Sample Book Chapters

Chapter 5 - Merchandising

Chapter extracts in this section of the website amount to 4,000 words distilled from 110,000 words in the print book.

   Up to a year of lead time is necessary for design, manufacture, and sales of merchandise to stores, which may be before the first scene of a movie is even shot. There’s a lot at stake. Retail sales of licensed merchandise based on entertainment and character properties were a $12.745 billion businessin the United States and Canada in 2006 (see table 5.1).

   Licensing merchandise conveys the right to manufacture products with theme elements based on movies (and can include the creation of movie-themed services for companies that do not make durable goods). The movieand movie-character–themed products can be key chains, caps, toys, wallposters, bed sheets, video games, candy, and much more (see fig. 5.1).
      The movie-merchandising business actually peaked in the late 1990s but has fallen back since then because
BELOW: Wal-Mart stacks up Spider-Man merchandise.
Copyright © 2009, Robert Marich. All rights reserved.
Used here with permission from SIU Press.

retailers—burned by underperforming movies—turned cautious. In addition, fewer of the top toy properties are driven by movie exposure. According to newsletter The Licensing Letter, toys fromonly two movies, Cars and Spider-Man, were among the top-ten toy properties in 2006. There’s something of a feast or famine for films in this arena. Some films get little merchandising interest while the most popular films for licensing line up a hundred or more.
   Not all movie licensing is for durable goods. For example, technology companies have licensed Star Trek—which portrays humankind as being noble and tech savvy in the future—for ad campaigns targeting a business audience and for use at trade shows. Such licenses can generate cash payments in the tens of thousands of dollars per year.
   For movies based on preexisting properties, such as comic books, the owner of the underlying property usually has its own licensing program. The promise of a big-budget Hollywood film will be a catalyst for even more merchandise deals. As a result, the film distributor and property owner arrange a formula to split royalty revenue and divide responsibility for management of merchandising.