NEW YORK (CNN/Money) -
A superhero with spider-like abilities, a child wizard and a fearsome green ogre may be just what the doctor ordered to lift the toy industry out of the doldrums.
Industry watchers say the much-anticipated summer releases of "Spider-Man 2," "Shrek 2" and the third-instalment in the wildly popular Harry Potter series, "Harry Potter and the Prisoner of Azkaban," should make this year a boom time for sales of licensed toy merchandise.
"Watch out for licensed toy products that tie in to these anticipated box office hits to perform well all year," said Michael Redman, senior industry analyst with NPD Funworld that tracks trends in the toy and video game industries. According to Redman, licensed product sales account for between 25 to 30 percent of total toy sales.
Also slated for a summer/fall release are "A Cinderella Story," a "Yu-Gi-Oh" movie in August and the "SpongeBob Squarepants" movie just in time to kick off the holiday shopping season.
Toymakers are already rushing out new merchandise tied to these movies.
Malibu, Calif.-based Jakks Pacific (JAKK: Research, Estimates), released its new Spongebob SquarePants TV Games early in January and expects sales of its other Spongebob SquarePants licensed products to get a boost from the movie.
Jim Silver, an industry analyst and publisher of the Toy Book trade magazine, agrees with Redman.
"Spider-Man 2 will be huge for the toy industry. I expect hundreds of thousands of licensed merchandise (items) to be sold in the first nine months of the year," said Silver.
Pain in the toy chest
The business of toys hasn't been all that fun lately and it only seems to be getting more brutal as sales continue to decline. At the American International Toy Fair that gets underway this week in New York, NPD Funworld expects to report overall sales in 2003 fell about 3 percent.
The brutal price wars, especially during the critical holiday shopping season, also forced store closures and pushed FAO Inc. -- parent of posh toy store FAO Schwarz -- into bankruptcy for the second time. Another casualty was Pittsfield, Mass.-based KB Toys, which filed for bankruptcy in January and said it would close about 375 stores -- or half of its total operations.
|The new SpongeBob Squarepants TV plug and play gaming unit from Jakks Pacific.
"It was a tough year, " said Silver. "We didn't have a hot toy and we didn't have a big movie to push sales of licensed products."
Redman sees more turbulence ahead. "With fewer KB Toys stores and closing of the Zany Brainy chain, toy manufacturers will have less shelf space for their products and they will be forced to become even more innovative and creative with what they're offering."
Interactive TV games, Barbie, and E-L-M-O
Toy makers Mattel, Jakks Pacific and Radica Games are among the more than 1,200 exhibitors gearing up debut the their new toys, games and gadgets at the New York trade show.
Silver thinks the hot category in 2004 will be interactive TV games -- not the Xbox and PlayStation 2, but simpler plug and play gaming systems.
Jakks Pacific last year brought out the Atari10-in-1 TV games, a plug-and-play 8-bit gaming system containing 10 classic Atari videogames, and a similar Namco TV games unit that featured classic arcade games, including Pac-Man, Rally-X and Galaxian.
|Fisher Price's new E-L-M-O spells out his name while he dances to the Village People disco classic "Y.M.C.A."
Citing the success of those two units, the toymaker this year will offer more retro plug and play games, including the revamped Activision TV games unit featuring 10 classic videogames such as Pitfall!, River Raid and Spider Fighter. Additionally, Jakks will also release the Spider-Man and Ms. Pac-Man TV games this summer.
"The plug and play games are very popular because they're simple to use. You don't need an Xbox for it. They're also fairly inexpensive," said Jakks Pacific (JAKK: Research, Estimates) spokesman Anson Sowby. The new units cost about $25.
Radica Games (RADA: Research, Estimates), the maker of handheld electronic games, is adding three new plug and play games to its Play TV line, including the EA Sports' Madden Football game in which players interact with the game via a football and a field mat, the EA SSX Snowboard game, and the Monster Truck Game.
Also to be watched:
-- Elmo's back! He's done the chicken dance, he's done the Hokey Pokey. For 2004, Fisher Price's furry red friend from "Sesame Street" heads to the dance floor once again, this time boogying to the Village People's disco classic "Y.M.C.A." as he spells out his own name.
-- A "Princess & the Pauper" singing Barbie? Mattel (MAT: Research, Estimates) this fall is releasing its first musical feature DVD that it's calling a twist-of-fate tale of "Barbie as The Princess and the Pauper." Complimenting the movie are Mattel's first-ever singing Barbie dolls -- Princess Anneliese and Erika -- that individually sing songs from the movie.
The dolls also have an interactive plush kitty named Serafina that responds to key moments in the movie by purring and meowing.
-- Among Mattel's movie tie-ins is a Harry Potter Championship Quidditch game where kids compete to catch the Golden Snitch.
You can also expect to see more of the golden oldies that were among the few industry successes last year.
"The industry is not yet done with the retro trend," said Silver. His pick for the "big toy of the year" in 2004 is the return of the original Cabbage Patch doll from Play Along Inc.