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Short Shelf Life: Animated Movie Licensing Challenges

Karen Raugust investigates how movie licensing presents unique challenges to licensors, licensees and retailers.

Retailers are comfortable with sequels. The original Ice Age had almost no licensing, while Ice Age: The Meltdown, will be Foxs biggest film-licensing program to date. © 2002 & 2006 Twentieth Century. All rights reserved.

Retailers are comfortable with sequels. The original Ice Age had almost no licensing, while Ice Age: The Meltdown, will be Foxs biggest film-licensing program to date. © 2002 & 2006 Twentieth Century. All rights reserved.

With more animated theatrical films being released each year from Disney/Pixar, Warner Bros., Sony and other studios the market for licensed merchandise tied to those films is increasingly competitive. Add to that the inherently short-term nature of a feature films lifespan, and you have a licensing sector fraught with challenges.

The shelf life of a film is so short, says Juli Boylan, svp, Sony Pictures Consumer Products. Its literally about the opening weekend. Retailers feel theres just not enough time to create consumer demand.

But film licensors are taking a realistic look at current market conditions and fashioning licensing programs they believe will succeed. For one thing, they are trying to extend the window of opportunity as much as possible, from four to eight weeks prior to the theatrical premiere all the way through the DVD release.

Getting in stores a month or two before the film release allows licensees to take advantage of the studios pre-release advertising and promotional campaigns. Many licensees, especially in hard goods, tell us they do at least half their business in the days and weeks prior to the film opening, says Elie Dekel, evp of Fox Licensing.

Film Versus Franchise

Because of the short-term, event-driven nature of feature film licensing, retailers have a greater comfort level with films that are sequels or based on existing properties, such as books or TV series. Foxs first Ice Age film, in 2002, had virtually no licensing, according to Dekel, while this years sequel, Ice Age: The Meltdown, represents Foxs most extensive film-licensing program to date. Dekel points out that the studio views Ice Age licensing as more of an ongoing brand strategy rather than a movie opportunity. We hope there will be many iterations to come.

Similarly, Universal sees the Curious George movie, released in February, as the introduction of a brand licensing effort. Beth Goss, evp, Universal Studios Consumer Products Group, says a limited number of items were on the market at the time of the film, but new products will be added for the debut of the PBS TV series in the fall. The majority of the propertys 60 U.S. licensees are authorized to sell products tied to both the film and the TV show.

Joy Tashjian observes that its hard to launch films that lack a legacy, such as Delgo, for which she is handling licensing. The strategy is to position that film as the first in a franchise. © Electric Eye Ent. 2004. All rights rese

Joy Tashjian observes that its hard to launch films that lack a legacy, such as Delgo, for which she is handling licensing. The strategy is to position that film as the first in a franchise. © Electric Eye Ent. 2004. All rights rese

Many licensors try to position even films without a history as the launch point for a franchise. If its not part of a legacy, or well-known, its hard, admits Joy Tashjian, president of Joy Tashjian Marketing Group, which handles licensing for Fathom Studios 3D feature film Delgo. Fathoms strategy has been to position the film as a kick-off to more films or a TV series. It was created with the idea in mind that it would be a franchise with spin-off treatments.

Some film-only properties are less risky than others in the eyes of retailers and manufacturers. Pixars Cars, for example, has a full program covering toys, apparel and home products. Its the broadest category assortment weve ever developed for an animated film, says Eva Steortz, Disney Consumer Products vp of boys and film franchise management. Its a bit of a fallacy, she adds about retailers lack of interest in first-time films. If you have the right product and the right translation to product, you can succeed with a new film.

With its regular schedule of films and licensing efforts, DreamWorkss has developed a good reputation with retailers. Its pipeline includes Over the Hedge.  & © 2005 DreamWorks Llc. All rights reserved.

With its regular schedule of films and licensing efforts, DreamWorkss has developed a good reputation with retailers. Its pipeline includes Over the Hedge. & © 2005 DreamWorks Llc. All rights reserved.

Of course, the track record of previous Pixar movies, both at the box office and in licensing, helps. Similarly, DreamWorks is starting to develop a reputation with its regular schedule of films and licensing efforts. Theres some familiarity from movie to movie, says Anne Globe, DreamWorks Animations head of consumer products and worldwide promotions. The studios pipeline includes Over the Hedge and Flushed Away in 2006, Shrek III and Bee Movie in 2007, and Kung Fu Panda and Madagascar II in 2008.

Globe agrees with Steortz that first films can have licensing potential. A sequel is more of a proven entity, with built-in awareness and a history of sales success, she says. But there certainly is a place at retail for something new.

Still, licensors agree that it can be difficult for most brand-new films to secure retail placement, and that a conservative approach is warranted. Our strategy is, This is our first film, lets not be overzealous, says Boylan about Open Season, the initial release from Sonys new animation division. The key is knowing what the challenges are and what is realistic.

A Second Sales Window

A films DVD release can lengthen the lifespan of its licensing effort by offering a second window for product sales. In some cases, additional and refreshed products come out in time for the release. Examples include soft goods, such as apparel, that can be manufactured and delivered relatively quickly, and seasonal items.

Home entertainment is critical to a film licensing program, Tashjian says. You have to have that. Its one more way to reach your audience. If people miss it in the theater, and a lot of them do, they have another opportunity to see it. Its a big driver in supporting the other products.

When the movie does well, the DVD is sort of an important second bite of the apple, adds Dekel. It reminds people about what they enjoy about the film, and its another opportunity for retail support. But he cautions, The retailers are a little more skeptical about that second window. To them, the DVD release is more about promotion than product sales. Yet, in certain categories, that second window can be a compelling opportunity.

On rare occasions, a DVD can even spur licensing activity for films that had no merchandising at the theatrical release. Such was the case for Foxs Napoleon Dynamite. The enthusiasm for the DVD drove the beginning of the licensing program, Dekel says, noting that the property represents one of the studios largest current licensing efforts, one that is still growing two years after the films premiere.

Steortz emphasizes that each movie has its own trajectory. Theres no real trend to a films lifecycle, she says. With Finding Nemo, the DVD release brought interest in categories that werent licensed for the somewhat limited theatrical program, so Disney added manufacturers to its roster. In fact, the studio has more licensees on board today than when the film came out in theaters or on DVD, and product sales continue to grow.

In general, the DVD release represents one component of an overall brand strategy. Its all about scheduling and windows, Goss explains.

Marvel Toys Curious George Tickle & Giggle plush (right) reflects the humor of the recent theatrical release, while a line of Bump N Go vehicles taps into the monkeys adventures. Provided by Universal Studios.

Marvel Toys Curious George Tickle & Giggle plush (right) reflects the humor of the recent theatrical release, while a line of Bump N Go vehicles taps into the monkeys adventures. Provided by Universal Studios.

The Product Mix

A decade ago, many films had a full range of products of all types, many with several dozen or even more than 100 licensees. Now, however, licensors tend to focus on key categories and products that make sense.

Its certainly not as broad and deep as it used to be, at all, says Boylan. Were not signing 75 licensees. Were focusing on those manufacturers that can create goods that we feel will sell through at retail. She points out that its better for retailers to miss an opportunity than buy too much and be left with a bad taste in their mouths. That only hinders us with our next film.

The original Shrek had licensees on board in all the core categories, including videogames, publishing, toys and apparel, but the licensing was certainly more modest compared to the sequels, says Globe. Since both the first and second films exceeded expectations, she adds, the studio has been able to consistently build the merchandising program. It worked to our advantage that we were conservative at the first movie.

That narrower range of products is characteristic of all films, not just new ones. Were all more realistic, says Dekel. Weve all been caught in the ringer of buying into the hype. Its less about being all things to all people now.

The balance of product categories has changed over the last decade as well. Ten years ago, toys routinely accounted for 50% or more of a films merchandise sales. Playthings can be less important now for some films, although action figures, playsets and role-playing toys still do well in many cases. If you look at the past couple of CGI films to come out, toys have not been the leading category, and have been a much smaller percentage of the program than what the soft goods have translated to, Boylan reports.

A lot [of films] dont have an obvious play pattern for kids to create a new story at home, Goss says, noting that the Curious George movie lends itself to products more than the books on which it is based. She adds that childrens interests have also changed. Theyre just as interested in wearing proudly an animated character on a shirt as they are playing with a toy.

Interactive games have risen in popularity and are a significant category for many films. Disneys Chicken Little interactive games performed well, and a second title is being launched. But, as Foxs Dekel cautions, Matching up videogame production and film production timing is a big challenge.

Publishing is also key for almost all films. There are only a couple of common threads in our industry, says Steortz. One is publishing, because films are story-driven. She notes that all Disney/Pixar features have publishing in place, as well as products in Disney Parks and Stores, even if there is little licensing activity overall.

Warner Bros. Happy Feet features lots of singing and tap dancing. Licensed items include karaoke microphones and dancemats. © 2006 Warner Bros. Ent.

Warner Bros. Happy Feet features lots of singing and tap dancing. Licensed items include karaoke microphones and dancemats. © 2006 Warner Bros. Ent.

Each Film is Unique

More than ever, licensed products attached to a film reflect its themes and characteristics. Its less about being all things to all people. Its about finding what in a film appeals to the audience and makes a good product, Dekel says. It sounds simple, but its not so easy in the execution.

The [Curious George] movie is all about humor and the slapstick nature of George, says Goss. Marvel Toys is creating Curious George Tickle & Giggle plush to reflect that sensibility, as well as a line of Bump N Go vehicles that match the adventuresome nature of the film.

Warner Bros. Happy Feet features lots of singing and tap dancing, and products from master toy licensee Thinkway Toys and other manufacturers incorporate those themes, according to Maryellen Zarakas, svp, worldwide marketing, TV and studio licensing, at Warner Bros. Consumer Products. Licensed items include karaoke microphones and dancemats, for example.

DreamWorks Over the Hedge takes place in a suburban backyard, which makes seasonal toys for backyard use a natural. And Sonys Open Season, which lends itself primarily to soft goods, features a character named Boog who carries a teddy bear backpack, which will be replicated so children can do the same.

Cars, with its vehicle and machinery themes, has allowed Disney to enter into categories where its past involvement has been limited, says Steortz. The studio has authorized a wide range of auto accessories, an extensive line of electronics and its first battery-powered ride-on vehicle. Other Cars items include a rug with a road on it, which kids can use to drive their licensed vehicles, and backpacks with pockets to hold die-cast cars. One of the biggest trends is that there isnt a trend, says Steortz. Each film has to be treated individually.

One universally acknowledged key to success is high-quality product development. If youre going to stand out from the rest and get retailers behind your program, you have to have great art, says Boylan.

Most studios no longer feel pressure to heavily license every film. The licensing program for Warners The Ant Bully will focus on select products, such as a line of candy, that tie in closely to the themes of the film. Similarly, licensing for Disneys The Wild will concentrate on the interactive game and book categories, as well as merchandise for the Disney Stores and Parks.

Most studios no longer feel pressure to heavily license every film. The licensing program for Warners The Ant Bully will focus on select products, such as a line of candy, that tie in closely to the themes of the film. Similarly, licensing for Disneys The Wild will concentrate on the interactive game and book categories, as well as merchandise for the Disney Stores and Parks.

Open Season will be Sonys first release from its new animation division. The consumer products department is maintaining realistic expectations in the licensing of products. © Sony Pictures Animation.

Open Season will be Sonys first release from its new animation division. The consumer products department is maintaining realistic expectations in the licensing of products. © Sony Pictures Animation.

Importance of International

Studios report that North America remains the most important region for film licensing (as it is for licensing in general), but that international is growing in importance as foreign markets account for a greater percentage of global box-office. Boylan reports that international territories now account for 35% of Sonys licensing business, up from only about 10%-15% two years ago. Its a dramatic difference, she says.

Ice Age: The Meltdown is Foxs strongest international property ever, Dekel says. Of 150 licensees worldwide, half are in Europe, 30 in the U.S. (the most for a single country) and the balance in Australia/New Zealand and Latin America.

In some cases, films can generate greater licensed product sales abroad than in the U.S. Disneys Chronicles of Narnia did more business in Europe than in the U.S., as did The Heffalump Movie, Steortz says. Toy Story maintains a significant global licensing program 10 years after its theatrical release, with Japan having the most developed program.

While licensing strategies are similar across the globe, there are some differences due to local tastes, which dictate the products and styles that work in a given territory, and release schedules, which affect timing and seasonality. In addition, the history of a property in a particular country determines how it is licensed there. Goss points out that in Norway, Denmark and Japan, Curious George is considered a classic, while in countries such as the U.K. and Korea the property is virtually unknown.

Pixars Cars is a film-only property that doesnt require a lot of risk in from retailers and manufacturers. It has a full program covering toys, apparel, home products, and the successful Pixar brand. © Disney/Pixar.

Pixars Cars is a film-only property that doesnt require a lot of risk in from retailers and manufacturers. It has a full program covering toys, apparel, home products, and the successful Pixar brand. © Disney/Pixar.

Retail Challenges

Studios believe that, no matter how popular a film turns out to be, retailers have to strongly support a merchandise line for it to succeed. Toward that end, licensors work to help them understand the propertys potential. We try to focus on educating them as much as possible and as early as possible, Zarakas says. That means showing retailers footage and scripts, explaining the licensing and promotional strategy, and demonstrating how the DVD release or other secondary windows will prolong the propertys life. All of this is done before licensees make their retail presentations.

You cant emphasize enough how important it is to work closely with retail, stresses Globe, noting that studios often need to customize programs and products to specific retail chains.

Aside from their short lifespan and difficulty in securing retail support, there are other challenges unique to film licensing. There are so many elements in film licensing that make it much different than a TV show, says Tashjian. One is the unpredictable timing. She notes that Delgos release date (now set for 2007) has been pushed back several times, in part due to the death of one of the lead voices, Anne Bancroft.

Tashjian began licensing the property two years ago. The delays have affected licensees, although none have manufactured product yet so they dont have to store inventory. Still, the delay affects them greatly, she says. Licensees books and projections assume a particular window of time when the bulk of business will be done, and its very tough to allocate the necessary resources and budget if the schedule changes.

Meanwhile, the timing of a films release and who the distributor is also affect licensing potential and strategies. And the studios and licensees objectives can be at odds. The studio often wants as many licensees as possible, but thats not realistic from a licensing or retail standpoint, Tashjian explains.

Dekel notes that the studios business model is hit-driven, with a focus on opening weekend. Licensees also want to open big but, even more, to extend the life of the property as long as possible. While a film release is one of the biggest promotional events there is driving awareness for film merchandise audiences are fickle and can lose interest in products quickly. Its a very difficult way to manage your business, Dekel says. You really need story and characters that resonate with the audience, and not be so purely dependent on the event of the film.

Karen Raugust is a Minneapolis-based freelance business writer specializing in animation, publishing, licensing and art. She is the author of The Licensing Business Handbook(EPM Communications).).