This is why this is one of my favourite channels on KZfaq, I absolutely love learning about every step in the process of making toys and the way the toy business works.

Excellent, clear, simple explanation of IP licensing from idea to market to bargain bin.

Thank you for this. Very much appreciated!

Considering the risks and possible reward being (possibly) minimal, its amazing someone wanted to tap into the market in the first place...

Another excellent industry insight video! It's so frustrating to argue with Hot Toys "collectors" regarding this exact very same specific topic! They just think "Hot Toys has the star wars license, why haven't they released a Kabe Chadra-Fan figure yet? They never listen to the fans" But they hate to hear that: 1. Hot Toys is a business, and as such are aware of what they need to do to net a profit. 2. There are upfront costs and expenses as well as legal barriers that exist that could limit what they are able to produce. 3. The market for a $200+ "action figure" isn't as large as most collectors think it is. Even if Hot Toys only produced 10,000 units for worldwide distribution, those figures often sit in inventory for months and get discounted by the retailers before selling out of stock. Your videos are such a great resource, and they really help me keep my sanity intact while navigating the online collector-sphere 👏😎👍 thank you Scott and David for the great information

Very good explanation of the complexities between licensor and licensee relations

Thanks for the video I learned a lot keep up the great work

Great, informative video! It seems like there's a lot of risk for licensees and thus a real lightning in a bottle miracle that say Kenner did so well with their Star Wars gamble.

Another fascinating insight video the whole "guaranteed payment" thing yeah it makes sense plus it also makes sense that if the product doesn't sell that it diminishes the value of the brand and not necessarily the manufacturer.

Thanks 🙏 you for your time

Thanks for sharing this video. Very educational.👍

This is a great crash course on cost/benefit analysis and risk management. However, I think there is one detail that could have helped to paint a more full picture. Specifically, I think the element of _opportunity cost_ is a major, often overlooked factor. By licensing the Ted Lasso figures to Mcfarlane, Apple loses the opportunity to give the license to Mattel or Hasbro or Neco or whomever. It’s not just the quality and success of the product sold by McFarlane, it’s also the loss of the benefit gained from potential products created by a different company. Consider how wildly different the landscape of modern fandom would be if Kenner had not won the license for Star Wars toys. What if it had gone to a company that only produced role playing items like battery powered light sabers and squirt gun laser blasters? What if the license went to a company that decided hot wheels sized cars were the only vehicles we would get from A New Hope? I could easily see a world where something like that could be used to compliment a full, 12-inch line of GI Joe style figures? Would Star Wars even be _Star Wars_ without the brilliant, innovative and unforgettable 3 3/4ths focused, vehicle-heavy line we got? I think this is the root cause of a lot of the slice-encing described in this video. You can hypothetically minimize the opportunity cost by granting licenses to as many different approaches as possible. Unfortunately, this does create a NEW problem, because obviously these competing, similarly-themed products carry significant potential to cannibalize one another. I’d love to see a follow up video that contends with this angle and considers some unmade lines, or famously failed lines as well as the ways in which many mega successful brands have been defined in public consciousness by their licensed products.

I needed this video thanks for making it.

As a recent law graduate and toy collector, I'd love to hear more about David's work in the toy industry. Scott, how could I get in touch with him?

Thanks for that video...it was very informative. Thanks David for your time and expertise. As a Transformers fan, one of the things that bothers me the most are the UNlicensed toys that "third party companies" make...figures that mimic the look of a Hasbro character but are not produced with a license and most often don't include faction symbols and go by different names, such as "Boss Gun" or "Red Truck" instead of Megatron and Optimus Prime respectively (yes, I know those aren't really the fake names used but just an example). These toys are made without the permission of the IP holder, get around all safety standards, and "fans" justify them by saying "Hasbro doesn't care about making the things we want" or "this is a better quality item than Hasbro makes". It drives me crazy that there seems to be no legal recourse for Hasbro/Takara in this situation to stop these companies from making money off their IP without paying licensing and having to follow proper toy safety standards. Is that something David might be able to wade into...the shadowy world of "third party companies" and "knock offs" and how they continue to thrive without any legal repercussions and if there are any ways that an IP holder can fight back against these thieves?

just so i understand correctly, the advance you pay is essentially deducted from the guaranty? in the example given, at the end of the year McF would be on the hook for $40K of the $50K guaranty since they've already paid $10K up front?

I really screwed myself writing a screenplay based on Monster in My Pocket and an opera based on The Man-Thing because I can't pay the licensor anything up front. The last licensees on those totally screwed them up, too. Of course, I couldn't say that when I attempted to contact the producer of the Man-Thing movie over LinkedIn after attending the legal portion of American Lyric Theater's Opera Writers Symposium after they told us that 99% of the time whoever has the film rights also has the stage rights, but I still didn't get a response.

What was Faux Riddler's name again?! I remember he had a bunch of infomercials for government grants back in the day. There was him and the "don't pay your taxes" guy. I think that one went to jail. Great video, btw.

Hmmmm interesting interview. 😆🙂👍

I had a quick question. What is the average advance and guarantee that a licensee pays a licensor?

Do you recommend that book you should in the video?

Licens-or sounds like a MotU character. Just throwing that out there.

Scott and/or David: Is it possible to buy the rights to one single character in a toy-line? Like, if I wanted to buy the character of Hordak and use him as the villain in my story, but in my story he has nothing to do with He-Man or She-Ra? Just for the record, the character I want to use in my story is not Hordak, and is not a Mattel property.

Do you have a video on how to find a toy manufacturer thanks

What happened with Toy Biz and the Batman/DC Heroes line in 1989/1990? How were Kenner able to produce movie-based Batman figures in 1990 as well? This has always been a mystery to me. Maybe the slightly smaller size of the Kenner figs put them in a different licensing category/scale? Thus subject to a separate deal?

I'm gonna have to listen to this a few times to fully absorb everything. 😅

nice information on the higher level, HQ deals & licensing..but I think companies (licensee) are assured depending also on their contracts w/ their distributors. when the distributing HQ had a deal with the toy car model companies, store branches like my dad's were "forced" to take products & he paid out of pocket to accommodate at least 4 boxes of 20 toy car models/ delivery, so now his store is burdened to sell those toy figures to re-acquire his own purchase/ investment & make profit...so unfortunately, if a scalper comes to his store & buys 2 dozen toy ferraris, he had no choice, as its "his own" money was at stake, & yes he has to pay bills for the month..how do we solve the scalper problem, & help our regular customers.. you can pay in advance & we'd save you a toy ferrari. (pre-order).

If there is a pt 2: so is it an unspoken rule that custom creators like Sucklord get a pass? Ex: the still at 2:44 . An art teacher once said an artist went to jail because he continued to draw Mickey Mouse after her was ordered not to. Are there other known times when the toy industry (in the US) had to clamp down on artists or customizers?

Applause? I had no Idea Spector Creative was filmed in front of a live studio audience.

di$ney was very polite when i asked them for a license. :) my question is if the advance goes towards that royalty you have to pay, and what monetary threshold to you have to show the licensee to be taken seriously on average?

I would kill for a one on one with David! I'm a film maker shooting a toy feature film and the whole goal of it is to license the toyline from the movie. Hit me up!

You make awesome videos man, gonna change the subject, your phone should be ringing off the hook by hasbro. They need help bad with G.I. Joe bad. The only way I have access to figures is on the scalpers market. I’m glad I still have the toys, for the most part when I was a kid, so as far as I see it I have the best versions that I can get, man would be nice if they had a matty collector or just make them available at stores cause peeps out there trying to army build major bludd or something, crazy times.

4k photos followed by > 720p photos makes my head hurt from eye strain. 🤷‍♂️

Hello. I have a question: What about those so-called "third party" companies that manufacture toys using likenesses of popular characters (e.g. a Ninja Turtles action figure) but DO NOT put the copyrighted character name on the product box? Apparently, they don't get sued, how is that possible? Thanks!

Rose Tico. Remember Atari E.T. ?

when people say toys and scale and proportion I always laugh because I am a big Transformers fan/collector....Makes me think to my self, "scale and proportion, that is a thing?"

Oh man, I remember that guy with the question marks on his suit screaming into the camera about money in his crappy commercials. I bet he made a lot of money selling nonsense in his money books. Haha.

How would I love X manufacturer to get back the motuc brand on tracks comes 2023 ... After all, these toys aren't exactly 7" scale. So no competition of any sort with Masterverse. OnlyOneSkeletor

You and David sound alike!

Well the great and wise Sage Yogurt did say that we were in this to make a “certain” load of money…..

Why are illegal downloaders of films and songs forced to use vpn's but buying 3rd party bootleg figures can be done out in the open on big toy sites?

Can anyone get a license? For example, if I wanted to bring the Silver Hawks back.

While you were having a lawyer around, did he ever warn you about your lax use of pictures from the internet?

You two sound alike

Interesting then you got likeness rights and expense why I think super man movie 1 .4 reeve figures or merchandise has never been done

Bottom line: Hasbro rents the space from Walmart and is responsible for filling the pegs with product. The Hasbro pegs are empty because Hasbro wants them empty. Hasbro knows 1 unit per week is not near enough to cover the demand. The Mattel pegs are full because Mattel wants them full and because they are employing the McDonald’s fish sandwich strategy. It’s not rocket science.

I in no way endorse this video!