazowski, an animated star of the hit film “Monsters, Inc.”
Just over the horizon is an army of action figures and role-playing toys pegged to the Dec. 19 release of “The Fellowship of the Rings,” the first in a planned trilogy of films based on J. R. R. Tolkien’s fantasy epic, “The Lord of the Rings.”
“Those are definitely the big three,” Melissa Williams, a toy industry analyst for the investment firm Gerard Klauer Mattison, said of the competing movies.
And like some other analysts, Ms. Williams sees the “Monsters” paraphernalia holding the high ground in the battle for children’s hearts and their parents’ wallets this holiday season no matter which movie ends up the winner at the box office. “Looking at them now, from 30,000 feet up,” she said, “it does look like `Monsters’ is the most toy-friendly of the three, because it skews younger.”
And yet Mattel, which is the prime toy- company licensee for Harry Potter, insists that its Professor Snape’s Potions Lab and other spinoff items will prevail.
It may sound like child’s play, but this is big business.
Ever since the “Star Wars” sequels proved in the 1980’s that movie merchandise could be one of a film’s prime profit sources, the alliance between Hollywood and toys has been an enduring and lucrative one.
About $7.6 billion worth of toys and video games based on movie or TV characters were sold in 2000, down about 6 percent from 1999, according to The Licensing Letter, a trade publication. And experts predict that 2001 will be a poor year for licensed products although tie-in toy sales could be stronger if “Harry Potter and the Sorceror’s Stone” proves popular.
“Last year stank,” said James Mammarella, editor in chief of the trade magazine License. “You will see an upswing this year.”
Still, smaller-than-anticipated sales for toys linked to the most recent “Star Wars” installment in 1999 have pushed toymakers to diversify their lines to place less emphasis on movie tie-ins.
Past disappointments have also made toy retailers more cautious about Hollywood products. Toy sellers recall that last holiday season, the Harry Potter products tied to the popular book series did not fare as well as they had hoped.
That may be why Tom Alfonsi, senior vice president for merchandising at the big retailer KB Toys, is wary of predicting big sales for Harry Potter toys linked to the widely anticipated movie. ” `Monsters’ is more of a movie for little kids, 4- to 7-year- olds, and that is more of a toy age group,” Mr. Alfonsi said. “When we look at Harry Potter, we see the 8- to-14-year-olds, which is beyond the toy-buying age.”
If that bears out, the main beneficiaries will be Hasbro (news/quote), which has action figures, games and stuffed Monsters, and Thinkway Toys, which has electronic Monster toys.
Yet there are early indications that Harry Potter toys may catch on, now that a film can make Harry’s world accessible to many millions of children who were either too young to read or simply disinclined to plow through the books the most recent of which was published in the summer of 2000.
“I am feeling very confident now,” Melody Young, vice president and divisional merchandise manager for Toysrus.com said of the Harry-ware. “I saw the movie and it was tremendous. We always had a little more confidence in the parts of the line that addressed an older audience, and a little less in parts that address a younger one. But we have more confidence now.”
Among the Harry Potter toys that are already selling well, even before the film’s release, are Mattel’s Potions Lab, which allows children to mix drinkable wizard brews. Also proving popular are Lego sets that let children build models of Harry’s school, the Hogwarts School of Wizardry and Witchcraft, and a Mattel game called the Harry Potter Levitating Challenge.
There is also Harry Potter apparel, a trading card game, action figures and collectible figurines. And hitting stores on the day the movie opens will be a Harry Potter video game from Electronic Arts.
“We have been somewhat cautious in our forecast about Harry Potter,” Ms. Williams said. “In part, this is because the child who is reading a 700-page book is not the same child who is typically playing with toys. However, we’re starting to hear from retailers that they are more encouraged now than they thought they would be.”
If anything, toy industry executives said, Warner Brothers was even more aggressive in pushing its Harry Potter products than Walt Disney was with its “Monsters, Inc.” wares. Hoping to overcome the perception that Harry Potter would appeal to children too old for toys, Warner and its licensing partners began showing off prototype toys as early as February, followed by a 45- minute clip of scenes from the film at a subsequent toy industry gathering in Orlando and a screening of the completed film for toy executives in early November.
“I think in the merchandise field, people are very hopeful,” said Marty Brochstein, executive editor of The Licensing Letter. “Personally, I think sales will be solid. But the question in a business sense will be whether it will be solid enough, given how much Warner has paid for the various rights and the number they have charged manufacturers in terms of guarantees for the various licensing rights.”
To avoid creating an incentive to flood the market with toys, Mattel has guaranteed only about $50 million in Potter toy sales. But Mattel offered Warner Brothers, a unit of AOL Time Warner (news/quote), a 15 percent royalty three percentage points higher than the standard and stock options.
At Toys “R” Us, Harry Potter goods are outselling “Monsters, Inc.” merchandise. And for now, there appears to be more interest in Harry Potter on eBay (news/quote), the online auction site. Last week, Potter items outnumbered Monsters goods by 10,276 to 1,315.
Mattel holds the master toy license for the Potter franchise, meaning Warner Brothers has granted the company the right to produce the broadest array of toys and games. Matt Bousquette, president of the gender-specific boys and entertainment division at Mattel, said Potter sales had been doubling every week, and he predicted that both the Potions Lab and Levitating Challenge would be sold out for the holiday season before Thanksgiving.
“We don’t need the movie to come out to know we have a success,” Mr. Bousquette said. “It’s going to be difficult to find key items. They are just going to be gone.”
The wild card in the race for holiday sales is “The Fellowship of the Rings.” For retailers worried about the appeal of book-inspired Harry Potter merchandise to young children, the grimmer and grander Tolkien trilogy poses an even stiffer challenge.
“I think it will have a lot more appeal in the collector community, because of the darkness of the movie,” Ms. Young said.
But David Imhoff, New Line Cinema executive vice president for worldwide licensing and merchandising, said he thought “Lord of the Rings” products would prove Ms. Young and other doubters wrong.
Yes, he acknowledged, there are strong adventure and action elements to the story, and the film will be rated PG-13 (compared with PG for “Harry Potter and the Sorcerer’s Stone” and G for “Monsters, Inc.”). But Mr. Imhoff noted that bloody action had not squelched sales of toys and merchandise for the “Jurassic Park” movie series.
“Besides, it’s one thing for a child of 7 or 8 not to be able to read these books, or to have difficulty reading them, but to see a film of the story is a very different scenario,” he said. “It’s a very different experience.”Posted in Old Special Reports on November 12, 2001 by xoanon