Founded in 1978, Giochi Preziosi is the biggest player in the Italian toy market and, by its own definition, it is also the fourth largest toy operator in the world.
Giochi markets and distributes toys under its own brands. In Italy the group has a direct presence in the retail sector, with its 434 stores under the names of Amico Gio, Giochetta and Giochi Preziosi, which makes it the largest toy retailer in Italy. The company is owned by three parties – Bank Intesa Sanpaulo owns 40 per cent, the Italian buy-out firm Clessidra owns 15 per cent and the founder, Enrico Preziosi, owns the balance of 45 per cent.
The company had sales of €723.4 ($1,065) million worldwide in 2007 and is running at an estimated €850 ($1,071) million clip in 2008. This turnover is split up between toys (52 per cent), retail (28 per cent) and others (20 per cent). Italy accounted last year for 88 per cent of the sales and the rest of Europe 12 per cent.
The firm’s mainstay is the action figure range first released in Italy in 2005 under the brand name Gormiti, now representing something like $150 million in sales this year and, in the words of Marathon International, “the fastest growing boy’s brand
that ever hit the world, having sold, to date, more than 100 million action figures.”
Giochi is present in all European countries including Germany, where until recently it had a joint venture with Simba Dickie, Germany’s largest toy manufacturer.
This joint venture was designed to exploit the potential of Gormiti in Germany and it was successful in doing so. Toys R Us Germany rates Gormiti as one of its fastest moving action figures, which is not a bad feat in a year when Batman: The Dark Knight and Star Wars: Clone Wars are battling it out on the shelves. In fact, Giochi claimed that it has already sold more than a million sets in Germany in the nine months since the launch of the range in January this year.
However, the collaboration between these two European toy manufacturers came to an end because of strategic conflicts. Basically, Giochi decided that it wanted to paddle its own boat in Germany in anticipation of a major marketing effort throughout Europe and the US scheduled to break next year for Gormiti.
With the same objective in mind, Giochi established its own presence in the UK earlier this year when it acquired 95 per cent of Flair Leisure. The two businesses already had a relationship through Gormiti, which Flair had been instrumental in launching into the UK in November 2007. Today, Gormiti is one of the UK’s best-selling toy ranges on the strength of very heavy television backing, supported by PR efforts,
in-store merchandising and point of purchase activities.
The impending worldwide major marketing effort mentioned here has as its backbone, an animated TV film series called Gormiti, the Lords of Nature. The film was co-produced by the Italian Mediaset broadcast group and the French TV network M6. It is in a 26-minute format with 52 episodes. It was showcased in Cannes at MIPCOM in October this year and turned out to be one of the most watched presentations at the event.
Worldwide TV and video sales are handled by Marathon International, whereas Giochi Preziosi handles worldwide marketing and merchandising. Negotiations are already ongoing for the film rights in the US and Canada. The movie
is expected to be released in Italy in December and in the US in autumn 2009.
To facilitate its entry into the US market, Giochi Preziosi opened its own subsidiary earlier this year – Giochi Preziosi USA in Irvine, California. It then appointed toy veteran John Sinclair as president and CEO early this year. John Sinclair knows the toy market in the US very well – he was with Playmates from 1988 to 2006, rising through the ranks to become de-facto CEO of the US operation.
The Playmates connection becomes clearer when we consider that in July 2008 Giochi Prezisio and Playmates entered into a joint venture with the objective of exploiting the Gormiti business potential in the US and Canada. Giochi owns 55 per cent of the deal, Playmates 45 per cent.
Giochi provides three of the five managers, including the CEO (the aforementioned John Sinclair), with Playmates providing the other two. Playmates has an extensive marketing, sales and distribution operation in the US and Canada and is expected to provide the overall infrastructure – marketing, sales, distribution, and administration – for the joint venture for all of North America. Incidentally, Playmates lost the Strawberry Shortcake licence to Hasbro with effect as from January 2008 and Gormiti is obviously expected to make up for this loss. There may also be a pay-back motivator at work here given that Hasbro’s second largest toy category is action figures.
Playmates is an effective but so far not overwhelming participant in the action figures scene. It has had the Turtles licence for years and just garnered the Star Trek licence in time for the movie release in 2009 (and obviously Giochi did not regard this as a major conflict). It has good distribution with the majors: Wal-Mart, Target and Toys R Us.
Probably as a result of this collaboration with Playmates, Giochi Preziosi has already begun to get traction in the US market. As an example, it just placed seven SKUs with Toys R Us. These are plush items under licence from Disney.
However, the success and failure of the Giochi Preziosi effort in North America will stand and fall with the Gormiti range, which will probably be introduced at Toy Fair 2009. The launch will likely be accompanied by massive TV advertising support, (echoing its successful UK introductory model) to be further strengthened by the release of the animated film series in autumn 2009.
The introductory line will include collectible battle figures with cards, a feature-driven playset and a starter set with an original animated DVD that introduces the Tribes, their leaders and their struggle to save their once peaceful island of Gorm. The product line will expand to feature additional collectible figures, playsets, and more in autumn 2009.
Each figure includes a card with a code that enables collectors to discover exclusive Tribes, characters, stories and island environments on the GormitiClub.com website. The website also offers a 3-D Island of Gorm to explore fast action flash animation games, downloads, strategy tips, character power
profiles and more.
The target group for the toys is boys aged five-to-eight, the same as for the TV series. The product range will probably consist of a fairly extensive assortment of 1½-inch to two-inch action figures.
There is already a fairly brisk trade in them on eBay, where currently 112 different figures are featured, ranging in prices from $6.37 to $69.99.
All in all, I would not be surprised if we saw in Gormiti a repeat of Spin Master’s Bakugan success story. Bakugan is now running at $100 million at retail in the US, on the strength of great product, excellent merchandising and on the back of a successful animated TV series.
It would seem that its toys are already strongly out there in cyber space and the marketing effort has not even started yet...