‘Star Wars’ Glows at Center of Marketing Constellation

The force will be with us again next week, but how long will it power a big moneymaking machine?

Lucasfilm’s otherworldly marketing creation will be unleashed at 12:01 Monday morning. That’s when some toy retailers will begin selling products tied to the company’s latest production, “Star Wars: Episode I The Phantom Menace.” The marketing campaign will build throughout the month until the movie itself premieres May 19.

With “Star Wars” already among Hollywood’s biggest licensing franchises--and with millions of fans eagerly awaiting the latest installment of Lucas’ saga--massive quantities of action figures, books and video games are certain to be snapped up.

But one surge of huge sales wouldn’t be enough. Given the cost of the deals negotiated with toy maker Hasbro, fast-food chains and other marketers, everyone involved is counting on “Phantom Menace” and the two future “Star Wars” “prequels” to pump up sales for years to come.

The Lucasfilm strategy, so far, seems to be to play it a little cool. Marty Brochstein, executive editor of the Licensing Letter, a New York-based newsletter focusing on the product licensing business, said Lucasfilm is holding back some of the hype. For example, he said, it has barred retailers from advertising the new “Star Wars” toys until two days after the movie opens.

“It’s a unique situation in that Lucas’ biggest job is to control and limit exposure . . . because of their fears of overkill and backlash even before the movie opens,” Brochstein said.

Lucas doesn’t need to overwork the hype for the new movie, he added, because “the fans are already out there doing it for him.”

Still, the long-term result is uncertain for companies such as Hasbro, which invested heavily in its licensing deal. It has promised to pay Lucasfilm’s licensing arm nearly $600 million in royalties over the next nine years for toy sales tied to the three “Star Wars” prequels.

Lucas also received warrants to purchase 15.8 million shares of Hasbro, or about 7.4% of the company. The price is steep, but Hasbro paid it to beat an offer from rival toy maker Mattel, explained Margaret Whitfield, a toy industry analyst in New York.

“For Hasbro, it was a must-win situation over Mattel,” she said. “But because of the cost to get the deal, it now has to hit a home run.”

John Taylor, an analyst at Arcadia Investment in Portland, Ore., predicts “Star Wars” toy sales will reach $500 million this year, about 13% of Hasbro’s estimated sales for 1999. According to Taylor, that matches the value of Power Rangers toys at their peak.

Other analysts estimate that “Star Wars” toys will account for $1 billion in sales this year.

Chris Byrne, editor of the Toy Report newsletter, cited the role that “Star Wars” has played in American popular culture since the first movie in the series came out 22 years ago. For toy marketers, “even if the movie isn’t good, I think [toy sales will] be huge.”

Whitfield added that many retailers also stand to benefit. “When you have something big, it tends to increase traffic to the stores and lift the entire industry,” she said.

On May 12, nine days after toy retailers get started with the hoopla, Taco Bell, Pizza Hut and KFC restaurants will join the marketing action.

Tricon Global Restaurants Inc., which owns the three fast-food chains, will transform the eateries into three “planets”: KFC will be Planet Naboo, Pizza Hut will be Planet Coruscant and Taco Bell will be Planet Tatooine.

In all, there will be 28 collectible toys--for customers willing to stop at each of the three chains.

While marketing specialists say Tricon’s restaurants will profit greatly during the run of the film, some question how much the long-term payoff will be.

In most cases, after one promotion ends, “it’s on to the next promotion and who’s got the best new toy,” said Randall Hiatt, president of Fessell International, an Irvine-based restaurant consulting firm.

Still, Hiatt said, “Star Wars” is “a property that’s going to endure. When the video comes out, there will be more packaging. They are going to make sure they have the promotions long after the movie is out of the box office.”

Following the first series of “Star Wars” promotions with Taco Bell in 1997, then-parent company PepsiCo Inc. reported a 4% increase in business in stores that had been open more than a year. The company attributed much of that increase to the promotional tie-in.

Brochstein declined to predict the overall sales of the licensed “Phantom Menace” merchandise, saying it will hinge largely on how well the movie performs in theaters.

Still, he said, the boost provided by previous “Star Wars” successes gives the movie a reasonable chance of surpassing the estimated $1.5 billion in sales of merchandise linked to Walt Disney’s 1994 blockbuster, “The Lion King.”

Howard Roffman, vice president of Lucas Licensing, said $4.5 billion worth of “Star Wars” merchandise has been sold since the series’ inception in 1977.

The enthusiasm is shared even by some social critics who often are skeptical about marketing campaigns aimed at children.

“Star Wars,” said Peggy Charren, an advocate for children’s causes in Cambridge, Mass., “is a benign institution compared to some of the other garbage in the marketplace. It’s hard to get upset about that in this day and age.”