Hot Toys Article - Star Wars License cost over 6 figures to obtain

[koon]

Coulda just said the wrong thing. People always say the wrong thing, and we all tend to exaggerate too. Then again, maybe it's in Hong Kong dollars.
Anyway if $20 is given to Disney per figure, $1mil is 50,000 units. What's the last production size you heard of for anything? Five different figures each with a 10,000 run? Ten figs with a run of 5,000. How many pieces do you really thing goes into a production run?

Obi-wan was cheaper than expected right? Because we've been deluded by the higher prices? Or they realised we've slowed down our buying with the expensive pieces prior or you think they finally made up the license purchased? Random thoughts, I don't know, but they do.

 

[user 1190]

Hopefully we can find out what sideshow paid soon too, they must have paid more.

Most likely less, remember they are on their 2nd or 3rd contact. Hot Toys was attempting to take the license from someone else when it came back up.

 

[Clutters]

Ah this is great news.

It's more likely then that we will see more than just the core characters. Given the target audience (cashed up men in their late 30s, early 40s) hopefully we will get all of the first 21 Kenner figures done in 1/6 scale!

 

[Captain Britain]

Just read through this thread. Have I stumbled into a Doctor Who forum by accident?

 

[Darklord Dave]

I have no clue how the Star Wars license works, but in the licenses I've been a part of, once you pay the balance off, you don't pay a percentage on top of that, after the value of the contract has been filled. If the Star Wars license was $500,000 (which I think is much higher than that). Hot Toys likely paid $250,000 up front as a guarantee, and the remaining $250,000 is paid off as the royalty rate on each unit sold. If you sell more units and satisfy the remaining balance, that $250,001th dollar is yours and every dollar after that is yours. The licensor isn't going to keep getting 10% off every figure sold after you pay them the value of the contract.

Licensing is a gamble. The licensor says "The value of this license is $X", if you think you can sell more than that in figures, you buy that license. If you do, then you made a good buy. If the figures don't sell as well as you thought, well then you're boned and you lost money. So, in things like Platoon and Sucker Punch, Hot Toys probably got to the point where they realized they would literally lose money if they kept on making figures, or the profit potential of those figures was less than something else they could make that could earn a lot more. . . opportunity cost and whatnot.

And realistically, (sssuming 5000 pcs each, at a 20% royalty rate on Hot Toys' selling price) Hot Toys could EASILY make $200k in SW money over 5 years, the royalties on Han/Chewie, Stormtroopers, Obi-Wan and Vader would comfortably surpass $500k. I'm pretty sure that the SW license for 5 years is at least a few million. Especially now with more movies.

Traditionally when someone says "over six figures" it means more than $100K. As SwedishHeat says - this is most likely an advance against a guarantee. The highlighted part above is not true however. The licensor (Lucasfilm) continues to get paid a percentage of every item sold. So the Guarantee might be 500K and what HT pays up front is $100K. The balance of the guarantee is paid periodically based on a royalty which is a percentage of the wholesale price. If the guarantee isn't met by the end of the term of the deal, the licensee still owes the balance of the guarantee. If the guarantee is met early in the term, the licensee continues to pay a royalty.

 

[Boba Ben]

Traditionally when someone says "over six figures" it means more than $100K. As SwedishHeat says - this is most likely an advance against a guarantee. The highlighted part above is not true however. The licensor (Lucasfilm) continues to get paid a percentage of every item sold. So the Guarantee might be 500K and what HT pays up front is $100K. The balance of the guarantee is paid periodically based on a royalty which is a percentage of the wholesale price. If the guarantee isn't met by the end of the term of the deal, the licensee still owes the balance of the guarantee. If the guarantee is met early in the term, the licensee continues to pay a royalty.

 

[cstojano]

Traditionally when someone says "over six figures" it means more than $100K. As SwedishHeat says - this is most likely an advance against a guarantee. The highlighted part above is not true however. The licensor (Lucasfilm) continues to get paid a percentage of every item sold. So the Guarantee might be 500K and what HT pays up front is $100K. The balance of the guarantee is paid periodically based on a royalty which is a percentage of the wholesale price. If the guarantee isn't met by the end of the term of the deal, the licensee still owes the balance of the guarantee. If the guarantee is met early in the term, the licensee continues to pay a royalty.

+1, this is how my English works as well - over six figures is a way of saying over 100k not over a million. If it worked that way then someone could say they paid over 3 figures for the license which could be 1000 dollars, 10,000 dollars, 100,0000 dollars, first and last born, etc. to infinity.

And i actually think these kinds of interpretive differences are interesting. It took me a long time to embrace the fact that the way to describe an object as unique is a "one off" despite describing it as "one of a kind".

 

[Invictus Sol]

Hmmm, explained this way, the "more than six figures" interpretation of the fee being $100k+ does make sense. (Also, as mentioned, it doesn't seem feasible for HT to recoup a $1M licensing fee, given the run sizes.) I retract my previous two incredulous posts!

 

[Mr Walker]

+1, this is how my English works as well - over six figures is a way of saying over 100k not over a million. If it worked that way then someone could say they paid over 3 figures for the license which could be 1000 dollars, 10,000 dollars, 100,0000 dollars, first and last born, etc. to infinity.

I know English isn't HT primary language, and I'm a finance guy who's used to dealing in big numbers, but were it over $1M, I'd just say 7 figures.

Which means nothing.

 

[MyenShi]

Yep, work in marketing and work with large sums. Over six figures definitely means 100k+. If it were over a million, it'd be over seven figures.

Wut.

6 Figures ($100,000 - $999,999) + "More than 6 figures" = $1,000,000+. It's as simple as that. They paid over a million for the rights to sell SW figures.

 

[Bustajesse]

Yeah over 6 figures is 100,000 +.

 

[qualitymm]

so HT pay one time fee only.? then it must be easy for them to get their ROI.

 

[user 1190]

so HT pay one time fee only.? then it must be easy for them to get their ROI.

They pay an amount up front, then pay royalties on each figure. They also only have the license for a set period of time, I would guess its until 2020 since that all the further Hasbro has the license who actually owns the 1/6 scale license.

 

[Pixelpiper]

I can't believe the incorrect interpretation of "over 6 figures" went on for so many posts. I was reading the entire thread clenching my fists.

I can't find a reference to any up-front payments from Hasbro for this latest round, they may not have any, but for the extension from 2018 to 2020 alone they've guaranteed an additional $225 million in royalties for Star Wars over and above what they had already committed to for their previous 2018 extension. That's a lot of green. And a lot of plastic to move. Kenner used to have a perpetual license to Star Wars but I can't find the details of that right now, nor the info on how this was lost after the Hasbro acquisition - there's some good reference in a book about licensing I checked out last year.

 

[Username]

I can't believe the incorrect interpretation of "over 6 figures" went on for so many posts. I was reading the entire thread clenching my fists.

If the wording was "High six figures", we wouldn't have had as many mathematically challenged people posting that people say "over six figures " and means seven figures, lol.

 

[Pixelpiper]

If the wording was "High six figures", we wouldn't have had as many mathematically challenged people posting that people say "over six figures " and means seven figures, lol.

Agreed. As it was worded, I'm reading "over 100k but below 200k." If something is substantially higher than 100k it's not typical to abbreviate as "over 6 figures" AFAIC.

 

[Username]

Agreed. As it was worded, I'm reading "over 100k but below 200k." If something is substantially higher than 100k it's not typical to abbreviate as "over 6 figures" AFAIC.

Of course. As worded, it was totally open to interpretation.

 

[buzzybean]

I can't believe they would have paid a million dollars for the license. No way.

 

[SwedishHeat]

HT can pay out $500,000 in royalties on just the products they've announced thus far. If they signed the license for 5 years, or even just 2 years, they'll more than make their money back.

These are just my educated speculations on run sizes, not anything announced anywhere.

 

[Darklord Dave]

HT can pay out $500,000 in royalties on just the products they've announced thus far. If they signed the license for 5 years, or even just 2 years, they'll more than make their money back.

These are just my educated speculations on run sizes, not anything announced anywhere.

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The run sizes are probably much higher. It's not really worth doing a licensed 1:6 figure unless you do at least 2000 and I'd imagine characters like stormtroopers the numbers are much higher. And Star Wars is the most expensive license, but I'd be surprised if it was as high as 20%, although that is conceivable.