Major US companies such as retail giant Wal-Mart and food producer Frito-Lay hope to cash in on the new Star Wars and Spider-Man movies with big sales of action figures, snacks and video games, but don't expect to see Anakin Skywalker boxer shorts.
While there will be plenty of lightsabers on toy store shelves, owners of the Star Wars movie franchise cut back on the number of products tied to the upcoming
PHOTO: REUTERS
Star Wars: Episode II -- Attack of the Clones to avoid oversupply.
PHOTO: REUTERS
Spider-Man merchandise, from cellphones to shot glasses to children's party plates, is everywhere.
"There are Spider-Man licenses for every conceivable product category," Russ Brown, executive vice president for consumer products at Marvel Enterprises Inc, which co-owns the rights to Spider-Man, said in an interview last week. These included footwear, collectibles and health and beauty aids.
Spider-Man hit US theaters on May 3, raking in US$115 million in its first weekend and becoming the first movie ever to gross over US$200 million after nine days at the box office, while Star Wars: Episode II debuted yesterday in most countries.
But companies have gotten burned in recent years by stocking up on too much movie merchandise. Although retailers in 1999 rang up about US$2 billion in worldwide sales of products associated with Star Wars: Episode I -- The Phantom Menace, oversupply was a problem.
Restaurant chain Taco Bell, a unit of Tricon Global Restaurants Inc and toy maker Hasbro Inc were among many to find that The Force was not with them when Episode I failed to live up to the promotional hype.
"It clearly was over-licensed," said Bret Jordan, an analyst who follows Hasbro at investment bank and brokerage firm Advest Inc. "And, the movie myth failed to deliver on the content side."
This time, Lucasfilm Ltd, the parent of the Star Wars franchise, has cut the number of domestic licenses for Episode II to about 50 from the 85 that were granted for Episode I.
"We'll be the first to admit that, at the end of the day, it was over-proliferated," Howard Roffman, a licensing executive at Lucasfilm, said. "We're much more tightly focused this time."
Gone are what Roffman describes as "fringe" items such as fast-food tie-ins or Star Wars inflatable furniture. Instead, Lucasfilm is focusing on toys, games and books -- categories that typically sell well. Episode II is forecast to generate US$1.6 billion to US$1.7 billion in worldwide merchandise sales, Roffman said.
For Episode II, privately held Lego Co and toy maker Hasbro hold license agreements to make action figures and other toys. There are also deals with snack food company Frito-Lay, cereal maker General Mills Inc and publishers Random House, owned by Bertelsmann, and Scholastic.
Hasbro is making a smaller line of toys for Episode II. An executive told analysts on a conference call last month that the company wanted to "make sure the demand is proper and we keep it a little bit hungry."
Web of profits
Marvel granted about 150 licenses to companies creating Spider-Man products and is about to strike deals for the Spider-Man sequel, due in 2004, and an animated television series set to launch this fall, Brown said.
"All of our stuff has already sold through," Marvel's Brown said. "Everyone is in reorder mode right now."
For the Spidey fanatic, there's a Cingular Wireless red cellphone decorated with a black spider web. Users can even download the Spider-Man theme song to use as a ring tone. Kellogg Co is selling Spider-Man toasted oat cereal and Pop Tarts pastries.
There is a Spider-Man version of the board game Monopoly with tokens featuring the film's heroes and villains, Dr. Pepper, a unit of Cadbury Schweppes Plc, has special Spider-Man packaging on some of its products. Dr. Pepper is also putting Spidey's image on its NASCAR race car. Kids can even brush their teeth with a Spider-Man toothbrush.
Despite the deluge of products, items from both movies appear to be doing well so far, companies say.
CKE Restaurants Inc have Spider-Man promotions at its hamburger chains, Hardee's and Carl's Jr. Hardee's said last month it was running out of Spider-Man heads that fit the tops of car radio antennae, while Spider-Man figures featured in kids meals are also a hit.
Wal-Mart Stores Inc, the world's largest retailer and No. 1 toy seller in the US, has loaded its toy department with lightsabers, Jango Fett action figures and Spider-Man toys, including a "huggable" Spider-Man that says 15 phrases when you squeeze his chest.
Discount rival Kmart Corp is pushing Star Wars hard, hoping to draw shoppers with contests to win a life-size C3PO and exclusive collections of 16 figurines.
"We're seeing strong sales on both licenses," Dave Karraker, a Kmart spokesman, said.
For example, someone bought US$3,000 worth of the US$89 Star Wars collectors sets that are exclusive to Kmart from the company's Web site, (http://www.bluelight.com). Spider-Man Web blasters and Goblin Gliders are also selling very well, Karraker said.
One Wall Street analyst said that Episode II need not be a huge hit to sell toys and games because there is already an established group of fans and collectors.
"Of course everyone would prefer that the movie is very popular and a big hit, but with Stars Wars it is really an established franchise," Sally Wallick, retail analyst at Legg Mason, said. "There's going to be business done."
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