Merchandising Moolah

Last September, Forbes published a list of the 20 most lucrative merchandising properties for the preceding year:

1. Disney Princess (Disney) $1.60 billion in 2011 retail sales
2. Star Wars (Lucasfilm) $1.50 billion
3. Pooh (Disney) $1.09 billion
4. Cars (Disney) $1.05 billion
5. Hello Kitty (Sanrio) $800 million
6. Mickey & Friends (Disney) $750 million
7. WWE (WWE) $700 million
8. Toy Story (Disney) $685 million
9. Peanuts (Iconix, Peanuts Worldwide) $600 million
10. Sesame Street (Sesame Workshop) $515 million
11. Disney Fairies (Disney) $435 million
12. Thomas the Tank Engine (Hit Entertainment) $390 million
13. Garfield (Paws Inc.) $370 million
14. Dora the Explorer (Nickelodeon) $330 million
15. SpongeBob (Nickelodeon) $330 million
16. Spiderman (Marvel/Disney) $325 million
17. Ben 10 (Cartoon Network) $295 million
18. Angry Birds (Rovio) $250 million
19. Batman (DC/Warner) $245 million
20. Barbie (Mattel) $242 million

The above figures represent retail sales.  That money is split between retailer, manufacturer and licensor.  As the Forbes article states, the average license fee is 8.7% of the wholesale price (retail price is generally 30-40% higher).  As stated in the article, some Disney license fees are as high as 15%.  Companies like Disney are not only the licensor but also the retailer when it comes to their theme parks and Disney stores.  Mattel is both licensor and manufacturer when it comes to Barbie.

Now that Disney has bought Marvel and Lucasfilm, it has the top four spots, five of the top six, and eight of the top sixteen.  Nickelodeon has two spots and Warner, which owns DC and Cartoon Network, also has two.

This is where the real money is in animation.  Disney controlled properties grossed more than $7.4 billion dollars.  That's why Disney made Cars 2 and why it is releasing Planes (and the already announced Planes sequel) to theatres.  This is why there will be more Tinkerbell DVDs.  While Star Wars fans went years searching for anything new relating to the property, they are about to be buried in more than they can possibly consume.

This is also why a studio investing tens of millions of dollars in an animated feature aims it at the family market.  If the film can become a franchise, like Toy Story, the money keeps rolling in even in years when there is little to no new animation done.  Assuming that the wholesale price was 60% of the $685 million and assuming that Disney received 10% as a license fee, Toy Story merchandise brought Disney $41.1 million in gross revenue for a single year.  While there are costs associated with licensing, primarily office overhead, lawyers, art directors and/or artists,  there had to be millions in profits.  And that's just one of Disney's licensing revenue streams. Using similar numbers, the Disney Princess line brought in $96 million.

Why risk making an animated property for adults when animation aimed at children might have a wealthy afterlife through merchandising?  So long as this is the economic basis of animation, the situation will not substantially change.

The Prophet

Deadline Hollywood is reporting that Salma Hayek is producing an animated version of Kahlil Gibran's book The Prophet.  It is an omnibus film with the wrap-around material being directed by Roger Allers (The Lion King).  Allers wrote the script as well.

The various sequences are being directed by Tomm Moore (The Secret Of Kells), Joan Gratz (Mona Lisa Descending A Staircase), Bill Plympton (Guard Dog and Your Face), Nina Paley (Sita Sings The Blues), Joann Sfar (The Rabbi’s Cat), Paul and Gaetan Brizzi (Fantasia 2000), Michal Socha (Chick) and Mohammed Harib (Freej).

The film is due for completion in the spring of 2014.

TAAFI Shorts Selection

The Toronto Animated Arts Festival International has released its selection of shorts to be screened in July.  The list is here.

Written in Water

Disney recently released its animation schedule through 2018.  There are two and sometimes three films a year slated for release.  There are people, like Charles Kenney, who fear that we're looking at a glut of animated films that will wear out their welcome at the box office.  I agree with that, but I also think that it is inevitable.  The nature of capitalism is for companies to keep making what sells until it stops selling.  Once that happens, they move on to whatever is selling next.  If that's not animation, we're out of luck.  For those who might be skeptical, I can point out that westerns and musicals, both of which were commonplace in past decades, are now rare.  Animation could suffer the same fate.

Whatever happens, it's important to realise that Disney's schedule is written in water.

All predictions are based on current conditions continuing into the future, and that rarely happens.  For proof, we only have to go back to the start of this year.  After DreamWorks' Rise of the Guardians underperformed at the box office, there were layoffs and a schedule shuffle.  Peabody and Sherman was delayed and Me and My Shadow was taken off the schedule all together.

There will be no difference if a Disney film underperforms.  There's nothing like a write-off to get an executive to reexamine the plan and hedge his or her bets.

There's another elephant in the room that nobody is mentioning.  Robert Iger retires as CEO in 2015 and as chairman in 2016.  Iger was a marked departure from Michael Eisner.  While Iger is open to criticism for his decisions, his tenure has been free of the feuds that Eisner had with Jeffrey Katzenberg, Michael Ovitz and Steven Jobs.  Iger's successor, whoever that may be, will undoubtedly bring different ideas and priorities to the job.  Those differences may have to do with animation, including the status of Pixar, John Lasseter and releasing films in 3-D.

Ed Catmull, the president of Pixar, is currently 68 years old.  He'll be 70 by the time Iger steps down and he or the studio may decide to call it quits.  That may also result in changes to what happens to Disney animation.

No changing of the guard takes place without a change in the status quo.  While Disney and other studios can plan their release schedules for as far into the future as they like, the truth is that changing personnel and box office results are variables that they can't control.  As they say, past performance is no guarantee of future results.  If it was, we'd be watching Lion King 8 by now.