|
As you keep your eye on toy products that are currently available on the market, or look for classic toys or game to collect, you will likely come across products that are truly wonderful and clever, and others that make you wonder "Who made this and why?!" Have you ever said to yourself "I could have come up with something better"? Well, maybe you can! Toy manufacturers don't always come up with their own products. They often look to professional toy and game inventors to design, engineer and develop many of the products that you see and buy on the toy shelves. Such classics as "Upsie Baby", Toss Across", "Rock 'em Sock 'em Robots", "Hair Grow Dolly", "Micro Machines", "Nerf", "Betsy Wetsy", "Glo Worm", "Monopoly", "Trivial Pursuit", "Taboo", "Pictionary", and many others were developed by professional, independent toy designers. Some toy and game companies buy as much as 80 or 90 percent of their toy lines from professional inventors. Every year toy manufacturers refresh their toy and game lines with newer, more exciting products. This means hundreds of products may change or be removed from a toy line, and hundreds of new opportunities for professional inventors to license their new items.
The toy industry does not buy items or patents from inventors. They license working concepts. "Licensing" involves giving a toy manufacturer the exclusive right to manufacturer, sell and distribute your concept in a specific region, in return for an advance, and a royalty payment (much like a writer who licenses his/her book rights to a publishing house). Royalty payments are typically based on a percent of the wholesale price of the manufactured item. The average royalty toy companies pay for an item is 5% of the wholesale selling price. Keep in mind that toy companies may not include royalty payment for returned, damaged, defective items and more. Royalties are paid for each individual item that the toy manufacturer sells to a retailer. Sales samples and such are likely to be excluded. So, contract negotiations are very important. Basically, the royalty works like this: the more expensive the item and the more a manufacturer sells, the greater the royalty income for the inventor. Inventors can make a lot of money, but licensing an item is not so easy. Toy manufacturers see thousands of product submissions from professional inventors each year. Additionally, most toy companies have their own internal development staff making it more difficult to come up with new and continually exciting products. Professional toy development houses are often turned down on many products before they get one or more licensed. Even so, professional inventors are more than two hundred times as likely to deliver a product to a toy manufacturer that has any likelihood of being marketed than the average clever amateur inventor. As a result, the majority of toy manufacturers will not work directly with the general public. They will only look at products presented to them by professionals. So how, you may wonder, can the average clever person get their product presented and licensed to a toy manufacturer? Clever inventors need to work with an agent.
An agent should be more than a middle person. They should play test the product and assist with improvements. A good agent company keeps their inventors updated with dates that toy companies are scheduled to see products, and give "wish lists" of items that are of interest or requested by the manufacturers. A good agent should have access to every major toy and game manufacturer in the United States as well as in Europe and Asia. An agent typically charges a nominal fee to review a product from an unknown amateur inventor and should provide a written analysis of how your product stands against current industry standards as well as how the product was received by the focus group. A good agent will only represent those items that were deemed marketable. Some great ideas may not be suitable for licensing, but may still over strong market potential. In this case, inventors may want to consider self production and distribution of their product. (In our next article, we will discuss the pros and cons of licensing verses self production.). Once an amateur inventor has established a relationship with an agent, the agent should work for that inventor free of charge. An agent should not charge for their licensing service, but will expect to receive a percent of the royalty income when and if the toy, game or juvenile product is licensed to a manufacturer. The money an agent makes from the licensing of a product should come from the toy manufacturer and not the inventor. An agent typically will review products that are fairly "rough" or in a crude form. When products are to be presented to a toy manufacturer, however, the toy must work well and look as much like the proposed finished product as possible. Agents should present products to the heads (decision makers) of the toy companies, and it is therefor important that your product, as well as your agent, make an impressive presentation. An agent should be your guide and should assist you with all your questions including protecting your idea.
|
