Making the most of the booming games toys and merchandise market

Walk into any games retailer and you’ll be greated by a wealth of toys and merchandise.

T-shirts, figurines, bracelets, hoodies, posters, bags, keyrings, artbooks, mugs, shot glasses… the list of branded goods available goes on.

And there’s some serious cash to be made in this sector. Just last year, American games retail giant GameStop ponied up $140 million to buy ThinkGeek parent company GeekNet. What’s more – the company reckons it can grow its merchandise business – worth $200 million in 2015 – to $500 million by 2018.

The games toys and merchandise market at the moment is very strong,” merchandise distributor Heo’s managing director Tom Pelly says.

It’s becoming more important for games retailers, even more so for the High Street. It’s a tough environment to be on, so retailers are finding they need to diversify their product range and have a wider variety of offerings in their store. Merchandise fills that need.”

Gaming Merchandise UK boss Luiz Ferreira adds: We’ve seen another year’s worth of growth. We have seen more licensees and licensors coming to the table. We have lots of weird and wonderful categories that are being explored and are coming to the merchandise sector. That’s really positive. Retail are taking more notes when it comes to merchandise. The appetite from both retail and consumers is very vibrant.”

"Publishers should be considering merchandise
early in game’s lifecycle."

Luiz Ferreira,Gaming Merchandise UK

So, we know that the toys and merchandise scene is booming. But what in particular is selling in this lucrative market?

A lot of it depends on the licences involved,” Pelly explains. For example, The Legend of Zelda always sells very well. And there’s classic games like Mario and Street Fighter which are always a safe bet. Obviously others come along and do very well, too.

Funko Pop Vinyls figures have come along in the last few years and done very well. They are a nice gateway product for attracting people who may not have thought about collecting products. before. It’s something low priced that gets them into that mindset and leads onto higher price or higher quality items further down the line.”

Ferreira adds: There’s new categories. We’re seeing figurines, toys and statues growing from strength to strength. There’s more and more people wanting these collectible items. Clothing always does really well – T-shirts, hoodies. But where the growth is, in terms of a category, is mugs. We have seen a lot more mugs sold lately. Stuff like keyring, hoodies, t-shirts, baseball caps and beanies have always sold well, but we’ve certainly seen growth in the mug sector.”

Jazware’s UK MD Jonny Taylor says that one area in particular is doing well in the toys space: "What both we and retailers have found surprising in relation to gaming brands during the past year is how well plush is performing – we’d usually expect it to under-index in this genre, yet it’s proving immensely popular with consumers."

But it’s not just classic games brands like The Legend of Zelda, Mario and Street Fighter that are big merchandise properties. Increasingly, brand new IPs receive a wealth of merchandise at launch. 2014 saw Destiny and Watch Dogs come to market with a number of goodies, while The Division came out with T-shirts, books and posters. Conventional wisdom would suggest that merchandise is bought by the most die-hard of fans of game series – but these are new franchises. Consumers may be excited, but they haven’t played anything from the game yet.

People are as excited and as passionate about old games as they are new games as they are to mid games. They are equally as excited about,” Insert Coin’s head of communication Dan Long explains.

If you talk to someone who is a massive fan of Final Fantasy VII, they may just be as excited about that as they are about a brand new IP. It’ll hold the same itch that they can’t scratch kind of thing that they want to be a part of. It’s a whole part of belonging to this clan mentality. Newness has something that nostalgia does not in that it’s fresh and no-one’s sure what’s going on yet and you don’t know the mystery behind this character or organisation. That’s the bit that people love.”

Ferreira adds: It doesn’t necessarily need to be an established brand for there to be merchandise. Sure, it’s a bit of a risk because everything depends on how good the software is. If the game comes out and gets poor reviews, there’s a good chance that merchandise isn’t going to perform really. A lot of the large companies consider this very early on in the games development, particularly if they have a ten or twenty year plan.

But if there’s a lot of hype around a game, then why not? We’ve certainly seen some good feedback on the merchandise for The Division.”

Bioworld Europe’s online marketer Michiel de Ruyter also believes that merchandise can be a good way of capitalising on excitement around a new brand.

The hype for these games weighs in as a big factor why merchandise companies jumped on board and started making products,” he explains. When Ubisoft announced Watch Dogs at E3 2012, demand was extremely high. The buzz and hype surrounding this game gave it an instant fan base without even playing the game. So from that point of view it made a lot of sense that merchandise for this game was made.”

"It’s vitally important to appreciate that not every IP translates well into toys. If there are strong aspirational characters, with cool vehicles and accessories in the game, this could transition well into toys and wider merchandise, but this is not always the case."

Jonny Taylor, Jazwares

But what do these gaming giants need to do to ensure their IP translates into a merchandise smash hit?

They need to pick a partner that believes in and understands the brand, and wants to work closely with them to build the brand together and develop fantastic products,” de Ruyter says.

Rubber Road’s MD Ben Grant adds: "Work withinnovative partners who will compliment your brands, bycreating unique and goodquality merchandise that you yourself would be proud to wear. A good merchandise partner will help extend your brand further, so take the time to review their previous projects and quality of product. There are plenty to choose from, but few will surpass your expectations."

Gaming Merchandise UK’s Ferreira says that merchandise needs to be considered from a very early stage in a game’s development.

They should be considering it earlier in a product’s lifecycle," he explains.

"There’s a lot of people out there that are doing a good job and there are a lot of choice. There’s not just one or two people doing T-shirts or clothing. There’s a lot of manufacturers out there willing to invest and support these franchises. There are lots of companies. There are lot in the UK, which is good in our industry and the export market. I’d certainly encourage publishers to at least investigate the opportunity of merchandise. Really, it’s a no brainer.”

But it’s worth noting that not all gaming brands are suitable for toys and merchandise.

"It’s vitally important to appreciate that not every IP translates well into toy," Jazware’s Taylor explains.