Strong entertainment properties keep licensing in limelight - Retailing & Entertainment Licensing Update - sales of licensed merchandise - Statistical Data Included

DSN Retailing Today, Feb 11, 2002 by Doug Desjardins

Retailers were ravaged by one of the fastest-moving recessions in history last year, but you may not have noticed if you were in the entertainment industry, which more or less breezed through unscathed and took licensed merchandise along for the ride. For the year, box-office revenues topped $8 billion, and the home video and video game industries both posted record sales.

Though licensed merchandise didn't fare quite as well, the final figures for 2001, which will soon be made official, are expected to equal the $5.8 billion in sales recorded in 2000. More than 44% of these sales were generated by entertainment properties.

"If I had to take a guess, I would say sales of licensed entertainment merchandise for the year were flat," said charles Rialto, president of the Licensing Industry Merchandisers Association (LIMA). "And when you consider the shape of the economy and the terrible events of Sept. 11, having flat sales for the year isn't too bad."

Rialto said the industry has been able to hold its own during the recession, due in part to several hit movies and the licensed merchandise they moved. Films like "Shrek," "Monsters Inc." and "Harry Potter and the Sorcerer's Stone" were a boom to the industry and helped renew retailer interest in licensed movie product--an interest that had cooled in recent years after a few notable flops.

"I think the success of several films and their merchandise has made retailers more receptive to film properties," said Rialto. "During the past few years, the trend has been toward cartoon properties like "Bob the Builder" and "clifford the Big Red Dog" because they have a longer selling cycle than a movie that's just around for a few weeks. But the pendulum is always swinging and 2001 was a very good year for movie properties." Flush with their success, the major studios will be at the International Toy Fair in New York City Feb. 10 to 14 to promote their upcoming films and the licensed merchandise that will precede them at retail. Dream Works struck licensing gold in 2001 with "Shrek" and is hoping for another hit with the summer release of "Spirit: Stallion of Cimarron." Brad Globe of Dream Works said this story about a spirited horse that helps tame the Old West has been a user-friendly property for licensees.

"With "Shrek," we were trying to sell the licensing potential of a green ogre who lives in a swamp and that wasn't easy," said Globe, head of Dream Works Consumer Products. "But "Spirit" is just a naturally attractive property and we've received an incredible response so far." The licensee list for "Spirit;' which will target families and young girls in particular, includes Hasbro for toys, THQ for interactive software and Pyramid Accessories for sleepwear.

Sony Consumer Products will be promoting licensed merchandise for the film version of "Spider-Man" and the sequels "Men in Black IT" and "Stuart Little 2." Of the three, "Spider-Man" has the largest licensing package with close to 70 licensees. "It's a big property with a rich history and a lot of cross-generation appeal," said Al Ovadia, executive vp of Sony Consumer Products.

Both "Men in Black 2" and "Stuart Little 2" have smaller packages of 25 to 30 licensing partners that's in keeping with Sony's new approach. "There comes a point where you get oversaturation and it becomes difficult to get shelf space for product and to sell that product through," said Ovadia. "So the emphasis now is on fewer licensees." Sony will also be shopping its new film version of the old TV show "I Spy," which will star Eddie Murphy and Owen Wilson and is due out in November.

Universal Studios Consumer Products will be promoting a full line of products for the April 19 release of "The Scorpion King," the third installment in its "Mummy" franchise, and will be courting potential licensees for the big-budget production "The Cat in the Hat," scheduled for release in late 2003. The studio also will be promoting Hasbro's new toy line based on characters from the cartoon hit "Butt Ugly Martians," the U.K. import that recently arrived in the United States.

"It debuted here in November on Nickelodeon and has been No. 1 in its time slot ever since," said Tim Rothwell, senior vp of merchandising and marketing for Universal Studios Consumer Products. "We think 'Butt Ugly' has great potential and presents the opportunity to stage some really interesting promotions."

While Viacom Consumer Products will be looking for licensing partners for its spring 2003 direct-to-video animated release "Charlotte's Web II: Wilbur's Great Adventure," its emphasis at Toy Fair will be on "Enterprise," the new Star Trek series starring Scott Bakula. "Art Asylum has created a whole new set of action figures based on characters from the show, and Scott Bakula will be there to launch the line," said Nancy Bassett, VP of worldwide licensing for Viacom.

The perennial appeal of martial arts films is something MGM Consumer Products will look to leverage, while putting together a licensing package for "Bulletproof Monk," a martial arts adventure that will star Chow YunFat and is scheduled for a summer 2003 release.