Toys Based on Sequels Take Center Stage

It's play time again for Hollywood, as the annual Toy Fair kicks off in New York on Sunday with the traditional slew of product tied to movies, TV shows and entertainment characters.Among this year's hot properties: "Toy Story 3," "Iron Man 2," "How to Train Your Dragon," the latest installments of "Twilight" and "Harry Potter," and TV favorite "Dora the Explorer," who is celebrating her 10th anniversary. But overall, there are fewer movies than last year that are ripe for toy merchandising this year."There are fewer 3D films with toy opportunities, but there will be a lot of sequel or legacy film product," Toy Industry Assn. spokeswoman Reyne Rice said.Some movies will cater to the core toy demo of kids, while others will skew more adult, providing the opportunity to sell product to toy collectors. "Toys for sequels usually sell better," Rice said. "Retailers, for example, will support 'Iron Man 2' more, because they know how well product for the first one did." And "Shrek 4" merchandise will more easily fill retail shelves now that the franchise is proven, while retailers originally questioned the appeal of a green ogre.About 25% of all toy dollars in a typical year are spent on products tied to a licensed or entertainment property.NPD Group said licensed toys in 2009 represented 25%, or $5.4 billion, of total industry sales of $21.5 billion. That was down from 27% of the $21.65 billion registered in 2008.Last year's figure excluded "Transformers," a Hasbro property that's become a boxoffice hit and was one of the top five toy properties of 2009, according to NPD. This week, toy giant Hasbro said last year's "Transformers" sequel, distributed by Paramount, led to sales of toys in that franchise worth $592 million, up more than 20% from the first movie's year in 2007. Sales of its "G.I. Joe" toys brought in revenue of $125 million in 2009, driven by the Paramount summer tentpole release.The symbiosis between toy companies and Hollywood has gone so far that Hasbro and others have increasingly pushed into film and TV to become branded entertainment firms. "All the major toy companies are trying to become entertainment studios," said Steven Ekstract, group publisher of License! Global magazine. But for studios, licensing also has been a very profitable business.Licensors of entertainment properties generally get an upfront guarantee from a master toy licensee, which can be worth $1 million or more for top franchises. Then the studio typically gets a 10%-15% cut of wholesale receipts, which are about 50% of retail. At Toy Fair, licensees will showcase their wares in hope of finding buyers among retailers. But like in the movie business, there is no guarantee. "Sometimes, a movie is really hyped, and you go to the licensee's showroom and see a rather anemic line of toys," NPD analyst Anita Frazier said. "Other times, you find that they have pulled out all the stops."Disney, which makes more money from consumer products than any of its peers, will once again use the Javitz center event to showcase its fairies, which will benefit from buzz for a fall DVD release. Another evergreen line of characters are its princesses, which could see continued sales of "The Princess and the Frog" product and a boost from this fall's remastered "Beauty and the Beast" DVD release.But "Toy Story" will be center stage as the company unveils "Toy Story 3" products with partners Mattel, Thinkway and Lego on Sunday.Bringing together two of Disney's franchises, the studio and toy partner Fisher-Price also will unveil "Dance Star Mickey" dancing plush toy with the help of Donny Osmond, who won the most recent "Dancing With the Stars" on Disney's ABC.Warner Bros. Consumer Products will present product related to new films "Jonah Hex" and "Guardians of Ga'Hoole." Plus, it will serve fans of TV favorites "Batman: The Brave and the Bold" and "Scooby-Doo," which will see the launch of a toy line that includes a Scooby plush and a Ghost Patrol Mystery Machine. Viacom's Nickelodeon, generally seen as the top TV-driven licensor, will be present with a range of product tied to "Dora," the leader in licensed preschool toys. Besides such fare as the singing and dancing "We Did It" Dora Doll, Nick also will feature animation favorites SpongeBob SquarePants and Go, Diego, Go! as well as live-action stars iCarly and True Jackson.Viacom also will put the spotlight on toys tied to M. Night Shyamalan's "The Last Airbender."Marvel is presenting a helmet and a remote-controlled walking Iron Man, in time for the movie sequel, distributed by Paramount. Rice predicts that along with "Toy Story" it will be one of the year's biggest Hollywood toy franchises as it attracts both the core kids target demo and older collectors.Hasbro predicts it will grow revenue and profit this year with its products tied to "Toy Story 3" and "Iron Man 2," despite last year's "Transformers" bonanza.CBS Consumer Products is bringing games tied to this summer's edgy teen romance release "Beastly" along with licensed video games based on TV hits "NCIS" and "America's Next Top Model," as well as new fare for Trekkies.Fox's licensing & merchandising team -- which had a particularly big toy year in 2009 thanks to such hits as "Ice Age 3" -- will be back with a second wave of "Avatar" action figures and prop weaponry. Summer release "Predators" also will get action figure and bobble heads treatment, with "The A-Team" and "Diary of a Wimpy Kid" toys also on display.After a decline of less than 1% in total toy sales in 2009 amid the recession, NPD's Frazier is optimistic for the industry this year given that unit sales in the holiday quarter rose 4%, even though revenue stayed flat due to heavy retail price promotions.

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Toys Based on Sequels Take Center Stage

Georg Szalai, The Hollywood Reporter

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Georg Szalai, The Hollywood Reporter