Toy companies look to movie studios for inspiration. Through intricate licensing deals, they receive permission to re-create characters, vehicles, props, and scenery from popular movies. But predicting which movies, and which characters in each movie, are likely to achieve the greatest success, both in theaters and on toy store shelves, is a difficult prospect.

The $22 billion toy market is increasingly cluttered as well. Because movie studios hope to make as much as they can through licensing deals, they allow different toymakers to jump on their movies’ bandwagons, as long as the toys differ sufficiently to support a separate license. Thus the company that makes tiny Star Wars figurines competes with the company that manufactures a 3-foot, stuffed Chewbacca doll, and both of them compete with the Star Wars version of Monopoly. As long as the product seems promising, movie studios will offer a license. Thus various manufacturers battle one another for consumers’ and fans’ spending, all with different variations of toys and games featuring the same characters. Furthermore, other toy companies simply ride popular coattails without licensing, such as when Nerf introduced a bow-and-arrow combination to benefit from the popularity of The Hunger Games and Katniss’s weapon of choice.

In addition, as the number of toy-friendly movies increases, especially in terms of the glut of superhero-themed films, the number of competing characters grows too. In the next year, notable planned movie releases include a new Jurassic Park, another Avengers movie, a live-action Cinderella film, and (as if you didn’t know) the new Star Wars installment.

Beyond this stiff competition, toymakers have a tough time deciding which movies will be a hit with children and their parents, as well as which characters will stand out as the ones to collect. For example, retailers could not give away toys featuring Jar Jar Binks, the vastly unpopular character from Star Wars Episode I: The Phantom Menace. But on the flipside, many retailers could not stock nearly enough Elsa dresses to keep fans of Frozen satisfied. Filmmakers predicted they would have a hit with Despicable Me, but no one realized that it would be the Minions that would make the most popular toys.

Discussion Question

Why do movie studios offer licenses to so many competing toymakers?

SOURCE: Rachel Abrams and Gregory Schmidt, “Superhero Movies Create Opportunity for Toymakers,” The New York Times, February 13, 2015, http://www.nytimes.com