Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, July 30, 1995 TAG: 9507280107
SECTION: BUSINESS PAGE: G-1 EDITION: METRO
SOURCE: The Wall Street Journal
DATELINE: LENGTH: Long
That is just one of many ways toy companies are becoming entwined with Hollywood these days. In a business that hasn't had an original megahit since Cabbage Patch Kids a decade ago, toy makers have grown increasingly reliant on Power Rangers, Ninja Turtles or the latest Walt Disney Co. creations for their ideas and sales. There is even a new word for it: entertoyment.
Addicted to cadging movie and television characters, many leading toy makers have shelved much of their own research and development, and changed the way new toys are created. In doing so, some parents and psychologists say they are even changing the way children play. Prepackaged characters and well-defined roles and actions can limit youngsters' imaginations and fantasy play, they say.
``I am torn,'' says Robert Solomon, chairman of Dakin Inc., a Woodland Hills, Calif., maker of toys tied to the films ``Congo'' and ``Casper.'' ``As a dad, I wish there was a little more imagination for my kids. As a businessman, I say this is the sign of the times. By and large, the days of the Hula-Hoop - like ``Leave It to Beaver' - are gone.''
Solomon and other toy manufacturers say Hollywood-related toys sell so well it would be foolish to invest heavily in the risky business of creating the next Frisbee or Etch-A-Sketch. Last year, nearly half the $17 billion in retail toy sales came from licensed goods based on movies and television shows, up from about 10 percent a decade ago. Toy companies expect $300 million in sales tied to Power Rangers this year, plus $130 million from Batman gear and $100 million from merchandise linked to Disney's animated film ``Pocahontas.''
By contrast, Sky Dancer, a new flying doll from Lewis Galoob Toys Inc. that is this year's big nonlicensed hit, is expected to do about $50 million in sales. Only a few perennials like Mattel Inc.'s Barbie, with predicted 1995 sales of $1 billion for its very extensive line, do better.
And when 90 percent of new, non-Hollywood products fail on average, it is no wonder that shelves are sagging with X-Men. Beyond traditional toys, four of five of Playmates Toys Inc. new toy lines this year are based on a movie or TV show. So are six of seven new toy lines this year from Kenner.
``I think if a Hula-Hoop were to come along today they'd slap a Power Rangers logo on it,'' says Stephen Sandberg, a toy distributor based in Foxboro, Mass.
Enthralled with toys, entertainment companies are launching their own toymaking subsidiaries. In the process, the dreams of lone inventors chasing the next Rubik's Cube are dimming.
Maureen Souza, a toy inventor and former product researcher for Hasbro and Tyco Toys Inc., says before the licensing craze manufacturers would jump on a bare-bones idea over lunch. ``Today, you've got to go in with a broker and a whole marketing plan,'' she says.
The marketing for Hollywood blockbusters, of course, is enormous - and can have huge impact on toy sales as well. Viacom Inc.'s Paramount Pictures and corporate sponsors PepsiCo Inc. and its Taco Bell unit are spending $97 million on ``Congo'' this summer, generating huge publicity for the movie's primary toy licensee, Kenner. ``Mighty Morphin Power Rangers: The Movie,'' from News Corp.'s Fox Filmed Entertainment, is expected to generate $200 million in ad outlays from all its promotional partners-benefiting toy maker Bandai Co. of Tokyo.
Such advertising spending dwarfs promotion budgets for toys. Last year, Hasbro spent $5.2 million and $2.9 million on G.I. Joe and Cabbage Patch, respectively.
Typically, toy makers spend about 14 percent of sales on advertising, says Seth Siegel, co-chairman of Beanstalk Group Inc., a New York licensing agency. Licensing gives them more for their buck, he says, even though licensing fees are rising. Disney first licensed products in the 1930s, and by the 1960s, Mickey Mouse and Donald Duck commanded a royalty rate of 5 percent. The figure was up to 8 percent by the late 1980s. For Pocahontas merchandise, Disney gets a hefty 12 percent royalty.
Small wonder, then, that toy companies are playing a bigger role in Hollywood. A Disney animator says one scene in ``Pocahontas'' - when the raccoon Meeko briefly braids the star's hair - was created after a suggestion from Mattel, which wanted to be able to make Braided Beauty Pocahontas dolls.
Disney denied that Mattel dictated the scene, saying the film always comes first. Mattel declined to comment. Still, the braiding of the two industries seems clear to others. ``It's a given in the industry that movies and TV programs are routinely designed with merchandising in mind,'' says Weston Anson, president of Trademark & Licensing Associates Inc., La Jolla, Calif.
For ``Batman Forever,'' Kenner got Warner Bros. to put the Riddler in tights because baggy pants don't look good on toy action figures, says Rick Watkins, a former Kenner toy-development manager.
But what is good for toy companies isn't necessarily good for children, some experts contend. ``Children who play with the new generation of licensed toys tend to imitate what they see instead of inventing new fantasies,'' says Diane Levin, who teaches education at Wheelock College in Boston and has written about TV's influence on children.
Cecilia Savon, a Belmont, Mass., mother of two boys, says movie-linked toys lack the long-term play value of traditional toys. ``They play with Batman for five minutes, then toss it for Ninja Turtles, then it's Power Rangers,'' she says. But she admits she doesn't have the parental willpower to limit purchases of popular licensed figures.The Toy Shop in Concord, Mass., has resisted. Owner David Hesel refuses to carry licensed toys in his small store. ``I believe that a toy has to stand alone without the help of a movie or TV to interest children,'' he says.
Big toy makers disagree. Mattel says its movie figures provide a starting point for children to change story lines, create new adventures, mix characters and play in groups. ``Would psychologists be against nursery rhymes and fairy tales passed down from generation to generation?'' a spokesman asks. ``Disney stories serve the same purpose and incorporate the same messages.''
Another reason for licensing's success is the continuing failure of traditional toys to excite buyers. That includes old-fashioned dolls, an area where innovations continue. There are dolls that cry, burp and drool. ``They've been through all the biological functions,'' says John Taylor of Arcadia Investment Inc. in Portland, Ore.
But sales of one-trick dolls have been down the past two years, to $331 million in 1994 from $460 million in 1992. Analysts say development cutbacks, along with marketing that boosts licensed products, stack the odds against new creations.
Reliance on Hollywood has left toy makers facing a new risk: Sales hinge on the success of the movie or TV series. If it bombs, a manufacturer may lose millions spent to design, produce and distribute toys.
A related risk is the ebbing of a craze. Hasbro prospered in 1993 with TV's ``Barney and Friends'' and the film ``Jurassic Park,'' but Barney faded last year, and toys based on Metro-Goldwyn-Mayer Inc.'s ``Stargate'' didn't come close to matching sales of ``Jurassic Park.'' Hasbro's 1994 earnings fell 12.5 percent to $175 million from $200 million.
Studios also can stub their toes in toyland. MCA Inc., now a unit of Seagram Co., lost millions with its investment in a company that made toys based on ``E.T. The ExtraTerrestrial.'' And an estimated $1 million investment by Mattel in a toy development unit at George Lucas's Lucasfilm Ltd. in 1991 never produced anything, though a Mattel spokesman says there are products in the pipeline.
In April, Warner Bros. announced a division to create toys based on film and TV characters. While it plans to continue relationships with longtime licensees, the Time Warner Inc. unit ``has so many properties that we can't always get a toy company interested,'' says Dan Romanelli, president of Warner Bros. Worldwide Consumer Products. Initial products will be released at Christmas 1996. Likewise, Disney already makes some of the curios and toys sold through its theme parks and stores.
None of the pure entertoyment ventures are as far along as Toy Biz Inc., 36 percent-owned by Ronald Perelman's Marvel Entertainment Group Inc. Toy Biz, which went public in February, is expected to ring up sales of about $200 million this year, putting it in the major leagues of toy manufacturers. Approximately 75 percent of sales are licensed products.
With full access to the Marvel Comics' vault of 3,500 characters plus new films and TV shows, Toy Biz has four toy lines based on current TV cartoon characters: X-Men, Spiderman, Iron Man and the Fantastic Four. X-Men sales alone came to $85 million last year.
Avid Arad, who heads Marvel Films, commutes weekly to New York from Hollywood, where he serves as a consultant to Toy Biz. ``I read the scripts for Marvel Films and I design the toys for Toy Biz,'' he says. ``One could say I have a lot of control.''
by CNB