Merchandising

Merchandising

Merchandising serves 2 functions
1. It promotes the brand of the movie using synergy
2. Creates another revenue stream for the movie's potential profits
Promotional tools
1. Toys etc
2. Tie ins
  1. Cross promotion that links a pre existing product (McDonalds) with elements of the films brand (Lego Movie)
3. Product placement
  1. Companies pay film studios to have their products predominately displayed in a film (Heinekin paid £33m to the makers of Skyfall to display their beer in the film)
Walt Disney pioneered this trend
1. He realised the potential of making money from merchandise
  1. Profits from toys, tshirts etc could be put back into the company in the form of a source of production funds
2. By the mid 1940's Disney was selling £100m worth of merchandise per year
  1. On top of film profits
  2. He also diversified into tv programmes, commercials, music, comic strips and amusement parks
    1. Other film studios could only think of nothing but celluloid and films themselves to make money
  3. SUCCESS OF FROZEN SHOWS DISNEY IS STILL SUCCESSFUL
All main studios have consumer products divisions
1. They license other companies to manufacture and market products (toys, clothes, soundtrack albums) based on a movie's themes, characters and images
  1. Deals are struck well before the release date of the film and film studios typically recieve advanced payments for the rights and royalties based on potential revenues that could be made from the selling of the toys
    1. In terms of tie-ins, a movie can be saved from profit loss from such a deal.
      1. SPEED RACER 2008, only made £98m worldwide at the box office, but the film secured deals with Lego and McDonalds which made £80m, meaning that the movie was saved from financial failure and still made eventual profit
        With profits from merchandising, the selling of television rights, dvd sales etc
The current vogue for film based licensing began with GEORGE LUCAS'S STAR WARS
1. It generated around £400m in merchandise- double the box office
  1. The merchandise included: toys, tshirts, bubble gum, digital watches, lunch boxes, costumes, night gowns, masks, trading cards etc
  2. The majority of this money went to George Lucas himself due to a deal he made when negotiating his contract.
    1. He took a modest fee for directing the film in return for all sequel and merchandising rights
      1. These generated billions and enabled Lucas to fund all the sequels out of his own pocket
        He kept all the profits
        With the money he set up Industrial Light and Magic special effects company
        It has now become standard practice to support franchises with massive merchandising campaigns which generates revenues that rival the Box Office
HARRY POTTER
1. The merchandise is designed, organised and controlled by JK Rowling herself
  1. it was worth approx £15b in 2007
    1. This doesn't include the expanding franchise.
      1. The Wizarding World of Harry Potter opened in Orlando and a new park is opening in Los Angeles Universal Studios in April 2016
    2. One Harry Potter video game alone has been estimated to have made a profit of £1.5b
2016 STAR WARS
1. Disney made more from selling Star Wars merchandise in the first 3 months of the year it was released than it did from any merchandise sales in the same period the previous year
  1. The 7th and 8th Star Wars films will be released in 2017 and 2019 because sales of merchandise will likely remain strong
DISNEY STORES OPENED around the world in the late 1980's and early 1990's
1. Approx 700 worldwide
2. This is on top of their phenomenal demand for their videos, dvds and blu rays of their films
CARS 2
1. Cars 1 lacked the critical reception and the Box Office profits weren't great, however the merchandise profits were a different story
  1. It has been estimated that Cars products have grossed in the region of £8b worldwide
    1. Cars 2 was released a few years later just so merchandise could be sold
      1. The film was released just to make profits from the merchandise. Plots of a film act as a second fiddle to how many toys can be released from one film
HASBRO (makers of Transformers toys)
1. The importance of film merchandise can be seen in their yearly profits after the release of Transformers: Dark of the Moon. In the year after the film's release date, their profits jumped from £100m to an estimated £500m
  1. There is going to be a Transformers film released every single year
  2. FROM A STUDIOS POINT OF VIEW, many large film-making companies are part of wider conglomerates and the owner of these conglomerates demand profits to keep shareholders happy. Exploiting name recognition and brand franchises is an easy thing to do which is why there are a number of toy related films that have either come out or will be coming out in the near future- including The Lego Movie sequel, new Transformers films, a sequel to Finding Nemo and an Angry Birds film.
FOR MANY CRITICS AND AUDIENCES
1. The power and weight that merchandising now carries in Hollywood is a bad thing
  1. Obviously, basing many franchises solely based on the potential profits you can make from toys etc means that critical decision making and creativity in new films has taken a tumble because more and more films are being released without any form of risk taking.
    1. Plots are therefore familiar and act as a second fiddle to how many toys can be released from one film

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