Film Merchandising as a Revenue Source: The Batman 1989 Case

Introduction

There is no doubt that the film industry has become more competitive over the last few decades. To remain relevant in this increasingly competitive field, studios and filmmakers need to consider new revenue sources. One such source is film merchandising. A prime example of a film that deployed merchandising as an additional revenue stream is Batman (1989).

It is worth noting, from the outset, that very few film researchers and authors have explored the potential of this particular revenue stream. While some are convinced that films could earn significantly more by embracing merchandising, others discount its relevance — arguing, in some cases, that it could actually harm a movie. There is therefore a valid reason to investigate just how effective merchandising can be as an additional revenue source, particularly given that some traditional streams such as streaming rights and TV deals may not be as dependable today as they once were, especially in light of technological disruption that has in some instances decimated entire business models.

Defining Film Merchandising

Merchandise, in the context of film merchandising, are "commodities based on movie themes, characters or images that are designed, produced, and marketed for direct sale, and not connected to established products or services, as is the case with tie-ins."¹ Film merchandising has been defined by Marich as a process through which profit margins for a film are increased and awareness for it is built through the sale of, or licensing of, a product founded on the character or theme of a movie.²

It is important to note that movie merchandising is not a new concept — it has been deployed in multiple scenarios throughout history. As Grainge indicates, Walt Disney was able to generate significant revenue from both theme parks and Mickey Mouse items.³

There is a need, however, to distinguish movie merchandising from product placement. Product placement, according to Quelch, takes place when an item produced by a certain manufacturer is deliberately displayed, in one way or another, within the film.⁴ Movie merchandising, by contrast, as Grainge observes, takes place when a manufacturer is granted the right by the studio to utilize certain artwork, characters, names, and so on, for a wide range of spin-off products.⁵ Such products can include, but are not limited to, clothing and toys. This effectively means that in most cases, the film-related spin-off products are not manufactured by the film distributors or producers themselves.

Merchandising as Revenue and Promotion: Batman (1989)

Grainge argues that because film producers and distributors license these rights rather than manufacture products themselves, they do not incur significant risk with regard to manufacturing or distribution costs.⁶ It is therefore the manufacturer who is likely to suffer a loss if the film underperforms. Marich notes that movie merchandising deals typically involve the payment of an advance lump sum to the producer or distributor by the licensee — a manufacturing entity — followed by regular payments in the form of royalties.⁷

According to Wyatt, there are two distinct benefits of movie merchandising.⁸ The first is the generation of revenue; the second is the promotion of the film. With respect to revenue, Wyatt argues that movie merchandising can become a revenue source that extends into "infinity." As the author notes, movies do not remain in cinemas forever, so it can be a smart move for producers and directors to ensure that a popular film continues making money long after its theatrical run. This is made possible by movie merchandising.

Grainge observes that merchandising was a central part of Batman's success.⁹ When the film was being prepared for release, some predicted it would flop. For instance, Marketing Evaluation Inc. argued in 1988 that the Incredible Hulk was too culturally dominant for its glory to be diminished by the latest comic-book adaptation.¹⁰ However, once the film was released, this prediction was quickly proved wrong. Grainge indicates that by the time the box office had closed, more than $500 million was directly attributable to merchandising, with spin-off items ranging from toys to shirts, hats, and bed sheets.¹¹ The revenues realized from merchandising were roughly twice what the film itself grossed at the box office. Some, as Grainge points out, speculate that merchandise worth upwards of $750 million was sold.¹²

The more a film is able to infiltrate consumer culture and cement its imagery, the greater the chances that its merchandising efforts will bear fruit. Film merchandising also helps extend the "life" of a film. Marich argues that the proper deployment of merchandising can help ensure that a movie remains in the minds of audiences long after it has left cinema screens.¹³ Batman's producers and distributors did not focus solely on film and distribution rights — they treated merchandising as both an additional revenue stream and a key marketing strategy. This approach not only created significant buzz but also generated revenue well beyond ticket sales. Marich is categorical that movies are "not just about getting audiences into the theaters… they are also about turning fans into consumers."¹⁴

Conclusion

In the final analysis, films like Batman are proof that film merchandising can be a valuable tool for producers. Not only does it provide an additional platform on which to market a movie, but it also introduces a potent and potentially long-lived revenue stream that extends well beyond the theatrical run.