Labyrinthine Licensing Creates Two Sets of 'Rings' Merchandise - Xoanon @ 12:10 PST
by ANNA WILDE MATHEWS
Staff Reporter of THE WALL STREET JOURNAL

"Lord of the Rings" fans face a decision. Should they buy the "Rings" jigsaw puzzles with scenes from the coming movie? Or the puzzle that springs from the J.R.R. Tolkien novels on which the movie is based?

This matters, at least to Ravensburger AG, which makes the movie puzzles, and H.P. Gibson & Sons Ltd., which produces one tied to the books. Gibson development manager Geoff Lee boasts that "purely from a jigsaw point of view," the puzzle based on the novels is superior because its art is more finely detailed. Not so, counters Ravensburger's purchasing director, Harald Pfanner, who maintains that his company's version has an advantage because of its ties to the film characters and Ravensburger's strong distribution network.

This unusual situation is due to a quirk in the licensing program surrounding New Line Cinema's coming film "The Lord of the Rings: The Fellowship of the Ring." One company -- New Line, a unit of AOL Time Warner Inc. -- controls the rights to products associated with the film and its two sequels, while another -- Tolkien Enterprises of Berkeley, Calif. -- controls the rights to goods related to the "Rings" novels.

The divided licensing arrangement is unusual in movie merchandising. Typically, studios seek to keep tight control of their spinoff products, enforcing rigid release schedules and detailed style guides that include logos, artwork and color schemes. That's particularly true for a long-term franchise like "Lord of the Rings," which cost about $275 million to $300 million to make all three films.

In anticipation of the first "Ring" movie's Dec. 19th release, stores are filled with T-shirts, games and toys bearing scenes from the new movie. But there's also a competing selection of products that tout "Lord of the Rings," without photos of the film's stars or any mention of the movie at all. Instead, they feature artists' illustrations of the books' characters.

The split is leading to some faceoffs. Vivendi Universal SA's game unit, for instance, has a license from Tolkien Enterprises to work on an ambitious line of video games based on the novels. At the same time, rival Electronic Arts Inc., with a license from New Line, is developing its own video games drawn from the films. Both are expected to begin rolling out in stores next year.

New Line and Tolkien Enterprises say their separate programs shouldn't create problems, because their goods are different, and they've agreed not to overlap in several major categories, such as clothing and action figures. "You're not going to see an equivalent line of product" from the two licensers, says David Imhoff, New Line's executive vice president for world-wide licensing and merchandising.

But says Susan Engel, chairman and chief executive of Department 56 Inc., which is making "Rings" movie-related Christmas ornaments and other products, "It could become confusing to the consumer." Of course consumers will also see a greater variety of "Rings" goods because of the dual merchandising programs, with potential bargains from the heightened competition.

Ultimately, of course, the success of the film will help determine the sales of all "Rings" products, whether or not they link directly to the New Line's release. There are early indications that some merchandise, at least, is doing well. U.S. Games Systems Inc. says sales of its Tolkien tarot card set, which is not tied to the movie, are five times higher than last year. Both jigsaw puzzles are selling briskly, though Gibson's license only includes the United Kingdom and Ireland. Vivendi Universal's Houghton Mifflin, which publishes most U.S. editions of the Tolkien books, says it has already sold $43.5 million worth of the novels and related background books this year. That's up from $5.2 million for all of last year.

The strange licensing situation emerged out of the complicated history of Tolkien's saga. The author originally sold the movie and merchandise rights to United Artists, which never made a film. In 1976, movie director Saul Zaentz acquired them, producing an animated version of the "Rings" story in 1978. Since then, Tolkien Enterprises, the licensing arm of Mr. Zaentz's company, has run a small operation that sporadically granted rights to such disparate offshoots of the novels as "Rings" belt buckles and a ballet based on "Rings" prequel "The Hobbit."

When New Line took over the "Rings" movie project a few years ago, it also negotiated for licensing rights. Tolkien Enterprises agreed to issue no new licenses in certain major categories, but it retained the right to grant them in some key areas, including games and collectibles. Making matters more complicated, News Corp.'s HarperCollins, the British publisher of Tolkien's works, retains its own rights to create certain printed products, such as a calendar. "It's Byzantine," says Laurie Battle, director of licensing for Tolkien Enterprises, who nonetheless says her licensing program "complements" New Line's.

New Line's movie licensees are working hard to play up their close connections to the film, especially stars like Liv Tyler and Elijah Wood. Boxes of Topps Co.'s "Rings"' collectible cards will include the occasional card autographed by the film's actors. Marvel Enterprises Inc.'s Toy Biz unit says that its action figures were painstakingly crafted from computer scans of the actors. To create porcelain-like figurines, Sideshow Inc. forged a joint venture with the company that's doing effects for the films and allowed some actors to choose poses for their own likenesses. The two firms even made a promotional video for retailers showing the film's stars holding their own miniature busts.

For their part, the makers of book-related merchandise stress the authenticity and depth of their products. For instance, Sophisticated Games Ltd. was able to create board games based on both the "Rings" books and "The Hobbit." Movie licensees can't use material from "The Hobbit" because the films don't include it. The movie licenses are "tied directly to the success or failure of the movie," says Michael Schuster, marketing director at the Franklin Mint, a book licensee, which is offering Tolkien collectibles including a $675 full-size sword. "The fan base for the books withstands generations."