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Movies And Merchandise: A Match Made In Hell

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There's a disturbing trend that's taking over the entertainment business, specifically film and television, which is having a direct effect on how movies and television shows are chosen for production. With production costs escalating out of control and box office returns ever diminishing, the question of how much money a movie will recoup through retail licensing fees is becoming an important factor in the process of deciding what does and does not get produced.

The industry has a long history of retail spin-offs dating back to the early days of Walt Disney and Mickey Mouse when in 1933 the mouse's image started to appear on Lionel trains and Ingersoll-Waterbury watches and clocks. This reciprocal deal gave Disney the money to fund his empire and it probably saved the other two companies' butts during the depression.

As the years have passed it's become a common enough sight to see plastic figurines and other mementos of children's movies showing up as part of fast food meals or on the shelves of stores. Some movies or television shows have even been blatant attempts to advertise a toy or a game, instead of the other way round.

In recent years we've seen the trend spreading to adult movies as well. The biggest and best example has to be the Lord Of The Rings trilogy where New Line Cinema licensed expensive reproductions of items from the film. Ranging from brooches costing $70 to statuettes at around $6,500, over $1.5 billion in sales have been generated since the movies were released.

In an article in Globe and Mail David Imhoff, New Line's vice president of worldwide licensing and marketing, is quoted as saying that twenty years ago when he first started, there was no adult market, but now everything they do has an adult component. From reproductions of Jason's goalie mask, lifelike Freddy Kreuger masks, to replicas of the fleur-de-lis cross key used in the film The Da Vinci Code (steel, platinum, and gold, for only $4,599), the film fanatic can purchase almost anything he wants, if he has the money, from his favourite movie.

While a studio only gets a small percentage (between five and ten percent) of the amount earned by these sales, when total sales of retail spin-offs amounts to $50 billion dollars as it did last year, that ends up being a good chunk of change — in fact, such a good chunk of change that studios are now taking this factor into consideration when they make decisions about projects.

Alfred Khan, the man who gave the world the Cabbage Patch dolls in the eighties, justifies this process by pointing out that television is almost completely deficit-financed and not able to make money without licensed products. "If we don't design the shows to take advantage of the ancillary rights, we're going to end up putting shows on that have absolutely very little commercial value,” said Kahn. “We won't be able to monetize that investment."

Once you translate that into English you realize that he is saying that television costs so much that even with advertising revenue, shows will lose money unless they have another source of income. Obviously the movie industry is feeling the same sort of pressure to increase the return on the dollar.

Budgets have ballooned into the stratosphere with some "stars" being paid more for appearances then movies used to even cost to make. Even with CGI technology (Computer Generated Imaging) the escalation in demand for bigger, louder, and more lurid special effects has also caused costs to spiral out of control.

When this is combined with the fact that there are more and more alternatives that keep people in the house and out of the cinema causing a decline in box office receipts, it's becoming harder and harder for a movie to break even, let alone make money. Licensing products from a movie seems to be the only answer that the studios are able to come up with that will increase their chances of making any of their stake back.

It seems that the movie industry hasn't bothered to take a course in basic economics. Instead of looking at ways in which they can increase revenues, perhaps they should be looking at ways they can decrease costs? We're talking movies here, nothing that is vitally important to the infrastructure of a society, so cutting costs shouldn't be a big deal.

Or how about being more creative with the way in which they pay people? If a box office star like Tom Cruise demands his usual millions for appearing in a movie based on the premise that he will make a fortune at the box office, why not pay him a percentage of the take after the fact instead of a huge chunk up front. Let him prove his worth and earn his keep instead of losing your shirt when the movie tanks and him walking away laughing to the bank.

Hell, if movies and actors started to have to depend on their performances for more than five percent of their salary they might actually start producing a product that will at least attract people to the box office. How many times can you visit the same well before the bucket comes up empty isn't a question Hollywood asks itself often enough.

Sequels, prequels, offshoots, and spin-offs have become the norm as they try to squeeze every last available dollar out of a familiar brand. The Mummy begat The Mummy II which in turn begat The Scorpion King which allowed The Rock to become a bona fide box office draw and do a remake of Walking Tall and a movie based on the game Doom. (To give The Rock credit he was the best thing in Be Cool as the gay bodyguard/chauffeur with aspirations to stardom.)

For every History Of Violence or Crash there are twenty-five vehicles for somebody or the other which end up going over a cliff because there is nobody behind the wheel of the car. But instead of pulling in their horns and re-examining the way they do business, the studio folk are more interested in maintaining the status quo even if it means that at some time in the future a movie will only be made if it can generate either a line of jewelry or action figures.

As it is, those days don't seem too far off, or might even be upon us, when one contemplates the major releases this past summer. How many comic book characters were or are going to be featured this summer and in upcoming months? The people over at Marvel Comics aren't even subtle about it. Tim Rothwell, president of the company's worldwide consumers-products media group says movies like Fantastic Four and Spiderman are "commercials in the sky" directing people to his product.

This symbiotic relationship between movies and comics isn't that new, but the exploitation of it through all the ancillary products and the immense profits they produce has grown to the point where instead of being a nice bonus on top of the box office they are becoming the raison d'être for the production. Last year while Disney had worldwide box office totals of $2.26 billion their return on licensed properties was $2.6 billion.

Disney is an exception as almost all of their movies have been geared towards merchandising since day one of their existence. Obviously if the film is a dud, they aren't going to get much in the way of sales when it comes to retail product, but what they lack for in quality, Disney invariably makes up for in quantity.

While there is nothing wrong with the idea of making extra money off a movie by licensing products associated with the film (heck I own a couple pieces of jewelry that were associated with the Lord Of The Rings and a knock-off replica of Frodo's sword "Sting"),  the problem is that more and more often movies are being made not for the quality of their script but for their potential in licensing income.

But there's a flaw in this strategy; if licensing fees are supposed to compensate for reduced box office return, but also end up reducing the quality of the movies and prevents new ideas from being produced, won't that further depreciate the box office? If the box office is reduced won't that also reduce the number of people who are willing to buy products associated with the movie?

People are going to have to go see and like a movie before they are going to be willing to shell out big dollars on mementos from a picture. Lord Of The Rings was so successful selling related items for two reasons — the movies were amazing and what was being offered for sale was of a very high quality.

Watching the movies people not only wanted to have something that reminded them of the experience, but they were attracted to the jewelry and ornamentation worn by the cast members. Everything about that movie was so beautifully designed, what fan wouldn't want to own something from it?

If producers hope to replicate that success by deliberately choosing scripts for their marketing potential, they are going to discover that it will take more than just some pretty trinkets or novelty items being offered for sale to make the big money. They still need to be able to capture people's imagination and make a movie people are going to want to see in order to accomplish that task. They have to remember that a movie is not a ninety-minute commercial or they will find they have no audiences and a bunch of junk on their hands that nobody wants to buy.

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About Richard Marcus

Richard Marcus is the author of two books commissioned by Ulysses Press, "What Will Happen In Eragon IV?" (2009) and "The Unofficial Heroes Of Olympus Companion". Aside from Blogcritics his work has appeared around the world in publications like the German edition of Rolling Stone Magazine and the multilingual web site Qantara.de. He has been writing for Blogcritics.org since 2005 and has published around 1900 articles at the site.
  • http://www.booklinker.blogspot.com Deano

    Uhmmm….I kinda liked The Mummy and The Mummy II. Pardon me while I crawl away in abject shame…

  • Nancy

    Aside from that I resent being the targeting of merchandising at all, it’s truly criminal that most of the merchandising is targeted directly at those least able to defend themselves against it, namely kids. No one should be allowed to market anything anywhere any time for any reason to kids. In addition to which, most of the stuff marketed is, frankly, crap: cheaply, poorly made trash. I admit I made my share of mistakes early on with SWARS. It took only a few tacky, trashy character dolls to wise me up to the fact that I was getting ripped off royally.

    Having groused that, I agree, Hollywood needs to re-examine their modus operandi as far as business ops cost controls go. Fewer & fewer people can be bothered to go to the theatres any more. Like myself, “enjoying” the movie with 200 or so strangers is not an enticement for me to go anywhere, and getting to watch something on a great big screen is also not a draw.

  • Baronius

    Good article. I’d be interested in your take on video game tie-ins. Huge money.