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Get Four
|  | OCTOBER 6, 2004
By David Kiley Turning Old Toys into New Stars As in movie stars. Toymakers are finding the best way to renew a tired brand, from Care Bears to GI Joe, is via direct-to-video flicks As the 21st century dawned, American Greetings (AM ) had a problem. It's 20-year old Care Bears line of plush stuffed toys, which had spawned a TV series back in the heyday '80s, seemed to be going into hibernation. Licensing agreements for everything from books to lunchboxes were still good for about $100 million a year in revenues, but the pastel-hued Care Bears franchise was definitely slowing down. Then something surprising happened. In an effort to revive interest, American Greetings in 2001 started packaging videos and DVDs of the old TV series, plus two 80-minute feature films from two decades ago, with teddy bears sold in Target (TGT ), Toys 'R' Us (TOY ), and other retail outlets, as well as in American Greetings' card stores. As a result, sales took off. Baby-boomer parents and grandparents, nostalgic for the friendly bears, couldn't get enough of the videos and DVDs, which helped drive sales of bedsheets, backpacks, lunchboxes, and the like embossed with the CareBears image. In the last two years, sales of CareBears-branded products have quintupled to $500 million per year. GOING HOLLYWOOD. Now, hoping to build on the momentum, Cleveland-based American Greetings is releasing its first full-length feature film in 17 years that will bypass movie theaters and head straight for the video aisle in toy stores across the country. The goal is to boost brand sales in 2005 to $700 million. Care Bears aren't the only toys that are ready for their closeup again. All over toyland, familiar brands are going Hollywood with direct-to-video animated full-length feature films. Barbie is releasing her third straight-to-video movie this in October. Her archrivals, MGA Entertainment's Bratz dolls, debuted in the movies in August. The first GI Joe animated feature in 16 years hit stores in September. Lego's Bionicle sees his own video flick released soon, and Hit Entertainment's Bob, the Builder also will have his own movie out this autumn, with Hit's Thomas, the Tank Engine hitting video screens next year. "TRUST AND FAMILIARITY." The irony of toys turning film stars is rich. At a time when critics decry far more subtle product placement in children's TV programming, parents and grandparents are scooping up movies where the brand isn't just sprinkled into the programming, it is the programming. Sales of these videos and DVDs won't reach the same heights as DVD releases of big theatrical hits like Finding Nemo or direct-to-video sequels like Lion King 1½. But the payoff can still be juicy. It can cost as much as $175 million to produce, market, and distribute an animated feature film that introduces a new story or character to theaters, with all the inherent risks. And even if the movie is a hit, an in-theater release has to do $350 million at the box office before the studio covers its costs. Meantime, Mattel (MAT ) has sold over $100 million in Barbie videos the last three years with an outlay of between $5 million and $10 million each in production costs and a similar amount on marketing for each video. Plus, Mattel has raked in $150 million more in related merchandise for each video. "With toy brands that both kids and parents know, there is trust and familiarity, small up-front investment, and big profit," says Glenn Ross, president of Lions Gate Family Home Entertainment (LGF ), which distributes Barbie and CareBears videos. REPETITION IS KEY. As a media buy, it's hard to beat your own feature-length film for kids. A preschool child will watch his or her favorite video an average of 17 times, according to Disney (DIS ). Jamie Cygielman, who oversees Thomas, the Tank Engine and Bob, the Builder franchises at Hit Entertainment and is an ex-Barbie brand chief, says many children will watch the same video hundreds of times. "The impact comes from repetition, and that positively affects the merchandise and brand sales," she says. Sandra Burns in Ann Arbor, Mich., is the mother of four-year-old twins, and she knows just what Cygielman is talking about. Her children Andrew and Penny watch more DVDs than TV shows, she says. She says the Barbie video initially gave her pause because it seemed so "schlocky." But, she adds, it had a ballet theme that turned her on again to the classic dance. The first feature film for Lego's Bionicle, aimed at 7- to 12-year-old boys, is already nearing Barbie territory in DVD sales. Lego expects to generate $175 million in revenues this year from Bionicle merchandise, which first launched in 2000. FRESH STORIES. Senior brand relations manager Michael McNally says Lego started out with an animated story line available only on the Internet four years ago about space-age robot characters. Then it rolled out toys, comic books, books, and finally the video for home sales. "We reverse-engineered the process, turning a toy into an entertainment property, and the films are critical to deepening the brand story for young boys," says McNally, who admits "We didn't know if we could pull it off." It's a jungle in toyland. Despite the success of film sales, Barbie still has been losing ground in merchandise sales to the hipper, edgier Bratz line. Total Barbie merchandise sales this year, about $3.2 billion to $3.5 billion, are running 10% lower than last year. It would be a lot worse for the perky Blonde, however, without the films providing fresh stories for Barbie. Mattel is relying on the movies to enhance Barbie's appeal with girls older than six, the age where many start to shelve the brand. Says Vice-President Tim Gilpin, Mattel has to "engage girls beyond just the latest doll." "ABSOLUTE NECESSITY." Hasbro's (HAS ) GI Joe franchise has been on a comeback since 2000, doubling sales in four years, thanks to a combination of DVDs of old TV series and 60-second Net films, though Hasbro doesn't disclose annual revenues of individual toy lines. It hopes to follow its September video release with another 80-minute direct-to-DVD film shortly, and Dreamworks is working on a live-action Transformers theatrical release in 2006 for Hasbro. "Film is an absolute necessity now to involve kids in the brand and parents in the purchase," says Derryl DePriest, director of marketing for GI Joe. He adds that fathers have a "high participation" in the exploits of the combat action figure. Sure, childhood experts tell parents to screen what their children watch on TV. But when the programming features toys mom and dad once played with, well, you're only as young as you feel.  Kiley is Marketing editor for BusinessWeek in New York
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