Big Changes for the Movie Industry: The Impact on Toys

Coronavirus has had and is having a significant impact on the movie industry. Most theaters remain closed, and studios continue to postpone major releases or premier them as streaming video.

Summer movie season, a rite of passage for children and their families, has, for all extents and purposes, been canceled. Case in point: Tenet, Warner Brothers, heavily anticipated “blockbuster,” was initially primed to release July 17, 2020. Now it has been postponed indefinitely. So have Mulan, Bill and Ted Face the Music, Wonder Woman 1984, The New Mutants, and more.

The move to streaming video on the part of Disney, Warner, Universal, and other significant studios has got movie theaters scared to death. AMC, the world’s largest theater operator, announced in April that it would boycott all Universal films due to its release of Trolls and other movies direct to streaming. The two have now made peace with an agreement that cuts short the time between a theater release and a streaming release. Once ninety days, the release gap has been reduced to fourteen.

We in the toy industry have to ask how this agreement will affect our business. A theater movie release is very different than a family room premier. When a family goes to the movies, they are making a much larger financial investment (multiple tickets, snacks, parking, gasoline, and more than likely dinner out). It is also a time investment as it is typically an evening or afternoon wholly focused around the movie. When families invest that heavily they typically also invest in toys or other memorabilia.

When you watch a movie at home, not so much, you rent or buy a video, watch it once or even several times, and then you are on with your life. Movies that release at home, therefore, compete with and on the same level as television shows.

Will it ultimately make a difference in toy sales? I am going to predict that streaming movies will not sell toys, to a significant degree, that movie releases do. I think there is simply not enough investment. This will make a difference in the royalty percentages and dollar guarantees that licensees will expect to pay.

Am I right? We’ll find out next year.

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