Generally referred to as ‘licensing and merchandising”, this area of the entertainment industry provides lucrative additional revenue to a project over a long period.  It is well known that most music concert tours make more money from merchandising than from ticket sales as the price of the ticket usually covers the cost of the venue and publicity required to attract a large audience.  Applied to a television program or feature film, this area can show a tremendous overall profit even where a theatrical release or television premier has not done that well.  There are many segments to the pre-teen 4 - 12 year old young consumer market that reportedly influence over U.S.$75 billion in buying power.

The so-called “Brat Market” dictates the product you should buy, the package it is in and how you should dispose of the empty container. These influences deal with brand image, ethics and environmental issues, all things that kids have learned from TV or school and are imprinted at an early impressionable age.  In this respect, children have come a long way from the childhood days of their parents. These influences spill over into many areas of buying power, particularly entertainment. Cartoon licensing for example, represented a U.S.$30 billion segment of the “brat” market. A percentage of merchandise can be sold via the Internet as well as through conventional distribution channels. If a product captures youngsters’ imagination and buying influence, it can mean hundreds of millions of dollars in revenues and royalties for the creator, manufacturers and producers of the product.

“Ninja Turtles” for example has realized over U.S.$6 billion in the sale of licensed products and  “Ninja” films were grossing $30,000,000 a week in box office revenues when first introduced.  The success of the Pokemon television series generated a series of films, the first of which grossed over $100,000,000 in box office and video sales. Trading cards based on this property have generated huge profits for the company and sales of Pokemon products were expected exceed $10.0B by the close of the year 2000. One toy company’s sales of “Ninja” products represented U.S.$150,000,000 in 1990 alone.  G.I Joe products have sold over U.S.$3.0 billion since the doll was introduced.  GI Joe figures have now achieved over 400 million unit sales.

Products sales for both these properties jumped dramatically when the characters were exposed to the market through an animated television series. The four day Hong Kong Toy and Game Fair, which is held in the third week of January, each year, posts over $120.0 million (US) in orders and participants expect a steady growth in the years tom come. A wide array of new licenses perked up the toy industry in the nineties. This new line of licenses came from new television productions, children’s films, comic books, video games and other ancillary products. These properties lend themselves easily to the electronic media subsequently fueling consumer demand for video and computer game versions of these productions. Royalty payments for electronics surpassed those from toys in the late 1990’s.  Will the video and games market continue to show outstanding growth? Sales In Action LLC is a sales and marketing business development firm comprised of entertainment industry veterans with over 15 years experience, says “yes”. According to SiA founder and president, Howard Horowitz, “given the predicted and past growth of the North American interactive entertainment market – probably somewhere around 18 Billion USD in 2004 for will grow to attract foreign publishers, developers, and distributors and will add 40% or more to their gross revenue by getting in this market.”

Toy manufacturers are now tending to obtain licensing agreements for TV and film based toys well prior to the release of a production in anticipation of box office and small screen successes. The computer animated film “SHREK” for example had licensing contracts with 35 companies, including Hasbro, for action figures and vehicles well prior to the production being completed. The same opportunity exists with most children’s productions, the latest on the market being Greanwold at www.greanwold.com

Michael Trigg
http://www.articlesbase.com/international-marketing-articles/toys-games-product-licensing-750575.html