Merchandising as a Key Revenue Source in the Film Industry

Introduction

There is no doubt whatsoever that the film industry has become more competitive over the last few decades. To continue being relevant in this increasingly competitive field, there is need for studios as well as filmmakers to consider new revenue sources. One such revenue source happens to be film merchandising. One example of a film that deployed merchandising as an additional revenue source is Batman (1989). It would be prudent to note, from the onset, that very few film researchers and authors have explored the potential of this particular revenue stream. Whereas there are some who are convinced that films could make more money by embracing merchandising, there are others who discount the relevance of this approach on multiple fronts, i.e. in as far as the generation of additional revenue is concerned. Indeed, some argue that the same could break a movie. Thus, there exists a valid need as well as reason to investigate just how effective merchandising could be as an additional revenue source in this realm. This is more so the case given that some of the traditional revenue streams such as streaming and TV rights may not be as relevant today as they have been in the past especially given the advent of technology that has in some instances decimated entire business models.

Discussion

Merchandise, in the context of film merchandising, are commodities based on movie themes, characters or images that are designed, produced, and marketed for direct sale, and not connected to established products or services, as is the case with tie-ins.[footnoteRef:1] On the other hand, film merchandising has been defined by Marich as a process through which profit margins for a film are increased and awareness for the same built through the sale of, or licensing of, a product founded on the character or theme of a movie.[footnoteRef:2] It is important to note that movie merchandising is not a new concept. Indeed, it has been deployed in multiple scenarios in the past. For instance, as Grainge indicates, Walt Disney was able to generate significant revenue from both theme parks and Mickey Mouse items.[footnoteRef:3] There is need to, however, distinguish movie merchandising from product placement. Product placement, according to Quelch, takes place when an item or product produced by a certain manufacturer is deliberately displayed, in one way or another, in the film.[footnoteRef:4] On the other hand, movie merchandising, as the Grainge observes, takes place when a certain manufacturer is advanced the right by the studio to utilize certain artwork, characters, names, etc. for a wide range of products that could be described as spin-offs.[footnoteRef:5] Such products could be inclusive of, but they are not limited to clothing and toys. This effectively means that in most cases, the said film-related spin-off products are not manufactured by the film distributors or producers. Grainge argues that the fact that film producers and distributors license the said rights means that they do not incur any significant risk on this front, i.e. with regard to costs associated with manufacturing and distribution.[footnoteRef:6] Thus, it is the manufacturer who is in this case likely to suffer a loss in the event that the film flops. Marich notes that often, movie merchandising deals mostly involve the payment of an advance lamp sum to the producer or distributor by the licensee (i.e. a manufacturing entity), which is then followed by regular payments in the form of a loyalty.[footnoteRef:7] [1: Paul Grainge, Brand Hollywood: Selling Entertainment in a Global media Age (New York: Routledge, 2007), 107.] [2: Robert Marich, Marketing to Moviegoers: A Handbook of Strategies Used...

…and market analysis.[footnoteRef:33] The author also recommends the allocation of significant time on research and development with the focus on this front being on what will most likely spike the interest of and/or excite the target audience.[footnoteRef:34] Batman found success with iconic T-shirts, figurines, as well as toys. More creative and sometimes ridiculous ideas have been a boon for movie studios in some instances. [29: Mary-Lou Galician, Handbook of Product Placement in the Mass Media: New Strategies in Marketing Theory, Practice, Trends, and Ethics (New York: Best Business Books, 2004), 199. ] [30: Galician, Handbook of Product Placement in the Mass Media: New Strategies in Marketing Theory, Practice, Trends, and Ethics, 199. ] [31: Galician, Handbook of Product Placement in the Mass Media: New Strategies in Marketing Theory, Practice, Trends, and Ethics, 201. ] [32: Grainge, Brand Hollywood: Selling Entertainment in a Global media Age, 111. ] [33: Grainge, Brand Hollywood: Selling Entertainment in a Global media Age, 112. ] [34: Grainge, Brand Hollywood: Selling Entertainment in a Global media Age, 112. ]

Conclusion

Merchandising, as has been demonstrated by the success story of a few films in the past, is an excellent revenue source. Batman (1989) is an excellent example of a film that made good use of merchandising to not only gain popularity, but also increase its sales. The fact that merchandising has not been extensively utilized by studios and filmmakers as an additional revenue stream means that not many understand its potential. However, as has been indicated in the write-up, film merchandising could also have a number of downsides. Thus, there is need to consider the specifics of the film before embracing film merchandising. In the final analysis, it would be prudent to note that films like Batman are proof that film merchandising could be a valuable tool for…