Thoughts from a Toy Executive: Modern Star Wars and Marvel Pitches

The floodgates are open and we’re bringing even more information about how Marvel and Star Wars attempt to pitch merchandise despite lagging success.

In an ongoing series of leaks and insider information out of the toy industry, one merchandise expert with thirty years of experience is flooding us with information from a variety of sources. We have confirmed the identity of this high-level expert inside the industry and continue to be amazed at the information and detail being provided. For purposes of protecting an identity and a career, combined with a need to withhold any information that might be protected by an NDA, we are not exhibiting an unredacted and full message from the source. However, we are providing as much as we possibly can, and this time nearly totally verbatim.

In this article, our source (again, we have confirmed the identity and level of career profundity) relays to us what is going on behind the merchandising curtain… this time sending us a direct message from a toy industry executive from an even higher level.

As you read this explanation of modern merchandising, you may notice that it isn’t written like a typical article. That’s because this is coming straight from someone who writes and converses in the way an executive with a major merchandising corporation does. There is shorthand, there is jargon. Hang in there and read it for as much comprehension as you can… some readers may find it easy, others harder. We will analyze all of this in an additional article soon.

Message from a Toy Executive Begins Now

Ok, when you’re on the licensing side you always receive a sizzle presentation from the license holder in an attempt, among other things, to justify the royalty they are requesting. Here’s some of what’s usually in there:

1) brand history and info

2) who else is on board – Lucasfilm realized real early (first gen Lucasfilm managers; OG trilogy) the power and synergy that licensees bring to the table, that they are part of the overall total brand exposure. For example they usually include a list of other current licensees, including any majors, say Hasbro and McDonald’s (how many Star Wars toys – dollars & units – that we were moving as well as details of our ad campaigns – pretty sweet having licensees tv advertise your brand, no? times sure have changed – McDonald’s info, etc) as part of their own Lucasfilm presentation document to other potential licensees. While all of that info could be found in various reports, nothing confidential, In addition to the exposure build, it was always re-assuring for other companies (say in the linen subcategories) to see this. While I wasn’t in industry during the first go around I was there for the second cycle (OG back in theatres, special editions & prequel cycle) where we were doing midnight plano drops, etc (from midnight Plano drops to now close-outs..) and we would get calls from other companies reviewing the Lucasfilm document and they wanted to confirm accuracy of some numbers (some aggressive upwards rounding not withstanding they were accurate). Everybody was making the money …

3) mid-term brand roadmap & plans. This is only included in the upper-executive versions, and you’re NDA’d to read.

4) exposure – this is where you are dazzled with all the applicable numbers: box office, tv ratings, theme park ride stats, book sales, relevant digital download and website visits, etc. > > Obviously not all apply to all IPs, with some having more meat on the bone than others, but you get the idea -.

Ok, here’s what I’m getting at with point 4 above, brand exposure:

what the IP holder is trying to do in this section is real in more and more companies representing fresh product categories and/or justify their new royalty rates at contract renew. They want to show a build here, that the IP is growing. If you are going to chart anything, it has to have an upward slope. Anything showing declines over time needs to be feathered or ideally should not be there. One way to ethically muddle is to play with metrics if you have too.

Forget SW, let’s switch to Marvel. One of the best, most classic metric swaps is to emphasize dollars and not “units” when the units are stumbling or even in decline. This is because inflation on the dollar side can mask a light to moderate unit decline. The big one here is box office if the IP’s main exposure locomotive is theatrical.

You guys the are almost the only ones making a point of this and need to be commended for pointing it out, because it’s a smoking gun: US movie ticket prices, like for many licensed products, are outstripping official basket-of-goods national inflation rate. Congrats for pointing this out. What this means, as you guys have said, is that in the case of box office (which is ground zero for mass exposure for Marvel) less and less people are going to see first run Marvel movies, though the dollars aren’t too bad, are masking this to general public. Ok, here’s what I can ad: friends of mine (yes this is related info) have told me that Marvel know this! They are now heavily emphasizing $ vs units in their IP-talk (say point 4 above) when previously they had the most glorious build/growth story up to and including End Game box, both dollars and tickets sold. They would proudly emphasize both stats, and rightly so because it was a clear win; you are privileged to be able to work with us (Marvel), no risk here – build those molds, buy the ICs, go for deep skus, sky’s the limit.

But now I’m told they smoothly side step the “how many movie goers” issue because their dollars are still ok (I must repeat that from what I’ve experienced and been exposed too, Marvel is still ok but with cracks showing – it is still nowhere near as bad as Star Wars). But Marvel know there are experiencing diminishing returns, and licensees, and movie chain executives aren’t idiots, they know this too, of course. And this info, as you know is in the public domain : divide a movie’s total box office by the price of an average ticket for the year of release and start comparing. The recent Thor doesn’t look so good now does it.. [Identity redacted] was told by a licensee with disappointing sales, “yeah, they (Marvel) don’t like it when that’s brought up”.

I might add that when you are producing licensed merchandise, you are producing units for logistics purposes. Of course dollars are important, but units are key – especially for mass (though admittedly not so much for higher specialty collectables where producing less in units but raising prices in their more elastic context actually has some advantages)

Less people are watching, and very few are talking about it. As a matter of fact, in my opinion, any media outlet that talks about box office without taking at least nominal inflation into account is either not aware of how much impact it has, or worse, is frankly suspicious.

So what do you think? Let us know in the comments below. As always, keep reading That Park Place for all the latest news, rumors and leaks that should be fun. We’ll keep the exclusives coming. And if you have any insider information, legally and ethically obtained, feel free to share it at wdwpro@protonmail.com.