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Movies & Toys

The Post Covid Fightback
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As with so many areas of life and business, the COVID-19 pandemic has led to massive disruption to the business of cinematic releases. With people locked down or at least staying away from mass social situations like movie theatres, the impact cinemas is massively down. Hollywood Reporter stated that box office takings in 2020 were around $2.2billion in the USA, versus 2019 at c. $11.4billion.* This is clearly a massive reduction, and as such (unsurprisingly) cinema chains have reported hefty losses as a result.

Pandemic impact on movie related toys

The impact for toy companies has been mixed – clearly toys for movies which were either not released or at best delivered minimal impact versus normal expectations were badly affected, and we can be sure there have been plenty of tense negotiations behind closed doors about minimum guaranteed payment schedules and reductions accordingly. Overall though the toy business looks to have done surprisingly well in 2020, but we are likely to see that the major beneficiaries will be ever green perennial toy brands which are well known and trusted by parents. This includes ongoing licensed toys based on already established properties versus new market entrants primarily.

The question then is as we start to see the end of the pandemic ahead with vaccines rolling out across the world, how should the movie industry and toy companies selling movie licensed toys fight back? 

The fight back, of course, already began with an accelerated shift towards home viewing via various platforms. The most important event of 2020 for the licensed toy business was of course the first full year of Disney+, this platform is the major initiative by the Walt Disney Company to offer their vast array of content directly into consumer homes. Timing is everything, and Disney+ launched at exactly the right time to deliver unprecedented success for Disney+ with content hungry families trapped at home for long periods of times and seeking both an entertaining way to spend their time as well as escapism from the depressing pandemic. Disney+ has c. 87m subscribers at the time of writing and forward projections suggest more than 200million people around the world will become customers within the next couple of years.

Can video demand drive toy merchandising sales? 

Backward looking cynics may have questioned whether a video on demand platform could drive sales on a par with a major cinematic release. The Mandalorian though, and resultant clamour for Baby Yoda toys has shown that with or without cinematic releases great content, with compelling characterisation will sell merchandise.

So, in some ways, the element of the toy business which has historically been driven by cinematic releases has already begun to adapt to a future where video on demand is much more prevalent and can itself drive significant toy sales. Following the stellar launch year of Disney+, The Walt Disney Company recently outlined new content plans including 10 new series based on the Star Wars universe, and 10 more based on the Marvel world. So clearly video on demand content with high propensity for toy licensing is only going to grow going forward.

The outlook post pandemic

Looking forward there are numerous heavy hitting movie titles backed up and awaiting release having been postponed due to the pandemic. Plus we have a new phase of Star Wars and Marvel movies to look forward to in the not too distant future. So when movie theatres do reopen and stay open (hopefully sooner rather than later in 2021!), with enough certainty to merit massive cinematic events, then we can expect to see footfall and audience numbers to return. We can be optimistic about this, because where any movie theatre chains struggle to remain in the business, the physical infrastructure remains in place, so when it becomes safe again to return to cinemas someone will still be there to show the movies. The reason why the movie business remained strong in cinemas pre-pandemic despite the rise of video on demand is because watching a much anticipated movie on a massive screen with state of the art technology is exciting and generally delivers a really compelling experience. For sure we can expect that some movie studios will lean towards parallel release dates both in cinemas and direct to homes, but people will want to enjoy themselves once the pandemic is over, and going out to the cinema is clearly still going to be enjoyable. We just have to look at the number of pop up outdoor cinemas that have sprung up around the world during 2020 to support this.

Looking forward a bit further, when this ghastly pandemic is a bad memory rather than a current reality, we can expect the opportunities for movie spin off toys to be greater not lesser, but with such a proliferation of content to license from, the usual basics of good licensing management will be needed as ever to ensure profitability from an ever expanding array of licenses on offer. Seems like exciting times are ahead once vaccines roll out and humanity can emerge from hibernation back to a world where we can go out and enjoy all that life and the movie industry has to offer.

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Sources:

*2020 Box Office: Domestic Revenue Falls to 40-Year Low (The Hollywood Reporter)