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Movies And Retail Sales: A Match Made In Hell

There's a disturbing trend that's taking over the entertainment business, specifically film and television, which is having a direct effect on how movies and television shows are chosen for production. With production costs escalating out of control and box office returns ever diminishing, the question of how much money a movie will recoup through retail licensing fees is becoming an important factor in the decision making process of what does and does not get produced.

The industry has a long history of retail spin offs dating back to the early days of Walt Disney and Mickey Mouse when in 1933 the mouse's image started to appear on Lionel trains and Ingersoll-Waterbury watches and clocks. This reciprocal deal gave Disney the slush fund to fund his empire and it probably saved the other two companies' butts during the depression.

As the years have passed it's become a common enough sight to see plastic figurines and other mementos of children's movies showing up as part of fast food meals or on the shelves of stores. Some movies or television shows have even been blatant attempts to advertise a toy or a game, instead of the other way round.

But in recent years we've seen the trend spreading to adult movies as well. The biggest and best example has to be the Lord Of The Rings trilogy where New Line cinema licensed expensive reproductions of items from the film. Ranging from broaches costing $70.00 to statuettes at around $6,500.00, over $1.5 billion in sales have been generated since the movies' release.

In an article in Globe and Mail David Imhoff New Line's vice president of worldwide licensing and marketing is quoted as saying that twenty years ago when he first started there was no adult market, but now everything they do has an adult component. From reproductions of Jason's goalie mask, life like Freddy Kreuger masks, to replica's of the fleur-de-lis cross key used in the film The De Vinci Code (steel, platinum, and gold, for only $4,599.00) the film fanatic can purchase almost anything they want, if they have the money, from their favourite movie.

While a studio only gets a small percentage of the amount earned by these sales, between 5 and ten percent, when total sales of retail spin-offs amounts to $50 billion dollars as it did last year, that ends up being a good chunk of change. In fact such a good chunk of change that studios are now taking that factor into consideration when they make decisions about projects.

Alfred Khan, the man who gave the world Cabbage Patch dolls in the eighties justifies this process by pointing out that television is almost completely deficit-financed and not able to make money without licensed products. "If we don't design the shows to take advantage of the ancillary rights, we're going to end up putting shows on that have absolutely very little commercial value,” said Kahn. “We won't be able to monetize that investment."

Once you translate that into English you realize that he is saying that television costs so much that even with advertising revenue, shows will lose money unless they have another source of income. Obviously the movie industry is feeling the same sort of pressure to increase the return on the dollar.

Budgets have ballooned into the stratosphere with some "stars" being paid more for appearances then movies used to even cost to make. Even with CGI technology (Computer Generated Images) the escalation in demand for bigger, louder and more lurid special effects has also caused costs to spiral out of control.

When that is combined with the fact that there are more and more alternatives that keep people in the house and out of the cinema causing a decline in box office receipts, it's becoming harder and harder for a movie to break even, let alone make money. Licensing products from a movie seems to be the only answer that the studios are able to come up with that will increase their chances of making any of their stake back.

It seems that the movie industry hasn't bothered taking a course in basic economics. Instead of looking at ways in which they can increase revenues, perhaps they should be looking at ways they can decrease costs? We're talking movies here, nothing that is vitally important to the infrastructure of a society, so cutting costs shouldn't be a big deal.

Or how about being more creative with the way in which they pay people? If a box office star like Tom Cruise demands his usual millions for appearing in a movie based on the premise that he will make a fortune at the box office, why not pay him a percentage of the take after the fact instead of a huge chunk up front. Let him prove his worth and earn his keep instead of losing your shirt when the movie tanks and he walks away laughing to the bank.

Hell if movies and actors started to have depend on their performances for more than five percent of their salary they might actually start producing a product that will at least attract people to the box office. How many times can you visit the same well before the bucket comes up empty isn't a question Hollywood asks itself often enough.

Sequels, prequels, offshoots, and spin offs have become the norm as they try to squeeze every last available dollar out of a familiar brand. The The Mummy begat The Mummy II which in turn begat The Scorpion King which allowed The Roc to become a bona fide box office draw and do a remake of Walking Tall and a movie based on the game Doom. (To give The Roc credit he was the best thing in Be Cool as the gay bodyguard/chauffeur with aspirations to stardom)

For every History Of Violence or Crash there are twenty-five vehicles for somebody or other which end up going over a cliff because there is nobody behind the wheel of the car. But instead of pulling in their horns and re-examining the way they do business, the studio folk are more interested in maintaining the status quo even if it means that at some time in the future a movie will only be made if it can generate either a line of jewellery or action figures.

As it is those days don't seem too far off, or might even be upon us, when you contemplate the major release this past summer. How many comic book characters were or are going to be featured this summer and in upcoming months? The people over at Marvel comics aren't even subtle about it. Tim Rothwell president of the company's worldwide consumers-products media group says movies like Fantastic Four and Spiderman are "commercials in the sky" directing people to his product.

This symbiotic relationship between movies and comics isn't that new, but the exploitation of it through all the ancillary products and the immense profits they produce has grown to the point where instead of being a nice bonus on top of the box office they are becoming the raison d'être for the production. Last year while Disney had worldwide box office totals of $2.26 billion their return on licensed properties was $2.6 billion.

Disney is an exception as almost all of their movies have been geared towards that since day one of their existence. Obviously if the film is a dud they aren't going to get much in the way of sales when it comes to retail product, but what they lack for in quality Disney invariably makes up for in quantity.

While there is nothing wrong with the idea of making extra money off a movie by licensimg product associated with the film; heck I own a couple pieces of jewellery that were associated with Lord Of The Rings and a knock off replica of Frodo's sword "Sting". The problem is that more and more often movies are being made not for the quality of their script but for their potential in licensing income.

But there's a flaw in this strategy; if licensing fees are supposed to compensate for reduced box office return, but also ends up reducing the quality of the movies and prevents new ideas from being produced, won't that further depreciate the box office. If the box office is reduced won't that also reduce the number of people who are willing to buy product associated with the movie?

People are going to have to go see, and like a movie, before they are going to be willing to shell out big dollars on mementos from a picture. Lord Of The Rings was so successful selling related items for two reasons, the movies were amazing and what was being offered for sale was of a very high quality.

Watching the movies people not only wanted to have something that reminded them of the experience, but they were attracted to the jewellery and ornamentation worn by the cast members. Everything about that movie was so beautifully designed what fan wouldn't want to own something from it.

If producers hope to replicate that success by deliberately choosing scripts for their marketing potential, they are going to discover that it will take more than just some pretty trinkets or novelty items being offered for sale to make the big money. They still need to be able to capture people's imagination and make a movie people are going to want to see in order to accomplish that task. They have to remember that a movie is not a ninety-minute commercial or they will find they have no audiences and a bunch of junk on their hands that nobody wants to buy.

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