Cars 2” is already a gusher in licensed merchandise for Walt Disney. The Wall Street Journal newspaper estimates that “Cars 2”—which is the G-rated animated movie opening Friday—will surpass the $2.8 billion merchandise haul of “Toy Story 3.”
Ira Mayer, publisher of the “Licensing Letter” and EPM Communications (who is also quoted in the book “Marketing to Moviegoers: Second Edition”), says that Disney commands merchandise royalties that are 2-3 percentage points higher than the 9.4% norm in entertainment.
“In recent months, Disney and its licensees have packed the shelves of Target Corp., Wal-Mart Stores Inc. and Toy R Us Inc. with Cars Kleenex, shampoo, juice boxes, sleeping bags, kids’ furniture and a half-size acoustic guitar emblazoned with the image of Lightning McQueen, a red race car with a friendly smile,” says the “Wall Street Journal” article by Ethan Smith. “Beyond that, Disney Interactive Studios on Tuesday is releasing ‘Cars 2: the Videogame,’ for major console systems, including a 3-D version for PlayStation 3.”
Notes a Reuters story by Lisa Richwine, “Disney partners are producing a plethora of ‘Cars’-themed products from toys and clothing to food. Mattel Inc, for example, is selling more than 150 ‘Cars 2’ toys, while Williams-Sonoma Inc. is launching aprons and mini cake-baking pans. Other partners include Nestle Ltd and Kimberly-Clark Corp.”
Target discount stores issued a press release saying that “Cars 2” merchandise is spread out throughout its stores, which number 1,755 nationally.
“They’re still selling ‘Cars’ 1 (merchandise) that leads into 2,” says Miller Tabak securities stock analyst David Joyce said. The original “Cars” was released in 2006, grossing $244 million in the U.S./Canada alone. It cost $120 million to make, according to BoxOfficeMojo.
The WSJ article adds that a few years ago Disney embarked on a film production policy to emphasize movies with tie-ins to Disney and thus merchandise riches. This year, 80% of its production budget is to such films, up from 40% in 2010.
It’s not sure-fire formula for success. Disney had a big hit with Up—which like the “Cars” franchise comes from its Pixar Animation unit—but there wasn’t much of a licensed merchandise boom from “Up.” The film was somewhat sad, and lacked cool gadgets and characters.
“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,” says “Marketing to Moviegoers: Second Edition.”
Update: Thom Forbes writing for Media Post noted that various news stories suggested Disney/Pixar made “Cars 2” because of strong merchandise sales and then flogged licensed merchandise tie-ins. “The war in the store is increasingly starting at the movie theater or the stadium,” wrote Jack Neff in an “Ad Age” article that detailed Kimberly-Clark’s global, multi-brand strategy — Kleenex, Huggies, Pull-Ups, Scott, Cottonelle, Viva — with “Cars 2” a couple of months ago. At least 22 retail chains are participating in the U.S., including regional ones. The effort includes movie advertising, a newspaper coupon insert and direct-mail program, in-store ads — including spots on Walmart’s in-store TV network — and working with leading parenting bloggers to host a “Cars 2” contest.
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