It would have been hard for George Lucas to imagine, 11 years ago, the impact that ”Star Wars” would have not only on American culture but also on the marketing-and merchandising-of movies. Although hard figures are difficult to obtain, it`s clear now that, while the worldwide grosses of the ”Star Wars” trilogy have reached more than $1.2 billion dollars, retail sales of licensed merchandise are more than twice that: $2.6 billion.
So when Lucas and ex-20th-Century Fox production chief Alan Ladd (”Star Wars` ” dynamic duo) announced a year ago that they were reuniting at MGM, which would co-finance and distribute Lucasfilm`s ”Willow” (from an original Lucas story), you could almost hear the cash registers ringing.
That`s because everyone remembers the decorator telephones and Halloween outfits and lunch boxes and posters and patches and buttons and records and cookies and souvenir books and hats and sheets and Jedi speeder bikes, wookies, ewoks, C-3POs and R2-D2s.
For the third installment of the ”Star Wars” saga, ”The Return of the Jedi,” Lucasfilm orchestrated the most comprehensive merchandising and licensing effort of all time. There were 50 licensees, and their retail sales broke records. Can it happen again? A lot of people are betting millions of dollars that it will.
The dice will start rolling in the Chicago area Friday, when ”Willow”
opens, propelled by everything from toys to T-shirts and fueled by the largest total promotional campaign in Hollywood history. At stake is not just the success of one movie, but possibly the future growth of the troubled movie merchandising industry.
The 30 licensees and six major corporations who have jumped on board the
”Willow” bandwagon have done so based on the Lucas name and track record. Only three names in the movie industry command this kind of respect: Disney, Steven Spielberg and Lucas. But it`s not just the name, insists Lucasfilm`s vice president of licensing, Howard Roffman. ”The reason they`re backing this film is that George has created a family entertainment with the qualities of an enduring fable.”
Lucas`s allegorical ”Willow,” written by TV comedy writer Bob Dolman, combines elements from ”The Lord of the Rings,” ”Snow White,” ”The Wizard of Oz,” ”A Midsummer Night`s Dream,” classical mythology, Swift`s
”Gulliver`s Travels,” the Bible, and, of course, ”Star Wars.”
Willow Ufgood, a Nelwyn (or dwarf, or hobbit, or munchkin) is an everyman hero (like Luke Skywalker) who leaves his secluded village to protect a Daikini baby destined to destroy an evil queen (like Snow White`s nemesis, or the Wicked Witch of the West). Madmartigan (like Han Solo or Indiana Jones) is a manic mercenary warrior whose heart is true: He can`t decide whether the sorceress` strong and sexy daughter Sorsha (like Princess Leia or Karen Allen in ”Raiders of the Lost Ark”) is a competitor or a lover. General Kael hides behind a diabolical skull mask (like Darth Vader); the constantly babbling 9- inch brownies resemble R2-D2 C-3P0. In ”Willow,” the Force is magic. The movie`s slogan is ”forget all you know or think you know”-a sentiment that may advance the plot but has no relevance to the retailers busily trying to apply all that they have learned about movie merchandising.
MOVIE LICENSING
Movie licensing has become much more knowledgeable since 1977. Although the business has yielded sales bonanzas for many merchandisers, some have been burned by the high-risk nature of movies: If the picture doesn`t take off, neither do its products. ”Sure, it`s a risk,” says Tonka licensing director Tom Burns. ”It`s Economics 101. The greater the risk, the greater the reward and the greater the penalty if you lose.”
”Platoon” was a box-office smash but a licensing bomb, joining such all-out failures as ”Dune,” ”Over the Top” and Lucasfilm`s own ”Howard the Duck” and ”Labyrinth.” Not all pictures lend themselves to children`s merchandise.
So ”Willow`s” success or failure will have an impact on the entire licensing industry.
” `Star Wars` blew the roof off film and TV licensing,” says Paul Pressler, Disney`s vice president of licensing. ”Since then, expectation levels have not been satisfied. Franchises and licenses have to hit certain benchmarks to be considered successful. Everyone wants to find the next ”Star Wars` ride, which happens only once in a lifetime.”
STAR POWER
The whole industry really began in 1973, when the 29-year-old Lucas made an unusual deal at Fox for ”Star Wars.” Ladd had committed to make the movie before ”American Graffiti” opened to excellent box office, and Lucas was in a position to renegotiate his deal.
According to Dale Pollock`s biography of Lucas, ”Skywalker,” Fox`s business affairs executives were shocked when Lucas demanded no increase in his modest $100,000 up-front salary, negotiating instead for control of merchandising and a share of those profits, publishing rights to any ”Star Wars” books, music rights and income, and sequel rights.
In those days, merchandising was considered worthless to the studios because most movies would disappear from theaters by the time toys could be designed, manufactured and distributed. No one knew what the music would be, and sequel rights only mattered if the movie was a huge hit. ”Lucas opted for the long term and he won,” writes Pollock. ”Fox took the short term, and they lost.”
No one in Hollywood expected ”Star Wars` ” unprecedented success. Within three months, the ”Star Wars” novelization was the No. 1 paperback bestseller, and Lucasfilm owned all the profits. The two-album John Williams score became the largest-selling film score from a nonmusical in Hollywood history (Lucas received a 5 percent royalty on its $16 million sales). After Fox`s 15 percent fee for negotiating licensing deals, the studio split all merchandising revenues with Lucas 50/50.
New millionaire Lucas still had to go back to Fox to distribute his sequels, ”The Empire Strikes Back” and ”Return of the Jedi,” but he negotiated for more control and an even bigger share of all profits. Lucasfilm produced and financed the films, negotiated its own licensing rights, and went on to secure extraordinary terms from Paramount Pictures for ”Raiders of the Lost Ark” and its sequel, ”Indiana Jones and the Temple of Doom.”
Merchandisers put up millions in advance guarantees to purchase licensing rights to these films (the ”Star Wars” and ”Indiana Jones” pictures include five of the top seven grossing movies in Hollywood history) and successfully sold many, many products as a result.
According to the Wall Street Journal, however, that gravy train has slowed. In 1985, Lucasfilm earned license fees of $35 million vs. $150 million two years before, the year of the ”Jedi” boom. And no subsequent Lucas-connected productions have been hits.
Lucasfilm is calling the shots on ”Willow,” too, although director Ron Howard`s Imagine Productions is also involved. (The exact terms of the complex financing and distribution deal are a closely held trade secret.) The film was already three weeks into shooting at London`s Elstree Studios when the MGM distribution deal was announced. MGM put up $20 million of the production cost (estimated between $35 and $40 million), and has committed more than $6 million on media spending alone. According to Lucasfilm, advertising and promotion expenditures will total at least $20 million.
The film must gross $120 million at the box office-something only one or two blockbusters a year ever accomplish-to pay back its production and marketing costs.
Since 1977, the industry has learned a lot about how to coordinate its marketing thrusts. The standard studio campaign-print and TV advertising, soundtrack, singles and music videos, national and local free and pay TV, radio and print publicity campaigns showcasing the stars-only reaches so far. And ”Willow,” in order to be palatable to teens, is rated PG, which means that Saturday morning network TV buys are off-limits.
But nothing prevents Tonka, Parker Bros. and Disney/Vista from advertising their ”Willow” action figures, board games and story records. And Kraft, Wendy`s, Quaker and Ziploc are using Willow in their huge national promotions, which include TV spots, 4-color glossy ”free-standing” newspaper inserts and coupon giveaways, and lavish grocery store displays. ”Willow”
will not only be visible in the media and in theaters, but also in K-mart, Walden`s, Toys R Us, Tower Records, Crown Books, and other retailers and supermarkets around the country. The promotion value in dollars is
incalculable: it is the biggest total promotional effort ever launched in the history of Hollwood.
Each licensee and promotional tie-in negotiated its own complicated formula of checks and balances with Lucasfilm: MGM`s media expenditures vs. up-front guarantees vs. Lucasfilm and MGM`s shares of royalties. Everybody banks on the same thing: ”Willow`s” combined visibility and popularity will sell more units to more people.
”Imagine something even bigger than `Star Wars` or `Indiana Jones,”`
reads a flyer for Kraft`s CheeseFest 88 promotion. ”Kraft and `Willow`: a movie tie-in like nothing you`ve ever seen before . . . Kraft and the world`s best-known filmmaker move product like nothing you`ve ever seen before . . . . Kraft and `Willow`: Build traffic like nothing you`ve ever seen before.”
Not to be outdone, Quaker and Ziploc also boast major summer promotions:
”Quaker Oats puts the magic of `Willow` on your table.”
”Success is in the bag with Ziploc and `Willow.` ”
The distinction between the licensed merchandising and promotional tie-ins comes down to risk: Whether or not ”Willow” is a big hit, Kraft and Wendy`s and Ziploc and Quaker will promote and sell their products, and MGM will do the same for its movie. The relationship is clearly synergistic.
”We at MGM make the world aware of `Willow` through our large expenditure of ad dollars,” says Andrea Hein, MGM vice president of merchandising and promotions. ”The studio spends the majority of its money up-front to get people in the first weekend. Promotions spread over a longer time period help keep the magic of `Willow` alive.”
The debate surrounding licensed merchandising is: What sells what? Does
”Willow” the movie push ”Willow” toys or do toys propel kids to theaters? ”I believe that merchandise in the marketplace isn`t as supportive of box office as once thought,” says Pressler. ”It`s a means by which people who enjoy the film enjoy it that much longer. If the film`s not good, nothing in the world will help it.”
In other words, if ”Willow” is a dud, the licensees will wind up with
”Willow the Duck.”
