Activision hopes 'Skylanders' game franchise has staying power

Los Angeles TimesOctober 28, 2012 

Six-year-old Jericho Rodriguez sprinted into Toys R Us like a cheetah chasing its prey.

“Mommy, Skylanders! Skylanders!” he yelled as he ran through a crowd gathered around the biggest display in the store, larger even than ones for LEGOs and Marvel superheroes such as Iron Man.

Jericho and other young boys were gathered at the Los Angeles store early Sunday morning for the new video game “Skylanders: Giants” and dozens of action figures associated with it.

“Giants” is the hottest release of the fall for boys ages 6 to 12, as Jericho’s father, Jess, can attest.

“He woke us up early to come here,” he said. “Right now I’m amazed there are so many more (characters) to buy.”

The first “Skylanders” game, last year’s “Skylanders: Spyro’s Adventure,” has been the No. 1 game franchise this year in the U.S., generating $286 million in sales, according to research firm NPD Group Inc. That’s particularly noteworthy in a year during which overall game sales have plunged 25 percent.

To play, users buy a $70 game, outfitted with a port where they plug in one of 32 “Skylanders” characters, priced at $8 or more each. Real enthusiasts buy more than one character. Some collect the entire set. “Skylander” publisher Activision Blizzard Inc. has sold more than 30 million toys.

Activision Publishing Chief Executive Eric Hirshberg said “Skylanders” can become the company’s next “billion-dollar franchise,” joining such blockbuster brands as “Call of Duty” and “World of Warcraft.”

“ ‘Skylanders’ has done a lot better than people were initially expecting, but this holiday period will be the make-or-break time that proves whether it has legs,” said Daniel Ernst, a consumer technology analyst at Hudson Square Research.

Among fans, “Skylanders” has created the kind of obsession that marketing executives crave. On eBay, complete sets of hard-to-find limited-edition toys cost as much as $2,499.

But “Skylanders” didn’t result from a conscious effort to create collector madness. Activision’s Toys for Bob studio was looking for new material as demand for games based on children’s movies, such as “Madagascar,” its specialty for the past decade, was diminishing.

Toys for Bob was asked to revive the purple dragon character Spyro, who had starred in more than a dozen games from 1998 to 2008.

Designers struggled to come up with a concept until they recalled an earlier idea to allow physical toys to appear in a game when placed on a special interface. But they couldn’t come up with a compelling take until they decided to use a previously discarded notion to make toys that interact with a video game.

Different play pattern

Specifically, the team built the device, called a “portal,” and also found a way to store in-game progress on the toys themselves. Focus group testing showed it was something special.

“That was the magic moment when the characters became alive and had memories,” said Toys for Bob studio head Paul Reiche. “Kids were bonding to the toys in a way we had not seen before.”

Unlike so many Wii and Xbox games that encourage staring at a screen in isolation, the multiple characters and storage ability of “Skylanders” gave it a different play pattern.

“Sometimes I play with them in the game, and sometimes I play with them as toys,” Jericho said. “When my friends come over, we pick the Skylanders we want (in the game) for our group.”

A key was coming up with characters children would love – a difficult challenge for a company that had never made physical products. Toys for Bob artist I-Wei Huang went through more than 1,000 designs before settling on ones such as “Ninjini,“ “Stealth Elf” and “Drobot.”

“We learned that kids don’t like characters they can’t relate to, meaning we had to get rid of ones we thought were cool, like a wizard with a long beard,” Huang said.

“Skylanders” has already become one of Activision’s big three franchises, along with “Call of Duty” and “Warcraft.” The company said in public filings that the trio accounted for 73 percent of net revenues in 2011 and “a significantly higher percentage” of its operating income.

The game’s spin-off potential is substantial too. Already, there are books, backpacks, pajamas and Halloween costumes. Hirshberg said Activision is considering partnering with Hollywood studios on “linear media” like television series or movies.

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