Sometimes Big Business Can Be Child’s Play

Add 101 Dalmatians to 17,000 different products and multiply by every preteen in the multiplexed world. How much doggone money can you make?

It’s the Licensing Game, and it is the biggest thing in the toy business these days. The rules are simple: Pick a movie, TV show or some other cultural icon, make toys in their image, and--voila!--the bottom line turns magically black. No creative research and development necessary.

The Toy Manufacturers of America estimates that half of the 2.99 billion toys sold in the U.S. last year, accounting for more than $7 billion, were licensed products. Given the mountains of licensed toys shown at the American International Toy Fair here this week, that percentage will increase.

“It’s expecting too much of the toy industry to come up with the new Frisbee or Slinky or really different hit product every year,” said Bruce Maguire, a spokesman for Tyco, the nation’s fourth-largest toy company, which produced last year’s hit, the Tickle Me Elmo doll. “It’s a business and it’s conservative. We’re around to make money, so we try to find ways of reinventing the classics.”

Some critics worry that the trend is ripping toys away from their raison d’etre: to be the source of imagination and creativity. If a toy lets your kid be only Han Solo, will he or she lose the essence of childhood?

Action figures, for example, are traditional big sellers. So this year, you’ll be bombarded with action figures from “Star Wars,” action figures from “101 Dalmatians,” action figures from “Jurassic Park: The Lost World,” action figures for the new “Batman and Robin,” and action figures of Dennis Rodman of the Chicago Bulls, complete with different hair colors.

“The work of childhood is play. That’s how kids figure out how the world works and what his or her roles might be in it,” commented Lawrence Kutner, a columnist for Parents magazine. “The point is, you don’t have to have a whole licensed circus set to fire your imagination.”

The upside potential for these tie-ins is astounding. Even before the re-release of “Star Wars” last month, its licenses had generated $4 billion in overall sales, $1.5 billion in toys. Universal said its licenses for “Jurassic Park” raked in nearly $1 billion in sales, and it expects at least that much from “The Lost World,” due on Memorial Day.

Hasbro has dozens of “Lost World” toys at the ready, from a model of the movie’s base camp to an FM radio in the shape of a dinosaur called the velociraptor. Tyco will be marketing “Lost World” items in its View-Master and radio-control car lines. Besides toys, you can also look for “Lost World” cereals (General Mills), bandages (Futuro), dino-egg-shaped washcloths (Major Motion), prepaid phone cards (MCI) and underwear (Fruit of the Loom).

Beatrix Potter’s books were licensed a century ago, and baby boomers treasure their Howdy Doody games and Gene Autry lunch boxes. But the scope and nature of licensing changed a few years ago.

“Up until 1991 or so, licensing was an ancillary revenue stream, a bonus that went straight to the bottom line,” said Ira Mayer, publisher of the Licensing Letter in New York. “Now, some films wouldn’t even get made unless they get this licensing agreement out front.” Mayer said the studios started counting on this money during the 1990-’91 recession.

While Mattel’s exclusive relationship with Disney for all toys but plush dolls and Hasbro’s connection with the “Batman” movies seem pretty solid bets, Galoob Toys, the country’s third-largest toy company, is rolling the dice on some new movies this year. Galoob’s 1997 line banks heavily on Twentieth Century Fox’s first animated movie, “Anastasia,” and two action movies with aliens, “Men in Black” and “Starship Troopers.”

“Everyone is chasing and looking for the right properties,” said Scott Masline, who runs the girls toy line at Galoob. “It’s the sexiest part of the business, but, of course, the success of a toy is not entirely in your hands.”

Various companies lost money on licenses for “The Flintstones,” “Casper” and “Dune,” for instance, when those movies did not do well at the box office. And generally, the money has to be recouped quickly.

“If the underlying entertainment is not a blockbuster, you may be in real trouble,” said Jill Krutick, a toy analyst for Smith Barney. “ ‘The Hunchback of Notre Dame’ was not good for Mattel and a lot of toys are already on close-out. Because it helps reduce the risk scenario of coming up with new concepts, it does make the research and development effort less critical at the toy makers.”

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Ruth Roufberg, a toy consultant who helps run the Duracell Kids’ Choice National Toy Survey, said the licensing boom has made it possible for small toy companies to find a niche.

“There are a lot of parents out there who are sophisticated and shop in small toy stores or creative toy chains like Learning Express, Noodle Kadoodle and Zany Brainy,” she said.

Roufberg said the Duracell survey won’t test licensed toys because it is too hard to tell whether a child likes a toy for its own value (even Tickle Me Elmo, because it was a “Sesame Street” license to Tyco, didn’t get tested).

“I do believe kids have gotten deprived of a lot of new and innovative toys, and they have paid more because an estimated 6% for licensing fees gets built into the cost,” Roufberg said. “On the other hand, it is the real world and kids do see these movies. Good characters from, say, ‘Star Wars’ may provide good game play. Children may be locked in a bit to one scenario, but they could also use their imagination.”

Marianne Szymanski, a toy consultant at Marquette University and publisher of Toy Tips magazine, said it is hard to avoid buying licensed toys when your kid’s ego is at stake.

“At 5, you are in competition at school,” she said. “What? You don’t have the latest ‘Star Wars’ thing? It’s just like adults. What? No BMW? Loser! Not every licensed toy is evil. ‘Jurassic Park’ had some great dinosaurs. But there are just too many right now.”

The studios certainly don’t agree. Universal started a new consumer products department last year to step up its licensing agreements. And Disney, the marketer extraordinaire, is hardly backing off.

“We just don’t make movies. We create franchises,” said Dennis Rice, the senior vice president of marketing at Buena Vista, Disney’s home video division. “People want to own a piece of that--a T-shirt, a toy--it’s part of the phenomenon for them.”

The video for “101 Dalmatians” will be released on April 15, and Disney will be ready for people who want a piece of that “phenomenon.” A mind-numbing 17,000 products (“from a $65 sweatshirt to a Dalmatian straw,” Rice said) will dot the Dalmatian horizon.

But how much Cruella does one kid need?

“In the last five years, it has been just nuts,” Szymanski said. “Sure, in the 1960s, you had your ‘Leave it to Beaver’ lunch box, but you didn’t need a ‘Beaver’ toothbrush and game and action toy and macaroni and cheese. I blame lazy parents.”

Don’t look for toy licensing to stop any time soon; TV show tie-ins continue to be strong. Galoob, for instance, has “Dragon Flyz” creatures and all sorts of action stuff from “The Adventures of Jonny Quest.” Mattel has a huge line based on the Nickelodeon cartoon series “Rugrats.”

And Dr. Seuss’ books have finally been licensed for toys and games. Caterpillar has licensed its trucks and machinery for toys for the first time, and this will be the first year you can buy a National Geographic puzzle. A game based on a restaurant? No problem--look for Planet Hollywood, coming soon from Milton Bradley.

“It won’t stop until there are a load of bombs,” Mayer said. “If ‘The Lost World’ or ‘Anastasia’ or something else goes crazy, everyone will be out there again. The bonanza is just too attractive.”