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There's a big difference between merchandise and theme park attraction rights

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Published: May 21, 2014 at 10:06 AM

If Universal has the theme park rights to Transformers, why is Disney selling Transformers toys at Epcot? And if Disney owns Star Wars, why can you find a store filled with Star Wars merchandise at Universal Studios Hollywood? Does the fact that Universal Orlando is selling Batman and Superman merchandise mean that the resort now has the theme park rights to those characters, which long have been associated with Six Flags parks?

Transformers at Disney
No, this isn't Universal. It's the toy department in the Mitsukoshi department store in Epcot's Japan.

Keeping track of which park owns what IP [intellectual property] in the theme park business can be confusing. We've reviewed before who owns what attraction rights, but the examples above illustrate that the deals that govern attractions don't apply to merchandise sales.

Why is that? Let's think about the value of attraction and merchandise rights. Obviously, businesses that own IP want to make as much money as they can from those characters. Since theme parks are vacation destinations, the more parks that have the rights to a set of characters, the less valuable the rights to those characters become. After all, if you can visit a set of characters at a bunch of parks near you, what's the incentive to book a trip to another park featuring those characters? Not much, if anything.

Value flows the other way with themed attractions, as well. The better job that a park does in creating compelling attractions around a set of characters, the more valuable those characters can become to their owners, as a great attraction can increase the number of fans of a particular set of characters, and deepen the affinity that existing fans feel for them.

As a result, IP owners have an incentive to limit the number of parks to which they license their characters, to extract the greatest possible licensing fees for them. They also have an incentive to work with parks that have the capital and development resources to create high-quality attractions that can build fan loyalty.

That's why you see these exclusive deals where only one chain ends up with the rights to a set of characters in a specific territory. Sometimes, an IP owner will license characters to different companies in different territories. For example, you'll find Snoopy and the Peanuts characters at Cedar Fair parks in the United States and at Universal theme parks in Asia. The theme park attraction rights to Sesame Street characters belong to Universal in Asia and to SeaWorld in the U.S. And, most famously, the rights to Marvel characters belong to Universal in Japan and east of the Mississippi in the U.S., while belonging to Marvel owner Disney everywhere else. But no major copyright- and trademark-protected IP belongs to multiple parks in the same market.

But that doesn't mean that you won't find characters at different parks in the same town. As we mentioned above, you can find Transformers at Disney World and at Universal Orlando, and Yoda T-shirts at Disneyland and at Universal Studios Hollywood. But you'll only find them in stores and merchandise displays at parks that don't own their attraction development rights.

For an IP owner, the economics of merchandise are totally different that the economics of attraction development rights. Merchandise is all about mass production and delivering that product to where the consumers are, while theme park attractions are built one at a time, and you have to work to bring people to where the attraction is. Major IP owners make more money by allowing their merchandise to be sold widely than they would by restricting sales to exclusive providers in designated markets.

OK, that explains why IP owners would want to let their stuff be sold at other parks. But why would parks sell merchandise for IP whose attraction rights they don't own? Again, it comes down to money. If the merchandise sells, and parks can make significant money from it, why not?

Granted, top theme parks don't want to sell merchandise that detracts from their theme and visitor experience. But Transformers toys provide a good fit for the toy section of the Mitsukoshi department store in Epcot's Japan. Star Wars merchandise fits in a store in a movie studio theme park that's selling toys and shirts featuring a variety of top Hollywood hits. And no one but a few brand purists object to including Superman, Batman and other DC superhero characters in a store selling Marvel superhero souvenirs.

Selling DC stuff in Islands of Adventure makes even more sense for Universal when one remembers that it's archrival Disney that gets the IP owner's share of the all the Marvel-branded merchandise sales at Universal Orlando. When a Universal visitor buys DC-branded merchandise instead of Marvel, Universal's sending that money to its partners at Warner Bros. (which owns DC) instead of to Disney!

Now things get tricky, legally, if a park were to develop a store to the point where the store became an attraction. It can be okay to sell stuff, but a park clearly can't put a meet-and-greet character from that franchise into a store next to its merchandise, unless the park owns that character's attraction rights. Displays get a bit fuzzier. If a display is fancy enough that it draws people into the store to see it, a rights owner could claim that it's an unlicensed attraction, and sue. This might provide part of the reason why Disney's been so reticent in selling Marvel stuff within the Walt Disney World theme parks, where Disney does not own the attraction rights to the Marvel characters.

So, ultimately, merchandise ain't attractions. Don't get too excited if you see DC stuff at Universal Orlando, or Star Wars stuff at Universal. Just because a park is selling something in a store shouldn't imply that it's about to build a new ride based on those characters.

Readers' Opinions

From Anon Mouse on May 21, 2014 at 12:04 PM
Having these products in the stores can confuse the customer or maybe just cash in on the phenomenon. Transformers in Epcot might not necessarily be about the American movie. It is just as popular in the Japanese original.

I wonder why Disney doesn't cash in on the Superheroes popularity with "The Incredibles". Sometimes, they can be done under the Pixar/Disney label instead of Marvel.

From Brian Bauer on May 21, 2014 at 2:07 PM
I've heard people ask "Why is (theme park) allowed to sell (licensed product) doesn't (other theme park) own the rights?"

They fail to understand that not only are toy rights and theme park rights two completely different things, toy rights have nothing to do with selling those toys.

From N B on May 21, 2014 at 2:18 PM
Robert, you never cease to amaze me at how you come up with stories for TPI... Of course, the easiest thing to do would report on Diagon Alley and the Fantasyland expansion, but you find things to report on that nobody really knows about. Well done.
From Apple Butter on May 21, 2014 at 8:48 PM
Robert is right on point but you left out one key IP and that is Harry Potter. I believe that the only place, theme park wise, that you can purchase potter merchandise is the Universal parks. I think by limiting the merchandise to only a select few parks it draws people in like you said. I think Universal is a pioneer in incorporating a themed element with food and merchandise that actually draws people in. They could have just done a Harry potter ride and left it at that but its so immersive having theming, characters, food, dinning, shopping, rides, and merchandise to only Universal. It's not only good business sense for Universal but also the consumer. Do I want to buy the Harry Potter wand at Cedar Point or do I want to buy it where I'm engulfed in theming, characters, rides, and attractions that I may be able to interact with. No brainer here I'm going for the park where I will be spending all of my cash at and that is Universal. Merchandise plays a key role in that decision.
From 38.97.98.194 on May 22, 2014 at 5:21 AM
With the release of the Big Hero 6 trailer coming today, there's another interesting case regarding Universal Orlando and Walt Disney World.

Who has the Orlando theme park rights?

One might say "Universal!" since the upcoming Walt Disney Animation film is an adaptation of a Marvel story. But thus far there has been no mention of Marvel in any promotion for the film and the famous red block logo has been left out of the teaser poster. Might Disney conclude that, in this instance, Marvel's tie to the project is so minimal that Universal can't claim it for the Orlando property? It would be quite odd if a animated Disney holiday release is not promoted in the Florida parks.

From Brian Bauer on May 22, 2014 at 7:21 AM
@Apple Butter, but you're talking about merchandise produced exclusively for the theme park as opposed to mass market items based on an IP which another company has the theme park rights for.

For example, it's possible that Universal could carry Star Wars action figures, but you'll never see a "Build-a-Droid" station there.

@anonymous, I don't think Universal can claim BH6. They would need Disneys permission to use it. They can only use the families of characters they are currently using. Which is a big reason why Disney may have chosen this IP. There are no direct ties to the characters Universal is using. I do believe they are downplaying the Marvel aspect, though. If the movie does well, Disney may want to incorporate something into the parks. Universal couldn't stop them from using the characters but they may have issue with promoting them heavily as "Marvel" characters.

From TROY DAVIDSON on May 22, 2014 at 8:16 AM
I hope Universal will have some 3.75 inch Harry Potter action figures for sale. POPCO company did a great job with the HP figures in the UK/Europe. Unfortunaly the NECA company got the U.S. contract which produced more "statue" type figures--and each were 7inchs tall. I would pay premium to get all major and minor characters as action figures. Univesal make it happen please!
From Mark Fairleigh on May 22, 2014 at 10:15 AM
There's also Star Wars/DC/Doctor Who merch at the Terminator gift shop at USF. I get the business aspect of it...but I'd rather see ride-specific merch or park-specific merch only. For me, "muddying the waters" just kills whatever themeing is at play. But I'm just quirky about that sort of thing.

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