There's a big difference between merchandise and theme park attraction rights
Written by Robert Niles
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?Tweet
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.
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