ANIMATION WORLD MAGAZINE - ISSUE 5.7 - OCTOBER 2000

Give Us Your Money: 4Kids Entertainment Attains Poké-Momentum
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Pokémon, plenty of gold and silver. © 2000 Warner Bros. All Rights Reserved. Permission is hereby granted to reproduce this photograph for publicity, promotion or advetising connected with the program depicted herein and for no other purpose.

A Rolling Franchise
Pokémon is expected to repeat as the top entertainment franchise for the 2000 holiday season, as the Pokémon Gold and Silver video games debut in the US on October 16, followed by Pokémon Puzzle League and Hey You, Pikachu!, the first voice recognition game for N64, at year's end. In anticipation, FAO Schwarz will launch a "Pokémon Boutique" in its Fifth Avenue store, following in the footsteps of toy stalwarts Barbie and Star Wars. And just when you thought the live arts were safe, a Pokémon stage show produced with Radio City Entertainment made its debut in September at Radio City Music Hall, with a planned 30-city North American tour to follow.

In addition to Pokémon, which continues to receive extremely high ratings, Kids' WB! will air the highly anticipated Pokémon: The Johto Journeys starting October 14, featuring 100 new Pokémon characters from the Gold and Silver video games.

While weary adults may groan at the thought of a continued Pokémon onslaught in North America, let us not forget that Pokémon is only two years old in Europe, where according to Kahn, 4Kids is "seeing excellent results...as the Pokémon phenomenon continues to gain momentum."

Pokémon: The Johto Journeys. © 2000 Warner Bros. All Rights Reserved. Permission is hereby granted to reproduce this photograph for publicity, promotion or advetising connected with the program depicted herein and for no other purpose.

Company Chief Financial Officer Joseph Garrity expects 4Kids' performance to be even better in the third and fourth quarters of this year as the Pokémon: The First Movie debuts overseas and sales of Poké-merchandise in Europe could top $300 million.

All this may sound like great news to a company like 4Kids, but it has been a battle for Kahn and company to fight gaining a reputation as a one-trick pony. For 4Kids, it's all about maintaining momentum. Children's tastes are inherently difficult to predict, making sustaining good growth year after year a tall order. As a publicly traded company (NASDAQ: KIDE), 4Kids is under a great deal of pressure to continue to perform.

James, a trader in 4Kids stock who wishes to remain anonymous, observes, "Almost ninety percent of 4Kids' income is derived from Pokémon. The only way they can increase their stock price is to convince investors that there's more to the story. Is it all smoke and mirrors? Is all the good news already out there? Pokémon has been a blessing for them, but if they don't find other viable properties their stockholders will bury them."

Time to Diversify
Kahn insists that Pokémon will remain a profitable property for years to come, but acknowledges that 4Kids needs to expand. "What [Pokémon] has allowed 4Kids to do is to have a springboard into the whole area of children's entertainment. This is a business of ideas. We are spending all of our energies developing new content and different ways of intensifying our return on that content. Corporations want to get customers young and obviously to do that you need kids licensing which is where we think we're at the forefront."

One property 4Kids has acquired as a result of its success with Pokémon is a European licensing agreement with Marvel Enterprises to develop new opportunities for several of Marvel's superhero franchises, including X-Men classic, Spider-Man classic, The Fantastic Four, Silver Surfer, The Incredible Hulk, Avengers, Captain America, Iron Man and Daredevil.

X-Men. ™ & © 1996 Saban. All Rights Reserved. Fantastic Four. ron Man.

In a release describing the new deal, Peter Cuneo, CEO of Marvel Enterprises, says, "4Kids' Leisure Concepts is one of the world's premiere licensing agents, as evidenced by their success with Pokémon and the WCW. Furthermore, 4Kids understands our business and has already proven to be a great partner to our toy company, Toy Biz, who is currently a Pokémon licensee. Leisure Concepts has the manpower and resources to help us immediately build a powerful international presence for our superhero brands."

Kahn has also returned to his roots, with the signing of Cabbage Patch Kids to an exclusive licensing agreement. 4Kids will renew the popular doll franchise and export it using the same patterns that took hold of the United States in the early 1980s. 4Kids will also re-launch characters from its WCW wrestling property, which recently has fallen far short of its main competitor, the World Wrestling Federation. Additionally, in a move that will surely please Thundercats fans, 4Kids has acquired the show's merchandising license and will develop "a whole slew of new [Thundercats] properties and ideas."

 
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