Why video game merchandise lags behind

Video Game Merchandise - Fortnite Llama Plushie

When I was a kid, I had Teenage Mutant Ninja Turtles everything: lunchbox, backpack, posters, bedsheets. I had a bunch of action figures (plus the super cool pizza shooting vehicle). For three Halloweens in a row, I went as Donatello (the best turtle, if you ask me). TMNT merchandise let me ‘turtle-ize’ my life in every way short of living in the sewers (which I might have tried, had my mom not stopped me).

 

Video game merchandise - Teenage Mutant Ninja Turtles
Gif from Gfycat.com

 

I got a little older, the Nintendo 64 came out, then the PlayStation, the PS2, and so forth. I followed game franchises like Legend of Zelda and Final Fantasy, playing hours of their games, but none of these franchises was as all-encompassing as the turtles. None extended into my life beyond my time holding a controller.

Why not? Where did they fall short?

Merchandise.

The fact is simple: the video game industry isn’t nearly as good as the TV and movie industry at merchandising, and it never has been. Even today, with 2.5 billion gamers worldwide, £104 billion in global sales (according to this Newzoo article) and more gaming platforms than ever, video game merchandise is seriously lacking. The gaming experience is confined to the screen and the average gamer has few options to show their fandom elsewhere. Let’s take a closer look at why.

A brief history of merchandise

Since Walt Disney started licensing Mickey Mouse out to companies in the 1930s, merchandising has been an integral part of the film industry. Disney kicked it off in the early years of popular films, and although film merchandising started slowly, throughout the decades, other franchises saw its success and picked up the practice.

Just look at Star Wars. Right from the start, George Lucas put his characters and logos on everything, from toys and apparel to household items like pillows and backpacks. There were theme park rides, Lego sets, novels and board games. My brother, the biggest Star Wars fan I know, once bought a custom-fitted stormtrooper outfit and it was nice.

 

Video game merchandise - gif of stormtroopers dancing
Gif from Giphy.com

 

Lucas licensed the heck out of his franchise, and it made him a ton of money. Since then, movie franchises have consistently ramped up their merchandising efforts. Think Harry Potter, Marvel, Lord of the Rings. You’ve probably seen more of these characters outside the theatres than you have in. And don’t forget Disney. The first film franchise to push merchandise did £766 million in consumer product sales last year.

The history of video games hasn’t been quite as intertwined with merchandise sales. For most of its life, the industry has thrived on consoles and games. Rarely has a particular game or franchise successfully ventured into the consumer product market because, quite honestly, they haven’t had to. I mean, the industry made nearly £104 billion worldwide on hardware and software sales, and it’s only expected to increase. If it isn’t broke, don’t fix it, right? Why invest heavily in merchandise when you’re rolling in cash on other products? Gaming companies know which side of their bread is buttered, and oh my god it’s a lot of butter.

The gaming’s industry’s revenue model: Downloadable content

Gamers are already spending a ton on products, but they’re mostly digital. The recent advent of easily-downloadable games and bonus content has driven gaming sales higher than they’ve ever been. Certain developers have reported that 30-45% of their game sales are now digital. And it makes total sense.

Think of it this way. You can get up from the couch, get dressed, drive to the store, search through the racks of other games, have awkward human interaction with the cashier, then drive home. Or, you can download the game while sitting around and eating chips. I know which option I’m choosing.

Consequently, game retailers – the places where merchandise often found its home – are starting to shut their doors. GameStop, once the go-to spot for game and merchandise sales, has announced a restructure of their stores to accommodate rising digital purchases.

And this isn’t even considering the in-game and in-app purchases. Rather than printing and selling T-shirts, or moulding action figures, gaming companies have instead designed special in-game products, skins, outfits and more, all for purchase. Like these Fortnite skins, or player packs for Fifa Ultimate Team. Team Fortress 2 has a whole store for players to buy and sell special items, including some that go for thousands of dollars.

Gamers can’t get enough DLC (downloadable content), and that’s a win for gaming companies. They don’t need production lines to create it, warehouse space to store it, or trucks to ship it. With DLC sales trending the way they are, physical video game merchandise simply isn’t high on gaming companies’ priority lists.

 

Team Fortress 2 is a ‘freemium’ game. Meaning it is free to play but it charges for extra features. Other games like this include Fortnite and League of Legends.

 

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Small Product Mixes

Compared to films and TV shows, video games don’t often have a wide breadth of products. Popular games will produce a few T-shirts, some posters, maybe an action figure here or there, but that’s usually the extent of it. Not often do games venture into other territories of physical merchandise.

Let’s look at Star Wars again. Scan at this Mentalfloss list of bizarre Star Wars branded products that include a coffee creamer and toilet paper. When I said Lucas put the brand on everything, I wasn’t kidding. But that’s the point. These products might not have been successful, but they were out there, appealing to various markets, no matter how small. Almost everyone has heard of Star Wars, and it’s because, at one point or another, they’ve probably seen one of their products.

By limiting themselves to a few products, video game companies are reaching the same market segments that they already own, the people who already bought and love their games. There’s little opportunity to bring other consumers into the fold or raise brand awareness among populations that wouldn’t normally be interested.

‘Angry Birds’ – A success story in video game merchandise

But with how passionate and dedicated these fanbases can be, merchandise still has a place in the gaming community, and every so often a game comes along that takes full advantage, perhaps none more than Angry Birds.

Angry Birds is a game for mobile devices that involves birds and pigs, castles and catapults. And, oh yeah, 50% of its £255 million 2018 profits came from the merchandise. What started out as an app where you launch birds from a catapult is now an empire of toys, books, apparel, and more.

 

Video game merchandise - Angry Birds
Angry Bird is one of the few games that has expanded into all kinds of merchandise.

 

Rovio, the maker of Angry Birds has been able to capitalize on a few things: cute and recognizable characters, addicting gameplay and the fact that kids can’t get enough of it. The birds and pigs are cute enough to be plush toys but cool enough to be figurines. Plus, their round shape makes them ideal for balls, beanbags, Christmas tree ornaments, plates, and just about anything else.

And who drives toy market sales? Kids do. In the same way that Disney has licensed its most beloved children’s characters, Rovio has turned its iconic red heroes into every toy imaginable. Because the game is also popular with adults (AKA the ones actually buying the stuff), they have brand visibility in that market too.

Plus, Rovio isn’t shy with their merchandising. They brand everything they can. Angry Birds board games? Great! Phone cases? Why not? Credit cards? Uhhhhh okay, I guess. Soft Drinks? Whatever, it’s going to sell anyway.

With a deep product mix and wide brand recognition in the right markets, Rovio has built a merchandising monster. There’s even an Angry Birds/Star Wars crossover. And Star Wars is now owned by Disney. It’s the merchandise trifecta.

Video game franchises are only becoming more visible and popular due to streaming platforms like Twitch and a rapidly growing eSports community. With such devoted fanbases willing to spend money, it seems that, if there was a time for merchandising success, this is it. Will companies or independent e-commerce shops take advantage? We’ll have to wait and see.


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