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Hits at the box office are creating retail blockbusters

July 13, 2009|Dawn C. Chmielewski

The summer's noisy, raucous, robot-battling blockbuster, "Transformers: Revenge of the Fallen," is creating a frenzy in the toy aisles as well as at the box office.

The second installment in the Transformers movie franchise has already racked up nearly $34 million in ticket sales in the U.S. and Canada -- and spurred renewed interest in the 25-year-old toy line from Hasbro Inc. on which the Michael Bay film is based. The previous movie, released in 2007, brought in $480 million in revenue for the toy maker. This time, sales are even more brisk, and analysts expect revenue to top $600 million by year's end, ranking it second only to the prevailing force in movie-related toys, "Star Wars."

Sales of merchandise with a cinematic hook could reach an all-time high this year, propelled by such perennial favorites as "Star Wars," new installments of established series such as "Star Trek" and "X-Men Origins: Wolverine," and newcomers including "G.I. Joe: The Rise of Cobra."

"This year might be a peak," said John Taylor, a video game and toy analyst for Arcadia Investment Corp. in Portland, Ore. "People are thinking if everything goes well, "Transformers" could rival "Star Wars" as the single biggest-selling property. With 'G.I. Joe' on top of that, you've got a shot at breaking $700 million. It's going to be a great year for this stuff."

For The Record
Los Angeles Times Tuesday, July 14, 2009 Home Edition Main News Part A Page 4 National Desk 1 inches; 39 words Type of Material: Correction
'Transformers' ticket sales: An article in Business on Monday about movie-related toy sales said "Transformers: Revenge of the Fallen" had racked up nearly $34 million in ticket sales in the U.S. and Canada. It should have said $340 million.

Retailers have come to rely on Hollywood, especially during the summer.

Store buyers are looking for the pop culture phenomenon to lure consumers into shops. They draft off of studios' multimillion-dollar movie marketing campaigns to spur interest in action figures, building sets, video games and other items with a cinematic tie-in.

"We definitely feel like customers are responding to entertainment-driven merchandise," said Laura Phillips, vice president of toys in the U.S. for Wal-Mart Stores Inc.

But with a glut of effects-driven summer films to choose from, retailers have grown more discerning about which properties they'll back. That's especially the case now, in the depth of a recession, when consumers have cut back on such discretionary purchases.

Shelf space is shrinking as stores devote more real estate to other products vying for a child's attention, such as video games.

Target Corp. and Wal-Mart stocked little merchandise associated with the Disney/Pixar movie "Up," principally because toy makers largely stayed away. Even analysts predicted -- incorrectly, as the $269-million domestic box office shows -- that the movie wouldn't connect with children. Its box-office total was more than "Star Trek" or "Cars." Neither retailer carried any of the plush toys based on "Monsters vs. Aliens," which also turned out to be a theatrical success, said Marty Brochstein, senior vice president of industry relations for the International Licensing Industry Merchandisers' Assn.

Not every movie lends itself to a toy line (and vice versa). Based on the popular Teenage Mutant Ninja Turtles toys, Warner Bros.' 2007 film "TMNT," for example, had a less-than-warrior-like box-office performance, selling only $95 million in global ticket sales. The homely Ogre character, based on DreamWorks Animation's "Shrek," did not fly off the shelves as a cuddly plush doll, according to analysts.

"If you've got a great film that resonates with the target audience, it can do really well," said Howard Roffman, president of Lucas Licensing. The Lucasfilm Ltd. division's Star Wars characters and spaceships have accounted for $18 billion in global sales since George Lucas' first film in 1977. "If it doesn't, no amount of marketing or ancillary products is going to make it work."

Walt Disney is considered the granddaddy of movie merchandising. He agreed to put Mickey Mouse's image on writing tablets in 1929, following the character's debut in "Steamboat Willie."

The modern era of movie licensing was reignited by "Star Wars" and "E.T. The Extra-Terrestrial" in the early '80s. Disney's 1994 animated film "The Lion King" achieved a sort of merchandising nirvana, generating an eye-popping $2 billion worth of sales of stuffed animals, toys, clothing and other items, according to the Licensing Letter.

But the recession has cooled toy sales, and retailers have grown more cautious -- paring the number of movies they'll support in a big way, Brochstein said.

Store buyers are reluctant to gamble on original films such as Disney/Pixar's "Up," preferring proven favorites such as Lego building sets and toys based on the animated TV series "The Clone Wars," the original battle-tested action figure, G.I. Joe., or Disney's Princesses, a collection of eight characters whose animated legacy dates to the opening of "Snow White" in 1937. The forthcoming film "The Princess and the Frog" will add another royal member to the assemblage, Princess Tiana.

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