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This story first appeared in the Sept. 6 issue of The Hollywood Reporter magazine.
In July, two weeks before Universal Pictures’ Despicable Me 2 opened in U.K. theaters, retailers and Thinkway Toys, the master license holder for the animated movie, pulled their TV and print advertising. The entire line of DM2 toys already had sold out.
“Customers were coming in and getting very upset they couldn’t get the Minions,” says Stephanie Sperber, president of Universal Partnerships & Licensing. “And this is after three reorders and air-freighting in products, which in the toy business is unheard of. People don’t air-freight. It makes things exponentially more expensive.”
What happened in the U.K. wasn’t isolated. Sales for DM2 toys in the U.S., other parts of Europe, Mexico and Latin America were equally robust. In a summer heavy with animated family movies, surprisingly few exploded at the box office and at retail. Despicable Me 2, which scored the biggest opening to date for an animated movie at $293 million worldwide in five days, was a star in both.
Despicable Me was an absolute blowout,” says Jim Silver, editor in chief of Playmag.com, a website that reviews toys. “The retailers underbought it in a big way, and they are playing catch-up. Literally everything sold out. It was severely underestimated.”
In 2013, U.S. toy sales will hit about $22 billion, according to data from the NPD Group, with a quarter coming from toys based on licenses from movies and TV shows – the category that in recent years has grown most quickly.
“Kids love to bring their favorite book, movie and television characters to life in the form of toys, games and accessories,” says Lisa Harnisch, senior vp and general merchandise manager at Toys R Us, “so our licensed business is very important.”
To feature the Talking Dave Minion and other items from DM2, Toys R Us created a dedicated shop in each store and offered exclusive items such as a banana-scented Fart Blaster. “We anticipate sales will remain strong throughout the remainder of the year,” says Harnisch.
Along with DM2, the top toys of the summer at Toys R Us, she says, were products from Disney’s TV series Sofia the First and Teenage Mutant Ninja Turtles, which was reincarnated last fall by Viacom’s Nickelodeon, spinning off boy-oriented merchandise that has been popular with kids, teens and adult collectors.
“Our marketing team made sure we connected with existing fans of this 25-year-old franchise and let them know Nickelodeon was taking care of their baby,” says Pam Kaufman, the channel’s chief marketing officer. “For the first time ever, we thought we could launch a show and a consumer product line at the same time.”
The Turtles benefited from cross promotions and special Turtle programming across many of the other Viacom networks, including Spike and MTV. Target stores report that the Turtle products were among their best-sellers this summer, especially the Teenage Mutant Ninja Turtles RC Shellraiser (about $35 at retail).
DreamWorks Animation had success with Turbo because of the popularity of car toys with boys. Lego had a strong summer with Iron Man 3 and Man of Steel action figures — and even The Lone Ranger, which Lego’s Mike McNally says scored among nostalgic adult collectors with its Western theme, despite the movie’s weak box-office performance.
The high-tech sensation of the season are the DM2 toys made for Universal and producer Illumination Entertainment by Thinkway, a company based in Hong Kong that made its mark during ’90s with Toy Story toys, and more recently produced products for Man of Steel and Disney’s Planes (whose toys flew off shelves even before the movie took off).
The first Despicable Me in 2010 was a box-office hit, but the only licensed toys were plush animals. About 18 months before DM2, Universal and Illumination made strategic decisions that paid off: They passed on larger toy companies for Thinkway because they felt it could create “cool, innovative products,” says Sperber.
One unique feature was facial technology. It’s an interactive application that allows the facial expression and eyes of the Minion action figures to change as the child moves the head or body. “Add voice and sound effects,” says Albert Chang, CEO of Thinkway, “and the toys become irresistible.”
TMNT’s ShellRaiser vehicle, just over 8 inches tall, retails at $34.99. Viacom’s Pam Kaufman praises the Turtles for being “action oriented without tremendous violence, and there is no blood.”
The Minion Tim Singing Action Figure ($39.99) rolls its eyes when you move its head. The Fart Blaster ($34.99, below) from Despicable Me 2 was a hit in the first movie but only now has become a popular toy.
Most of the products from Disney’s Sofia The First, like this doll that comes in a set with animal friends ($39.99), only hit mainstream stores this spring but instantly became best-sellers.
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