Animated film shorts featuring Toy Story characters may spur merchandise sales
When Walt Disney (DIS) releases Cars 2 on June 24, the audience will get a six-minute bonus. Buzz Lightyear, Woody, and other stars of Toy Story 3, another film made by Disney's Pixar animation studio, will romp and joke about Ken and Barbie's failed attempts to hitch a ride to Hawaii inside their owner Andy's book bag. It's more than a warm-up act: The short is intended to help keep sales humming for merchandise based on the Toy Story franchise, which already rivals Disney's Mickey, Minnie, and Winnie the Pooh lines in sales.
While movie studios have long run animated shorts before the main attraction in theaters, Toy Story: Hawaiian Vacation marks a bold effort by Disney to capitalize on Americans' habit of accumulating toys, lunchboxes, and other consumer goods tied to movies. "Showing those shorts is a super-smart strategy for Disney," says Albie Hecht, former president of Nickelodeon Film & Television Entertainment and founder of Worldwide Biggies, a digital studio that produces films and TV shows for young adults. "It's a way to extend the characters and the brand without its fans waiting two or three years for a new movie."
The Toy Story "Toon," as Disney calls it, was created in the 20,000-square-foot DisneyToon Studios that Pixar opened in Vancouver, B.C., in 2010 to make short flicks based on its movies. Disney started making Cars Toons in 2007, running them online, on its cable channels, and occasionally before a feature. That's one reason, says Evercore Partners analyst Alan Gould, that Disney's revenue from Cars merchandise rose 11 percent, to $240 million, in fiscal 2010—four years after the initial Cars movie left theaters. Last year, Disney also packaged the shorts and sold them as a DVD. But the Toy Story franchise is much larger and more financially important to the company.
Jim Morris, Pixar's general manager, says the shorts allow Pixar to "create great entertainment experiences" while prolonging the brand's relevance. "Our plan is to keep the Toy Story experience top-of-mind to our consumers between films and to help the franchise," he says.
The Toy Story short cost $6 million to produce, according to a person with knowledge of the budget. It puts Buzz and Woody back in front of families a year after Toy Story 3's premiere, just as memories might be fading, says Gould. That film grossed $1.06 billion in worldwide ticket sales, according to researcher Box Office Mojo. That makes it Disney's biggest animated film ever and its second-largest overall after Pirates of the Caribbean: Dead Man's Chest.
Disney's estimates peg Toy Story as the fourth-largest merchandise franchise of 2010, after its Mickey Mouse, Pooh, and Princess doll collection and ahead of Mattel's (MAT) Barbie line, Chief Financial Officer Jay Rasulo told analysts in February. Including sales of licensed products from which Disney gets a fee, Toy Story 3 merchandise will generate more than $7.3 billion at retail, Disney estimates. The company has also installed Toy Story attractions at its theme parks.
The earlier Cars Toons may have helped stimulate goodwill for at least one character in the new film, says Steven Levitt, president of Marketing Evaluations, which measures Q Scores—the percentage of people familiar with a product who consider it a favorite. The score for Mater, Cars' folksy-talking tow truck, remains a relatively high 47 four years after the first film left theaters, Levitt says—1 point higher than Mickey Mouse. That compares to Bugs Bunny and the M&M candy and Toy Story 3 characters, which were the highest-ranked animated figures, with scores of 52, he says.
Pixar plans more Toy Story shorts to keep Buzz and Woody in the spotlight. A second Toon will play before The Muppets, which opens Thanksgiving weekend, the start of the holiday shopping season. The debut of Toy Story: Hawaiian Vacation also comes just weeks before Disney opens its $800 million Aulani resort on Oahu. Disney execs say there's no tie-in, but six minutes of Woody and the gang dreaming of frolicking in paradise can't hurt.
The bottom line: Disney estimates Toy Story is the fourth-largest merchandise franchise of 2010. It's bigger than Mickey Mouse and Barbie.