Film Franchises Fuel Efforts to Marry Merchandise to Theater Visits

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As the film industry continues to focus its efforts on building and extending licensing-friendly franchises, theater operators AMC, Regal and Cinemark are part of a renewed push to create new revenue streams by bringing merchandise sales into the theaters themselves.

Avengers' Infinity Wars Merchandise

Avengers Infinity Wars Merchandise

It’s an idea that’s been tried in the past, but has always been hamstrung by logistical and profitability challenges. But at a time when theaters are competing with streaming services for consumer attention, the look at it as another way to boost the in-theater experience. In some cases, it’s premiums and gift-with-purchase items. In others, it’s product sales in the lobbies. But in all cases, it’s an effort to marry a tangible piece of merchandise directly with the theater-going experience.

It’s a model that’s proven successful in China, and AMC and vendor Mtime – both controlled by Chinese conglomerate Dailian Wanda – are attempting to adapt it to theaters in the U.S.

Mtime has merchandise at 4,500 theaters in China, and a well-oiled merchandising and product selection process has resulted in 90% sell-though there, says Mtime’s Aaron Sobel.

In China, Mtime puts together examples of what the in-theater displays should look like, where they should be located and information about the products that are being sold. It also meets with theater operators every quarter to detail upcoming films and displays and provide the designs and features of the products that will be part of them.

Mtime also has an Mtime PRO mobile app that lets cinema owners and managers review merchandise from U.S. and Chinese licensees, select items to buy, pay via mobile and have the products delivered to the theaters.

The new effort in the U.S. with in-theater merchandising appears to have greater strength then previous attempts as it has the support of the theater chains – AMC has tested sales through up to 50 theaters this year and has plans for 150 in 2019. Meanwhile, Fandango – best known for its online ticketing business, has been creating and curating online and in-theater merchandise displays, and Regal (561 U.S. locations) has been making product available through its loyalty program. Separately, Cinemark, which has about 340 U.S. theaters in 41 states, has been adding staff – it hired a new director of merchandising in January — and is testing merchandise sales through some its theaters, say licensees that have supplied product for the tests. A Cinemark spokeswoman declined to comment.

To be sure, these in-theater merchandising efforts have short runs – typically a week before a tentpole film’s release and 3-4 weeks afterwards – and limited assortments and quantities. For example, Mtime and AMC stocked an in-theater lobby kiosk for Incredibles 2 at 50 theaters with 18 SKUs, including six plush figures (Funko), and three t-shirts (Mad Engine) and Five Pop! vinyl figures (Funko), along with goods from third-party licensees such  as Jada Toys.

These in-theater and online merchandising efforts are trying to capture consumer attention “in the moment” when movie goers are still reveling in having just seen the film or anticipating going to the theater. In one case, Fandango created an exclusive gift-with-purchase poster for those using Fandango to buy tickets for Ant-Man and the Wasp, which was released in the U.S. on July 6. Consumers buying tickets for the film online through Fandango receive a code that can be redeemed for the poster, which is then shipped to the purchaser. Fandango had similar promotions for Star Wars: The Last Jedi, Blade Runner 2049 and Black Panther. It also offered a choice of five different posters for Avengers: Infinity War. Regal also has offered promotional merchandise to consumers who buy tickets online.


Incredibles 2 Products in AMC Theater

Fandango, whose main merchandising efforts are through its online FanShop, also is testing the waters with in-theater efforts. It launched two pop-up shops inside the Pacific Theatres at the Grove in Los Angeles in December, along with an Airstream RV at the west entrance and stocked them with licensed goods from Star Wars: The Last Jedi, Wonder Woman and Despicable Me 3. The top-seller was a Porg Galactic plush figure tied to the Star Wars film.

“The whole idea is building out a movie lifecycle business so that we can engage fans at any stage of the movie experience and sort of build out an ecosystem,” says Fandango Chief Marketing Officer Adam Rockmore. “The industry has moved to more of a franchise mentality and that has helped establish merchandise as a known entity in theaters. It is a question of how we take that merchandise and extend the franchise for the consumer.”

While the assortments for in-theater and online offerings are still relatively small as theater operators test the concept, the sell-through of the products has been strong, say licensee executives. Jada Toys fielded a five-pack of its 1.65-inch Incredibles Nano Metalfigs through the 50-theater AMC and programs. It was released a week before Incredibles 2’s debut and had sold through more than 600 pieces by the second week following the film’s release, says Jada’s Darryl Li.  Trends International also is seeking to test the waters with posters at Cinemark theaters.

“It is such a natural fit because you already have, in our case, the promotional posters in the marquee so this is an authentic tie in,” says Trends International’s Paul Beck. “The programs are still in the early stages, but there is definitely an opportunity and it is only a question of finding the right film and product offering.”

To find that right combination, the theater chains are focusing on their high revenue and customer traffic locations. The individual theaters typically have their existing concessions staff handle licensed product sales. And any inventory that remains after the merchandising program ends typically continues to be sold through the concession stands. In most cases, Fandango and Mtime own the inventory, but the theaters provide staff and get a share of the revenue.

At AMC, buying is done through its food and beverage group, while Regal handles those functions through its loyalty program staff.

For AMC, which previously tested in-theater merchandising with Araca Entertainment with the release of Star Wars VII: The Force Awakens in late 2015, the programs are an opportunity to generate incremental revenue, albeit at lower margins than those carried by food and drink, CEO Adam Aron told financial analysts late last year.

“We know the studios have a tremendous amount of licensing deals where they are selling merchandise in retail stores around the world,” Aron said. “But in a venue where you would think enthusiasm would be the highest, we have done virtually nothing” in terms of merchandise sales. Itdoesn’t have the profit margins of popcorn, soda or liquor, but if we pick up 50 cents a head from merchandise sales, it adds up to real money.”

In China, where in-theater merchandising has been underway for about five years, product sales can sometime be up to 15% of film’s box office revenue, says Sobel. For the Top 10 films in China, merchandise sales were 20% of the box office during first three quarters of 2017 and sell through was 90%, says Sobel.

But he also acknowledges that the U.S. market is different. For example, while cellphone case are a strong in-theater category in China, that’s not been the case in the U.S., due largely to a difference in where consumers expect to buy the product, says Sobel.

“I don’t think people in the U.S. go to theaters right now and expect to have merchandise options there,” says Sobel. “We are trying to change consumer habits to where they see the cinema as an option for buying movie-related products. Once you start having a more consistent program, then you will start to see more consistent sales.”

Disney views the in-theater pop-ups as a “flexible business model” that the studio is testing to gauge delivery “of our products to fans and families in new, unique and exciting ways,” says Disney’s Josh Silverman. “We want to create for our fans an experience when they see our films.”


Jurassic World’s Indominus Head Prop

Aside from dipping its toe into the in-theater product world, Fandango and Universal Brand Development created an online fanshop for Jurassic World: Fallen Kingdom, which opened June 22 in the U.S. Fandango worked with Universal’s prop department to develop a collection of products ranging from Funko’s vinyl figures at $11.99 to baby velociraptor ($849) and Indominus Head ($25,000) props. The top-selling products have been theme park map replicas ($99) and a hatched velociraptor egg prop ($399), says Rockmore.

Fandango and Mtime draw from a mix of internally –development and third party licensee products. In China, Mtime has more than 60 licensees including Funko, Pyramid International, Zak Designs, Takara Tomy and Bandai in addition to Jada. Licensees supply 87% of merchandise for the in-theater display in China with Mtime directly sourcing the others, says Sobel. But Mtime-sourced goods account for 62% of sales. Drinkware and popcorn tubs account for 49% of sales, followed by consumer electronics and accessories (15%), toys (14%), apparel and accessories (11%) and home goods (11%).



Disney Consumer Products, Josh Silverman, EVP Global Licensing, 818-544-0041,

Jada Toys, Darryl Li, Marketing Dir.,

Fandango, Adam Rockmore, Chief Marketing Officer, 310-351-7699

Mtime, Aaron Sobel, VP International Sales, 323-436-2828,

Trends International, Paul Beck, Licensing Mgr., 317-388-4031,