Licensing Plays a Growing, Risky Role in Toy Business

Times Staff Writer

Throughout the toy industry, people are asking: Will She-Ra, the Princess of Power, just be the next Brooke Shields?

For Mattel Inc., any such comparison is likely to be disconcerting. She-Ra, a six-inch blond doll in fanciful costume and riding a winged unicorn (sold separately), is the centerpiece of Mattel’s bid for what it believes is a $200-million market in girls’ fantasy dolls. The Brooke Shields doll put out by LJN Toys, by contrast, is one of the renowned toy-world bombs of the last couple of years.

The future of She-Ra is on the minds of exhibitors and retail store executives populating this year’s Toy Fair, the annual trade show sponsored by the Toy Manufacturers of America at the trade group’s exhibition building in the toy-and-trinket district of Manhattan. Here, more than 700 manufacturers and distributors are competing for the attention of thousands of store buyers.


Although the Toy Fair is not a “writing show,” in the words of one prominent buyer--meaning that order-taking is not a top priority, particularly for big companies that have already shown their 1985 wares to buyers--it is a critical arena for toy makers jockeying for shelf space in department stores and toy shops by showing off their advertising budgets.

Here it is possible to get a feel for the subtle cycles of marketing that define the toy business, just as the tussle between big cars and small cars defines Detroit. Everyone accepts that transformer toys--those trucks and tanks and spaceships that metamorphose into robots and back again--will still be big this year, while the A-Team theme toys that dominated some markets through 1984 have run out their string.

But among the uncertainties is the future of a phenomenon that, within the Toy Manufacturers of America’s hallways, has the mystique of a mantra: licensing.

Licensing has been a cornerstone of the toy business for several years. Someone creates a character--E. T., say, or Snoopy--and markets the rights to feature it in doll collections, lunch boxes, television shows, books and so on. Licensing is something the She-Ra and Brooke Shields dolls have in common.

The father of this concept was Walt Disney, whose characters have been recycled into toys and other items for decades. Charles Schulz’s “Peanuts” characters have been similarly merchandised for more than 20 years.

But licensing was not a crucial element of toy marketing until the 1970s. Karen Weiss, director of licensing for New York-based LJN Toys, says her company’s first license was for toys based on characters and vehicles from the “Emergency” TV show of that time. Galoob Toys Inc. took out its first license in 1977 for the “Starsky & Hutch” program.

Surged With ‘Star Wars’

Licensing really took off with “Star Wars,” a revered name in the toy business not only for the movie’s popularity but for its abundance of licensable characters.

“There was so much product in that movie,” says Paul Starkey, senior toy buyer for the Dayton-Hudson department-store chain. “Every scene of it had 10 new items.” (In contrast, for all its popularity, “E. T.” had only one such commodity, the title character.)

About the same time, American Greeting Cards Co. created Strawberry Shortcake, a juvenile character whose delicate shoulders managed to support an entire industry of television specials, dolls, clothes and scores of other items. After that, “people figured that anything with a license would sell,” Starkey says.

The Toy Manufacturers of America estimates that licensed products accounted for half the $8 billion in domestic toy sales last year. The proliferation has scarcely made life easier for buyers or manufacturers.

Starkey says: “I’d guess there were 25 to 30 licensed characters at the Toy Fair last year. It’s been damned confusing to come out of there and say, ‘These are the three licenses that will be successful.’ ”

Then there is the proliferation of items based on a single successful character. “You have only so much space,” says Thomas Castle, toy buyer for The Broadway, a Los Angeles-based department store chain. “If you laid out every SKU"--that’s “stock-keeping unit,” or individual product, in retailing argot--"of Cabbage Patch, there’s probably 6,000 of them.” (Cabbage Patch merchandise is expected to remain a hit this year.)

Some Characters Flop

The licensing market is also an annoyance to manufacturers who are charged premium fees in advance for rights to characters that might not sell, whose television programs might never air or whose movies might flop. LJN, for example, is rumored to have paid $2 million for the rights to characters from the movie “Dune,” a box-office dog. (LJN’s Weiss won’t say what the price was, but acknowledges that the results are disappointing.)

Licensing agents argue that products featuring a broadly licensed character will reinforce sales of one another; some go so far as to argue that canny licensing can be a substitute for costlier advertising campaigns. But toy makers tend to feel that it’s their products that will determine any character’s success.

“There must be a toy line that the kids like,” says Beverly Cannady, director of licensing for Mattel. She adds that a bigger manufacturer is better, too. “You bring a character to a nightgown maker, and the first thing he’ll ask is who’s the toy manufacturer.”

Still, some toy makers think all that exposure comes at too much cost. “Licenses have been so important to the industry in the last few years that the prices have gone through the moon,” says Robert Galoob, chief operating officer of Galoob Toys in South San Francisco. Furthermore, he complains, “you sign a license based on looking at a script, without knowing if they’ll even produce the show. Or you sign a license before they shoot the film.”

Forecasting Is Difficult

Toy makers and retailers agree that forecasting the hot property of any season is about as easy as predicting next week’s weather. Among the unexpected bombs of 1984: the Michael Jackson doll. Toy popularity is also parabolic, often hitting a peak in sales swiftly before sharply falling off. Dayton-Hudson’s Starkey admits to some uneasiness about Mattel’s top-selling Masters of the Universe line of burly fantasy dolls for boys: “It’s the third year for Masters and there’s not a hell of a lot in this industry that lasts for three years.” (“We expect Masters of the Universe to be around for a long time,” responds a Mattel executive.)

And toys keyed to a specific television show tend to fall off particularly quickly, even if the show remains a hit. Witness the widely franchised A-Team toys, musty and timeworn after 18 months even as the television show remains at the top of the Nielsen charts.

For that reason and others, Galoob says, his company is trying to move away from Hollywood-generated characters and toward what he calls “proprietary lines"--characters the company helps create and for which it can sell, rather than buy, licenses.

Yet for all the perennial complaining about Hollywood’s dearth of creativity, the toy makers seem to have fallen into the same gulch. Drawing from the same studies indicating that little girls tended to play with their brothers’ Masters of the Universe fantasy toys, Galoob contrived its counterpart to Mattel’s She-Ra: Golden Girl, a similarly blond-tressed empress with a unicorn and castle (sold separately). Asked why his super-heroine and Mattel’s are so nearly identical as to resemble imperial twin sisters, he shrugged and remarked:

A Matter of Marketing

“These are archetypal play situations. Fantasy figures have horses--very often unicorns--and chariots and castles. There’s really nothing new under the sun; it’s just a matter of marketing.”

Whatever the origin of the character, that marketing still depends heavily on Hollywood. Where sorcerers and demigod heroes once needed only their super powers to prevail, Mattel now promotes She-Ra in trade advertising as “the most powerful woman in the universe, backed by a 65-episode TV series.”

On behalf of his Golden Girl, Galoob says that “we feel we can make it a success with our own promotion.” Still, CBS Inc., to which Galoob has licensed the Golden Girl character, is developing an animated Saturday morning TV show around her, just in case.