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Excerpts from the article prepared for The Licensing Journal, January, 2001 issue
Rehtmeyer, Inc. helps inventors and companies develop and market toys and games. We get calls from inventors who are often more idealistic than realistic about their market opportunities and potential, particularly when considering licensing as an option. The "dream" beliefs listed below are actual comments made by inventors who have contacted our companies over the years. We thought you'd enjoy sharing the "dreams" and the toy industry "reality" and hope this insight enable you the success you deserve!
The Dream
"My product is going to save the toy industry!"
Reality
The toy industry is about a 35 billion dollar a year industry. It will be a challenge for any product to compete with these numbers, but sure fun to try! Maintain the enthusiasm and drive, but do understand that the industry is bombarded with so many products that it is difficult for major toy manufacturers to react to any given product in as emphatic a way as the inventor. To industry veterans, the "proof is in the pudding". Until the product "sells through", (meaning it clears out on all the retail shelves in a timely way)-- the "jury is still out" on the success of a product. It's upon a successful "sell-through", the industry gets euphoric.
The Dream
"My product is patented (or patent pending), so therefor it is both unique and marketable."
Reality
While a patent can enhance the value of a product, and indeed helps to protect the inventor's rights, keep in mind that patents do not indicate uniqueness to the toy industry or the marketability of that product. There are dozens of patents on "dolls with hair that grows", for example. The Dream "My concept will outsell Barbie." Reality That's $1.5 billion in sales, according to Mattels' 1999 annual report. If you think you can do it-go for it!!!
The Dream
"I'm going to make millions of dollars."
Reality
While very possible, most products require a great deal of marketing effort to become successful and many products never reach their full potential. Consider turning your passion for the product into a savvy marketing campaign to help you achieve your dream.
The Dream
"I attend TGIF (The Toy & Game Inventor's Forum) in Las Vegas and sell my idea to one of the many toy companies there.
Reality
Several inventors actually did just that! The Dream "There's never been anything like it." Reality Everyone says this. Hopefully it is true. The industry may see many products that are introduced but fail to come to market and therefore, may have a different opinion. The best course of action is to have your product evaluated by an unbiased, industry professional or team before putting too many resources behind it.
The Dream
"The Toy Company will figure out my cocktail napkin sketch and buy my idea."
Reality
Toy companies buy and license ideas that are further along and more "proven". They want to "see what it does", and touch and feel it. The easier it is for a toy company to "run with the idea", the more likely it is to be licensed.
The Dream
"I will be able to sell my idea outright for a lot of money."
Reality
Until a product has a proven track record, the value of the product is questionable at best. Most toy companies prefer to license an un-proven product on a royalty basis over a "sellout". This way toy companies don't invest money in products until they "sell through"-a safer approach from a toy company's perspective.
The Dream
"I can license my idea to many companies."
Reality
If it's not an exclusive, the toy manufacturers will not likely see the benefit.
The Dream
"My patent term is up in 3 weeks so I need to license the product before then."
Reality
While it is plausible to license a product in a day, a more realistic time schedule is around 18 months. Don't wait until the last minute to "do" something with your product. Act on it today!
The Dream
"I've a twist on (Pick one: Monopoly, Trivia Pursuit or Chess) that should sell like Monopoly, Trivia Pursuit or Chess.
Reality
It is difficult to license a concept that may be deemed "too similar" to an existing product.
The Dream
"I have a rule change to "Scrabble" that Hasbro Games will love."
Reality
Toy companies look for stronger "value added" features to license. Rule changes are typically not deemed "strong enough" to support a new product launch.
The Dream
"I have a game based on (pick one: Nuclear energy, Oil drilling rights, etc.) that I want to market to ToysRUs."
Reality
The major mass market companies prefer products that appeal to the broadest market spectrum as possible, enabling them the greatest market opportunity as possible.
The Dream
"What if many companies fight over the rights to license my product?"
Reality
You would be a very lucky and happy person!
The Dream
"My product is already produced (in my garage) so it should be easier to license."
Reality
Sometimes this is true, but often one has nothing to do with the other. The license-ability of a product depends on the final look, costs, sell through, overall value and it's "wow" appeal (as commonly referred to in the industry. A pre-produced product that was a known sales "dud", however, will be harder to gain interest than one that has not been previously exposed.
The Dream
"Monopoly sold millions of copies and has been successful for over 50 years, so as my game is similar to that, it should sell about the same."
Reality
Interesting logic. That's a lot of compiled sales to try to match. If you feel that your product is a contender, get a strong marketing plan together, a fair amount of working capital and consider self production over licensing.
The Dream
"I know my product is perfect because I have been working on it for over 30 years."
Reality
Don't pass on an opportunity by doing nothing. If you have a great idea, send it to Rehtmeyer, Inc. for evaluation. The longer you wait, the greater your chances that someone else will think of the same idea.
The Dream
"My product is very timely; it is for the (choose one: Millennium, Olympics, Election, etc.), so I need to get it to market ASAP."
Reality
It is difficult to market products based on a very specific timely event. Timing for products based on new movie releases, for example, take place more than 18 months prior to the release of that movie.
The Dream
"I want a 50% royalty, full rights to inspect and select the look, design, market, etc., a 1 Million dollar advance, approval of manufacturers, retailers, etc., my name and picture on the box...."
Reality
Who doesn't? A more typical royalty is 5% based on the wholesale price (less returns, deductions, etc.). Toy companies are more than leery about allowing anyone outside their company any say as to the design, marketing, or any other aspect of the product. If a 5% royalty seems too low, and you want greater involvement, consider self production where you maintain the entire profit and product control.
The Dream
"I'd like to create not only a new product that sells millions of units, but creates an entirely new product category for years to come."
Reality
This is exactly what the industry wants and needs. Products including "Trivial Pursuit" (which created the "adult game category and redefined price-points, packaging and the game market), "Pretty Pretty Princess" (which created the "girls game" category), "Tickle Me Elmo", and "Furby" which defined interactive plush, "Bass Fishing" (which created an interactive handheld market that extended to adults) and many others-all of which came from inventors, are prime examples that invention does pay, and you can win the lottery, after all!
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