NEW YORK (CNN/Money) -
Just when you thought the Pokemon toys were safely tucked away, Yu-Gi-Oh comes barreling into your living room from halfway across the world.
Trading cards, action figures, video games and other products based on the adventures of an otherwise nerdy boy named Yugi who obtains magical powers to fight evil have become one of this year's hottest toys and the latest fad to entrance 8- to 10-year-old boys.
And for 4Kids Entertainment Inc., the company that owns the U.S. rights to Yu-Gi-Oh, it's shaping up to be a speedy ride.
"It's a social game for them (kids)," said Christopher Byrne, a New York-based independent toy consultant.
|Yu-Gi-Oh is the new Pokemon for older kids. It is one of the hottest brands for the holiday season. (Source: 4Kids Entertainment)
NPDFunworld, a Port Washington, N.Y.-based market research firm, said Yu-Gi-Oh was the No. 1 licensed toy brand in terms of percentage sales increases through the first half of 2002. It topped Spiderman, Star Wars and Scooby Doo.
Yu-Gi-Oh is the latest hit for 4Kids Entertainment. The company has been around for 15 years, but it made toy history five years ago when it brought Pokemon stateside from Japan. The firm specializes in picking out Japanese fads and television in search of hot trends with universal appeal, such as Yu-Gi-Oh.
The story goes like this: Yugi and his friends, Joey, Tristan and Tea obsess over "Duel Monsters," a card game in which players pit mystical creatures against one another in battles involving magical spells and such.
But Yugi and his friends are drawn into a mystical world of real monsters through the revival of an ancient Egyptian game that is similar to Duel Monsters. Yugi acquires magic powers by solving an ancient Egyptian puzzle his grandfather gives him, and he must use those powers to save his grandfather, who is kidnapped by the creator of Duel Monsters.
In the real-life card game produced by Upper Deck, kids help Yugi battle the monsters in his quest to restore his family's honor.
Sound a little hokey? Maybe. But that's okay with toymakers as long as people keep snapping up the merchandise.
"We knew it was going to be good," said Al Kahn, CEO of 4Kids Entertainment. "We were looking at it in Japanese, but we think kids are kids on a worldwide basis, and once you understand it (Yu-Gi-Oh), it appeals to kids all over the world."
Kahn, a former marketing executive for Coleco Industries who has been travelling to Japan in search of potential hits for 25 years, knows what he's talking about. In 1994 he picked up on a Japanese toy phenomenon called Pocket Monsters. In 1995, he brought it to the United States, changed the name to Pokemon and the rest is history.
Kahn estimates Pokemon raked in $15 billion worldwide during its four-year peak. He hopes for a similar run with Yu-Gi-Oh. Kahn, who declined to provide specific sales figures, cited industry estimates that put year-to-date sales of Yu-Gi-Oh at half a billion dollars, saying the cards and video games are selling "incredibly well."
"It should be our largest property," Kahn said.
After seeing Yu-Gi-Oh on Japanese television last year, he negotiated with the comic's creator, Konami, to distribute the cartoon outside of Asia. The master distribution license followed and 4Kids started shipping products to the U.S. in April.
The cartoon aired on the WB Network in September.
"This thing is really starting to blossom the way Pokemon blossomed," Kahn said.
Last year, 4Kids awarded Mattel Inc., the world's biggest toymaker, the master toy license for Yu-Gi-Oh. The El Segundo, Calif.-based company produces action figures, board games and die-cast vehicles related to the comic.
Though Mattel (MAT: up $0.12 to $20.32, Research, Estimates) declined to break out specific sales figures, spokeswoman Sarah Rosales said the brand is one of its hottest products this year and that there are plans to roll out more toys featuring new Yu-Gi-Oh characters.
"The popularity of the show has catapulted the popularity of Yu-Gi-Oh," Rosales said.
Companies like Mattel and its chief rival, Hasbro Inc. (HAS: down $0.07 to $12.69, Research, Estimates), often rely on licensed brands, particularly those with a television or movie tie-in that offers many marketing opportunities. When Pokemon's popularity faded in 2000, it hurt sales and profits at Hasbro, which holds the toy rights to Pokemon.
"It's the sort of cyclical nature of fad, boom and bust of the toy market these days," Byrne said. "It's (Yu-Gi-Oh) probably sustainable through most of next year, and then it will start to fall off as kids grow out of it and go on to something new."
|Yu-Gi-Oh trading cards from Upper Deck (CNN/file)
But If Yu-Gi-Oh sales turn out to set a pace anything like what Kahn is estimating for the year, it will have come despite a more cautious consumer who is expected to spend a bit less this holiday season than in previous years because of economic worries.
"I think that regardless of whether or not there's a downturn, people want their children to have what they want," Kahn said. "So if children are asking for something specifically, chances are parents are going to try to get it for their kids."
Though the verdict is still undecided for holiday sales, there seems little doubt that Yu-Gi-Oh is continuing to have a hold on American kids -- for now.