Toy industry disappointed by sales from movie tie-ins
The warning signs for the toy industry started last year when “Cars 3,” considered a surefire success, proved lackluster for licensees such as Mattel.
Now, toymakers’ big bets on movie tie-ins look downright bleak. Sales of playthings based on the “Star Wars” saga — the franchise that kicked off the whole phenomenon four decades ago — were down in 2017 despite a new film, “Star Wars: The Last Jedi,” during the all-important holiday shopping season.
Call it “Star Wars” burnout, or better yet, “movie fatigue,” said Gerrick Johnson, an analyst for BMO Capital Markets.
Hollywood and toymakers have fixated on toy-friendly films at a time when kids are increasingly turning to YouTube, Netflix and social media for entertainment. More than 20 major films, including “The Last Jedi,” had robust toy-licensing programs last year. A decade ago, it was about half that. Movie attendance in the U.S. has dropped almost 14 percent in that span.
“There are so many screens now, kids aren’t just at the movies,” Johnson said. “A movie doesn’t have the same resonance it used to.”
While “Star Wars” was still the top-selling toy line during the nine-week holiday period, it fell to second place overall last year and below the all-time high seen in 2016, according to data from market research firm NPD Group.
“‘Star Wars’ is a force to be reckoned with in the toy industry,” the brand’s owner, Walt Disney Co., said in a statement. “It remains the leading film-driven property for the entire year.”
After a decade without a “Star Wars” film, Disney has released three movies since December 2015, and another is coming in May. The latest installment, “The Last Jedi,” didn’t include many new memorable characters beyond those introduced in the preceding film, Johnson said. That left fans looking for newness elsewhere, leading to weaker results than expected, he said.
U.S. sales of the brand’s toys slowed in late 2017, Drew Crum, an analyst for Stifel Nicolaus & Co., wrote in a note to clients last week. This was despite “Last Jedi” being the top-grossing film released in the U.S. last year at $596 million.
Adult collectors, who grew up with the brand, are still buying a lot of merchandise when the toys come out, but demand dies down afterward, Johnson said.
That doesn’t bode well for Hasbro, which has the main “Star Wars” toy partnership, or Jakks Pacific, which has a secondary license.
The “Star Wars” performance could hinder Disney’s bid to revive growth at its consumer products division, where sales fell 13 percent to $4.83 billion for the fiscal year that ended Sept. 30.
The September bankruptcy filing of Toys “R” Us Inc., which makes up about 15 percent of the market, added to the challenges for “Star Wars” sales growth this year, though the company continued to market the toys.
Visitors to a Toys “R” Us store in Los Angeles recently had plenty