GI Joe and Hot Wheels; were movie tie-ins a good idea?

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In my last posting, I mentioned that I was recently interviewed on television by Bloomberg TV and in writing by The Street (see “Mattel’s ‘Cars 2’ Success Junks Hot Wheels”).  In both cases, there interest was in the impact of movie tie-ins. 

The Street wanted to talk about Mattel’s great second quarter (income was up56%) and its attribution of success being to a great degree generated by sales of Cars 2 products.    Revenues from the entertainment division were up 41%.

So significant were Cars 2 sales that The New York Times headlines its July 16 article on the subject with the title, “Sales of Cars2 Toys Lift Profit at Mattel.”  Mattel was successful across the board.   International sales were up 12% as were sales of Barbie products.  In fact, everything was up…with one exception.

Hot Wheels sales were off 2%.  I see this as significant in that it is the crux of the movie tie-in question.  In the long term, does a toy company benefit from moving some of its revenue stream and brand equity from an evergreen like Hot Wheels to a promotional vehicle like Cars?

Evergreens are the cash cows of any business.  They demand less cost, provide steady revenue and profit delivery and ultimately support a company’s need to take on riskier properties.

So, the question is how many of the children who leave Hot Wheels for the latest Cars themed products come back to Hot Wheels?  In addition, what is the impact of a bad movie on an evergreen?  My sources tell me that GI Joe has not recovered its former strength since the ill-fated movie came out.  Rather than see it as a traditional toy, children who saw the movie saw it as just one of last summer’s tie-in movies. Once the movie was done, they moved on to the next movie.

Movie tie-ins are important to the toy industry and no one is suggesting we back off.  We may, however, want to think twice about the overall impact of a movie tie-in on the long term health of our highest value brands. 



2 thoughts

  1. Richard and Kevin,
    You both have great insight to the issues with brand names and movies based on those brands.
    For those of us who have been in the business for a few years it proves once again that licenses based on movies are not a sure bet.
    Peter Santaw

  2. Hello Richard
    You raise the right questions. I’d like to add a few thoughts. The susceptibility of any Intellectual property to being harmed by doing a bad movie is really dependent on how broad, diverse and healthy the franchise eco-system is at the time the movie goes to market.
    GI Joe was ailing long before a truly terrible movie was done. There wasn’t much of a kids business left to harm. I do agree that the movie did significant damage and was a bad creative and strategic effort. Toy movies are often too much under the creative influence of toy companies who focus on seeing their product rather than good story, the primary success factor for entertainment.
    I don’t really see a powerful causal link between Cars and Hot wheels. Cars, arguably, is showing the strength to be an evergreen so expect to see it around in toys for a very long time. Hot Wheels has been struggling with how to drive their brand for years now and I think their woes have more to do with lacking that bigger idea than it does with the appearance of cars. One is a character based concept and the other is performance and collection based. Very different play patterns and markets.
    Here’s a link to a few additional thoughts on why toy movies are having such issues.
    Cheers and thanks for the good discussion.

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