Sample Book Chapters

Chapter 6 - Merchandising

Chapter summaries in this section of the website are distilled from 139,000 words in the book.
  Up to a year of lead time is necessary for design, manufacture, and sales of merchandise to stores, which is put in motion 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 $11 billion business in the United States and Canada in 2010 (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.

 

retailers—burned by underperforming movies—turned cautious. In addition, fewer of the top toy properties are driven by movie exposure. 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.
   Most licensees produce “durable goods”—physical items expected to last more than three years—but movie incarnations can also be employed in intangible “services.” For example, Universal Orlando Resort and Virgin Holidays offered “A Celebration of Harry Potter Films” travel package in 2011 to tourists in the United Kingdom.
   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. 
Text copyright © 2013, Robert Marich. All rights reserved. Used here with permission from SIU Press.