Merchandise sales based on characters and intellectual properties owned by companies such as Time Warner (NYSE: TWX), which licenses heroes such as Batman, and Viacom's (NYSE: VIA) Nickelodeon, which has had great success with SpongeBob SquarePants, don't compare.
The article rightfully reminds readers that the total amount generated in retail sales is only an indication of how seemingly popular a company's brands are in the marketplace. It does not point to the amount of revenues or profit a company books on the sales (Disney will only receive a small percentage of those sales, perhaps between 5% and 15%).
The important thing I take away from this as a shareholder is that Disney is doing a reasonably good job of milking its franchises. As one might expect, the usual suspects were cited as drivers: Hannah Montana, High School Musical, the Jonas Brothers music project, and Disney Princesses are doing the heavy lifting for Disney's consumer-products division, along with a property that continues to surprise me: Cars. Amazing that the latter remains a popular seller in the boys category.
One thing that has been on my mind is the question of how long can Disney's two current hot franchises, Hannah Montana and High School Musical, remain in the good graces of the fickle tween audience. That's a constant worry. Shareholders may wake up one day and realize that the world has moved on from these two properties. That's why I hope to closely watch the tracking data on the Jonas Brothers. This brand has a Disney Channel flick coming up shortly, entitled Camp Rock.
Besides the Jonas act, I hope Disney is incubating other discoveries. It's not an easy job to figure out where the next big thing is coming from, and the process is nowhere close to perfect, but Disney needs to aggressively focus on remaining a leader in the tween space, and to not rest on its laurels. You know, Nickelodeon could stumble upon its own Hannah at any time.
I have to admit, I am disappointed that the article didn't make any mention of Mickey Mouse or Donald Duck. Yes, those characters are aging, and their icon status might not be so strong among the very young these days. Hopefully Disney has plans to work on its portfolio of classic characters and make them as relevant as they can in this era of Miley Cyrus and Pixar cartoons.
Again, though, as a shareholder, I do appreciate the synergistic appeal of Disney's various divisions and how they work in concert to deliver double-digit growth in retail sales for consumer merchandise. And I hope Disney keeps the growth going by finding new fads for the tweens to fall in love with.
Disclosure: I own Disney; positions can change at any time.
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Reader Comments (Page 1 of 1)
6-11-2008 @ 2:59PM
Douglas Burchard said...
I have a nine-month old who absolutely loves Mickey Mouse. It started with the Mickey Mouse Clubhouse (not to be confused with the Mickey Mouse Club), and then he started noticing Mickey on his diapers, etc. I know it's only the subjective experience of one parent, but it seems to me that the Mickey Mouse brand is alive and well with younger soon-to-be customers.