In late August, DC Comics and Warner Bros. held a virtual convention to showcase superhero content for fans across the globe, all presented by live-stream due to the coronavirus. One of the event’s most anticipated moments involved Kristen Wiig, who stars opposite Gal Gadot in the sequel “Wonder Woman 1984.”
As the film’s villain, Wiig had yet to be seen in costume as the menacing Cheetah, a feeble woman who transforms into an apex predator with a goal of destroying Gadot’s Amazonian queen. Social media erupted with footage of Wiig pouncing in her skintight fur. Fan blogs and mainstream publications covered the unveiling. But observant consumers would have seen the anticipated costume reveal weeks earlier — Cheetah already stalked the shelves of their local Target or Walmart, in the form of a collection of 13-inch Mattel dolls based on the film.
The release date for “Wonder Woman 1984” has been pushed six times, mainly due to COVID-19 and the shuttering and sluggish reopening of global movie theaters. As a result, the licensees and retailers behind that line of Wonder Woman dolls endured months of nail-biting, wondering if they’d have a splashy new feature film to accompany the rollout of their products. It’s November, and Wiig’s Cheetah has yet to hit the big screen and may see another delay. The dolls had to go it alone.
Much like other best-laid plans in 2020, the consumer product pipeline was ravaged by the coronavirus. Licensing rights to major films and streaming intellectual property generated $124.8 billion in revenue in 2019, according to a global study from trade organization Licensing International. The entertainment category accounts for 44% of that market share, doubling the size of its closest competitor. These products range from toys to lunchboxes, with detours into backpacks, board games and apparel. In addition to physical goods, major brands design campaigns tied to tentpole films that help seduce consumers into buying the frosty Heineken in James Bond’s hand, or tell the owner of a McDonald’s Happy Meal that the cute yellow creature in the box means the Minions are coming back to the cineplex.
“Consumer products don’t get a lot of credit because they’re not as sexy, but they are absolutely a form of content. We are the tail that elongates fan engagement until the next big moment,” says one film studio executive in charge of licensing, speaking on condition of anonymity.
In March, as the disease gripped the world, numerous studio executives said they sat for daily panicked phone calls with licensees. Categorically, these companies include toy giants like Mattel, Hasbro and bobble-head maker Funko; apparel companies like Judith Leiber Couture (which crafted a $5,295 purse for a collection based on Disney’s live-action “Beauty and the Beast”), Nike and Old Navy; and food brands from kids cereals to Doritos.
Before the scope of the pandemic was clear, both the studios and their product partners were begging to simply get inventory shipped out of locked-down China — a massive manufacturing hub for such goods. When it became apparent that movie theaters would not open for the foreseeable future and release dates would have to shift, the dominoes started to fall.
MGM, the studio behind the new Bond movie “No Time to Die,” was the first to blink and delay the Daniel Craig film’s release five weeks before it was scheduled to debut in April. A factor in the decision was to deliver an “exercise in transparency” to its marketing partners, one MGM insider tells Variety. The Bond films enjoy legacy deals with Heineken beer, Omega watches and automakers Land Rover and Aston Martin. All of these companies were prepared to execute millions of dollars in ad buys and live activations around the film’s premiere.
“We did so very keenly to get ahead of any spending our partners would put into the marketplace. They recognized the original release wasn’t sustainable, and it was relatively easy to move. Hard goods are a different story, and much more difficult,” says the individual.
NBCUniversal faced the same predicament with “Minions: The Rise of Gru.” In April, Universal Pictures boldly pushed the latest sequel in the top-earning Illumination franchise an entire year, from July 3, 2020, to July 2, 2021. Numerous licensing deals were able to move with them, but a pricey and timely activation with McDonald’s was stuck. A 90-piece collector’s set of Minions toys was to hit during a monthlong campaign timed to the movie’s release.
The studio, according to insiders familiar with the strategy, devised a plan to make the toys and other lingering partnerships seem relevant despite having no new movie to show. This included a Minions PSA with the World Health Organization honoring frontline workers, network airings of the 2015 film “Minions” on NBC and Telemundo, and themed movie nights with broadcast partners in the U.K., Mexico and Latin America.
That a major studio would go to such lengths to preserve these relationships isn’t surprising, considering the staggering foot traffic and marketing potential of an entity like McDonald’s. The fast food company serves an estimated 69 million customers per day globally, with 25 million served daily in the U.S. (sales numbers that have surely been curbed since the start of quarantine), according to marketing documents viewed by Variety. What’s more urgent for a partner like McDonald’s, according to several studio executives, is that the food retailer does not have the same storage capacity as megastores such as Target and Walmart. Products must move instantly through the storefronts.
Consumer products play a critical role in giving franchises longevity.
“There’s a fair amount of marketing you can benefit from that helps drive box office. The arrangement with licensees drives revenue for them and the studio. But most importantly, it allows fans to engage with the brand and take it home with them, whether it’s a game, an interactive toy or wearing a T-shirt with the Batman logo. It allows for that brand expression to carry on after the movie,” says another top film studio executive.
The life cycle of physical consumer goods tied to films is on average 18-24 months, from conception to the shelf, according to half a dozen people with knowledge of the process. Licensing partners are brought into the studio at the greenlight stage of a film.
“You need to see what the Indominous rex is going to look like before they even shoot the film, if it’s going to be a Christmas gift the year the movie comes out,” says one individual who works with top manufacturers, referring to the monstrous dinosaur hybrid of “Jurassic World.”
Licensees pay the studios a healthy minimum guarantee to use the IP, and also royalties as the goods continue to sell. Some sources suspect these deal terms will change in light of the coronavirus, given that retail is in no better shape than the theatrical film market.
“It’s pretty unusual that you have both sides of a marketplace so massively disrupted at the same time,” David Anderson, co-head of UTA Marketing, says of the landscape. “Even if theatrical magically worked today, we’d have to address the retail realities. There are less store visits across the board, and behaviors have shifted online.”
In the way that COVID-19 has escalated legacy media’s priorities to streaming content, the licensing business faces similar adapt-or-die decisions about expedited production times and increased product availability.
In a forthcoming white paper from License Global, a trade publication that covers the category, a study finds that licensing also has been impacted by the coronavirus. The industry is bracing for a 21% decrease in annual revenue in 2020, with a 10% decrease in head count to match, compared with the
Survival will hinge on cooperation and leniency from partners like the studios: The study also finds that 62% of licensees have renegotiated a contract in 2020, with an eye toward extending payment terms as opposed to reducing amounts paid to the IP holders.
Relief could be on the horizon as streaming originals gather legions of fans, the benefit being that those companies do not rely on theatrical releases to reach hundreds of millions of eyeballs. Netflix’s breakout series “Stranger Things” has spawned capsule collections from Nike and intricate Lego sets. Newer franchises like the streamer’s animated “Over the Moon” will need time to captivate families, although that movie about a young female scientist who engineers her way to the moon does have a collection of Mattel dolls, custom bedspreads and DIY paper lanterns, along with a novel based on the film.
“For a long time we’ve been watching markets shift. E-commerce has been rising; brick-and-mortar has been changing. S-comm, or social commerce, has been on the up,” says Amanda Cioletti, content and events director for License Global. “And the pandemic has accelerated that pace of change.”