Familiarity fuels sales; as industry shies away from risky entertainment properties

Discount Store News, August 18, 1997

As vendors and retailers become more choosy about what kinds of licensed entertainment properties they link up with, the familiar may be better than the fads.

In the case of entertainment licensing, familiarity often breeds profits. Some retailers have been burned by entertainment-related licensed merchandise after fads cooled, and they were left holding unsellable goods.

"The consumer today is fickle. She only wants what's new, new, new," said an executive at a major discount housewares chain. The chain pulled back from most licensed goods, sticking only with tried-and-true characters. Only "Winnie the Pooh" licensed merchandise is a consistent seller.

"[Poohl appeals to a wide range of ages and sells well in our juvenile area," the executive said.

Vendors are also taking a cautious approach to entertainment-related licensing.

American Greetings uses a targeted approach and prudent management of its portfolio to maintain a good mix of the new and the familiar to avoid being burned.

"By being selective, we are able to satisfy both consumers with an emotional connection to familiar characters and retailers, who want to minimize the risk of those short-lived properties that leave products gathering dust on shelves and dragging down profitability and productivity," said Patricia Papesh, senior vp of marketing, American Greetings.

Nickelodeon's "Rugrats" animated characters from its popular animated series have proven successful for a number of licensees, and American Greetings is among them.

"'Rugrats' is a classic case in point of the success of our focused approach," Papesh said.

American Greetings considers the "Rugrats" characters to be rising stars with staying power.

Yet "Rugrats" has been a slow build. The series and its characters caught on big about a year ago after the show had been airing for about five seasons on cable television.

The show appeals to both children and adults and has an edgier feel than many children's programs, qualities that have lead to big demand in mass merchants.

"Point-of-sale results tracked juvenile party goods transactions for several weeks in 1,000 stores of a major mass retail chain and showed 'Rugrats' DesignWare party goods outselling all other juvenile party goods," Papesh said

American Greeting extensively tests its licensed character to determine what products will be the most productive.

In the case of "Rugrats," test results pointed to juvenile party goods, greeting cards, gift wrap, ornaments, balloons and stickers since these items tend to be license-driven for the juvenile market. Older, more nostalgic properties might be limited exclusively to being placed on ornaments, for example.

Elvis Presley will appear on holiday ornaments and gift bags from American Greetings, while the company will place "Bananas In Pajamas" on birthday, Valentine's Day, everyday greeting cards and gift wrap.

Some of Hollywood's major companies are developing ways to turn entertainment vehicles into hot rods of consumer products marketing.

The birth of a new product category in the home video business (direct-to-video feature films) is creating a new tool to build entertainment related brands.

Direct-to-video films are sell-through priced at retail and cost far less to produce than a theatrically released feature.

However, marketing direct-to-video titles can require more promotional activities since the title lacks the awareness that can be created by a theatrical release.

Mass merchant retailers essentially become the box office for direct-to-video films, creating a major opportunity to cross-sell consumers. Studios and consumer products companies are using the direct-to-video channel to help build brands based on proven characters.

Direct-to-video features sold at sell-through prices were pioneered by the Buena Vista Home Video division of the Walt Disney Co. and was first used to help build the "Aladdin" franchise.

Harvey Entertainment and Twentieth Century Fox Home Entertainment are currently in the midst of building a series of coordinated direct-to-video releases and consumer products promotions that will be based on Harvey's stable of classic comic book characters, including Casper the Friendly Ghost and Wendy the Good Little Witch.

"We're probably one of the earliest people, besides Disney, implementing a major consumer products licensing program and cross-promotion program based on a direct-to-video release," said Charles Day, vp of consumer products for Harvey Entertainment.

"Casper: A Spirited Beginning," a prequel to the 1995 "Casper," produced by Steven Spielberg, will appear next month, just in time for Halloween. A follow-up release, which will reunite Casper and Wendy The Good Little Witch, is planned for 1998.

Since 1996, a Saturday morning animated "Casper" series has been playing as part of the Fox Kids lineup, which provided a bridge to the next media event in the friendly ghost's many afterlives.

"We are treating the direct-to-video that is set to release in September this year as a movie event," Day said. "Fox is positioning it as though it were a major theatrical release with all the publicity and advertising dollar they're putting behind it, which is about $30 million." The difference is all that money and marketing muscle is being used not to encourage people to go to movie theaters but to go, instead, to mass merchant retailers.