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Disney works to keep its hit film 'Frozen' hot

“Frozen” mania pushed Disney profit up 19% to $2.2 billion in its fiscal first quarter ended Dec.

When it comes to the sassy princesses who star in Disney's hit film "Frozen," retailers don't want to let them go.

Elsa and sister Anna, the animated duo behind the 2013 movie, have rapidly become the rulers of a retail empire that keeps expanding like a magic ice floe in a weirdly enchanted kingdom.

The two royals are immortalized in a vast array of products for multiple age groups, including dolls, silvery children's dress-up wigs, iPhone cases and adult-size lingerie. Even sidekicks Sven the reindeer and Olaf the snowman make appearances on goods, including T-shirts, dental floss and notebooks.

The film has been a huge boon for Burbank-based Walt Disney Co. "Frozen" mania pushed its profit up 19% to $2.2 billion in its fiscal first quarter ended Dec. 27. Revenue climbed 9% to $13.4 billion.

"A full year after its release, we're seeing the true impact of 'Frozen' across our entire company," Disney Chief Executive Robert Iger said in a conference call to discuss earnings with analysts. The company said the "Frozen" franchise rakes in more than $1 billion in annual retail sales; in November, Disney said it had sold 3 million role-play dresses.

The success of "Frozen" helped give the overall toy industry a $531-million boost in 2014, the research firm NPD Group said, which dubbed the brand the biggest and fastest growing toy property of the year.

After becoming the highest grossing animated film of all time, the popularity of "Frozen" shows little sign of melting away. Next week, Disney is launching a short film called "Frozen Fever" that will air before a live-action retelling of the classic Cinderella tale, in which the ball-gowned heroine bears a striking resemblance to Elsa.

"When you have a jackpot like 'Frozen,' it can go on forever," said Jason Moser, an analyst at the Motley Fool. "This really goes back to what Disney does so well — they can create a movie like 'Frozen' and take it in a number of different directions and continue to make money."

Disney, the spinner of classic fairy tales, is enjoying a boom from licensing and selling merchandise. In its first quarter, revenue from consumer products jumped 22% to $1.4 billion. That compared with a 2% drop to $1.9 billion in studio entertainment, which included films such as "Maleficent" and "Guardians of the Galaxy."

"Frozen" was such a hit at Toys R Us that the company expanded its selection from a few dozen products in the beginning of 2014 to more than 300 during the holidays, said Richard Barry, chief merchandising officer.

Demand has grown after retailers were caught off guard by the movie's popularity after its 2013 debut, Barry said. Disney has also been skillful at fueling interest in the brand, with "Frozen" attractions at Disneyland, a themed cruise and the new film in March, he said.

"It was a very important driver of our business during the holidays," Barry said. "Disney's ability to carve new content is incredible."

"Frozen Fever" will be accompanied by a flurry of new merchandise at Disney stores and other retailers.

J.C. Penney is stocking new "Frozen" products in March along with exclusive merchandise from the Cinderella movie. The chain, which houses Disney shops in some of its department stores, plans to expand these shop-within-shops to an additional 116 locations, said Deb Berman, chief marketing officer.

She said "Frozen" was a big reason why Disney has been one of the most successful brands among Penney's shoppers. "Everyone is counting on the consumer's connection to 'Frozen' to continue well into the summer," she said.

The 99 Cents Only chain began stocking "Frozen" party accessories in late October after seeing the success other retailers were having, said Mike Botterman, vice president of general merchandise.

"It caught everyone by surprise," Botterman said.

"Frozen" is especially attractive because girl-friendly entertainment products tend to outsell boy's properties by 10%, he said. "With girls there are a lot more fashion items."

To create memorable merchandise, Disney starts bouncing ideas around in the very early stages of creating a film.

Michael Giaimo, art director for "Frozen" and production designer for "Frozen Fever," said employees from the creative side talk with retailers and Disney's consumer products side throughout the design process.

"Sometimes there is an initial conversation even before they see any of your designs," he said. "They'll say 'We know girls like this and girls like that.'"

But ultimately, the top priority was creating artwork that served the story, Giaimo said. That included avoiding the color pink in the movie, except for a deep magenta on Anna's cape, he said.

"I wanted to stay away from a Barbie world," he said. "The sisters were coming off so strong and distinctive and provocative — I didn't want them to be associated with a palette that is so out there in the world in every way."

Some of the creative decisions added to the story but increased the cost of manufacturing products, Giaimo said. Anna's dress, for example, features long-stemmed flowers that appear only in the bottom third of the skirt. That kind of "engineered print" requires that the cloth be cut a certain way, and some fabric is wasted — extra costs that licensees do not favor.

"They don't like to do a lot of engineered prints, but we had to challenge them and say, 'You are going to have to find a way to make these,'" he said. "Otherwise it would be like some country did a knockoff version that wasn't licensed to us."

The popularity of "Frozen" may eventually prove to be its undoing, some observers said.

Disney has to keep pushing out new content with new characters to engage shoppers with new products — one reason that the "Star Wars" franchise has remained popular, said Gerrick Johnson, an analyst at BMO Capital Markets. But customers constantly bathed with fresh movies and merchandise may weary of the brand.

"By 2016, we will be darn tired of 'Frozen,'" he said. "You can get sensory overload if you have too much stuff coming at you.'"

That's a danger that Disney is confident it can avoid.

The company is striving to "avoid proliferation" as part of its long-term strategy for "Frozen," said Josh Silverman, executive vice president of global licensing at Disney Consumer Products.

"It is something we do watch and are careful about," he said. "We are pretty surgical about it."

One of Disney's priorities is to create merchandise that appeals on a deeper level to customers, he said.

"When you begin to play with it or eat it or dress it up, we want to make sure that emotional connection" — the same feelings that viewers have while watching the movie — is there as well, Silverman said. That should be true for products such as "Frozen"-themed frozen food as well as "Frozen" attractions and experiences, he said.

"It's one of the amazing things Walt Disney company does better than anybody else, the synergy and careful planning," he said. "It's very on story and on strategy."

shan.li@latimes.com

Twitter: @ByShanLi

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