TFE/TFE Licensing, February 2022

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INDUSTRY FORUM DESIGN EDGE

Matt Nuccio lists the most common complaints inventors have within the toy industry

THE DESIGNER’S PERSPECTIVE

5 Common Complaints From Inventors by Matthew Nuccio

If you gather a handful of toy inventors in a room and give them a few adult beverages, they are bound to talk some smack about the industry. Some inventors have mild complaints, while others weave conspiracy theories that would lead one to believe that the Illuminati secretly controls the entire toy industry. While some complaints seem irrational others seem rational, there are 5 consistent complaints I hear all the time. 1. They Just Don’t Get it Inventors tend to fall head over heels in love with their concepts, which is why it can be heartbreaking when a potential licensee not only doesn’t like your concept, but also clearly doesn’t understand it. I’ve heard many inventors chalk this up as a lack of vision on the potential licensee’s part, but I tend to believe that it’s more an issue with the inventors’ presentation and/or their actual concept itself not being fully conceptualized …or it is simply not relevant for the company to whom they are pitching… 2. Ghosting Pitching your invention concept can be a nerve-racking experience. I’ve had some gnarly meetings over the years, from presenting to clearly drunk people, to having to stand before a boardroom full of buttoned-up suits all staring at their watches for me to be done. It’s almost always awkward, like a first date or a job interview. That’s why it can be very unsettling when you put all that work into building a presentation, take time out of your day to present, and then never hear back from them. I mean, seriously, you would think that you insulted their mothers the way some of these people fall off the map after a meeting…you can follow up with emails, phone calls, or even send smoke signals but receive no replies. What’s seemingly crazy is that, more often than not, they tell you the concept is “great” and “to send it in for further review.” So what has this taught me? …Don’t even appear to be in love with your concepts. I think the issue is just human nature. If the person you’re pitching to is afraid to hurt your feelings, then they may just try to avoid it… and once it’s sent into the abyss of their company, they figure it’s someone else’s problem and don’t follow up. So, over the years, I’ve made it a point to not worry about my feelings, but instead worry about my time. 3. Lost Prototype Like a lost sock in the dryer, prototypes can vanish and never be seen again. Unfortunately, the lost prototype is a phenomenon that seems almost inevitable. We’ve all spent our sweat, blood, tears, and MONEY on prototypes only for them to be lost in some sort of toy purgatory, never to be seen again. Sometimes they’re lost in transit, other times they’re left behind in a buyer’s presentation…but often they’re sent to a factory for costing, never to be seen again. What can be done about that? Well, you can hound the potential licensee 14 tfe February 2022

to try to find it, and they have been known to be found occasionally. Alternatively, you can take the hit. I have even heard tales of inventors demanding to be reimbursed. I have yet to see it happen. 4. They Stole My Idea There’s an old saying in the toy industry, “may you be so lucky as to be ripped off.” During the course of my career, I have been fortunate to have been blatantly ripped off with no recourse only once. Luckily karma kicked in, and the item tanked at retail. However, I have heard some horror stories over the years. So what’s the best way to avoid being ripped off? The best way not to get ripped off is to not only work with companies or agents with solid reputations, but to forge an honest relationship with the individuals involved. Yeah, there’s the Machiavellian mantra of “keep your friends close, and your enemies closer,” but that only works if you’re a politician or a gangster. These days, many of my closest friends work in inventor relations for respected toy companies around the world. Those relationships don’t give me slam dunks, but they do give me peace of mind and recourse, when necessary. 5. Damn They’re Cheap Well, this is the one I hear the most. For the most part, the word “cheap” is relative, but in some instances, it’s warranted. When a licensee signs a royalty agreement, that agreement should be within the industry standards. Arguably, the standard is 5% royalty on net gross sales, or between 3% and 4% if there is a third party license such as Marvel or Disney involved. Plus, an advance calculated from 20% of the first projected years’ sales is appreciated. Consistently, it is the latter that becomes the issue. Now if you’re Mattel or Hasbro, it isn’t difficult to figure out your first year’s sales. Before they even sign the item, they know how many units they need to produce to make it worth their while, and generally, their risks are mitigated before they even agree to proceed. The headaches are with the smaller companies. They often sign deals before even showing the trade, so they argue that they are taking a risk. The natural counterargument being, so is the inventor. The licensee from there on out will be presenting the item to the trade, and if by chance it is not executed well, the costing is wrong, or the buyer simply isn’t looking to add a new vendor, that invention is killed for future licensing opportunities. What can be done in this instance? The solution I have found to work the best is to offset the advance with a higher royalty and/or calculate an advance based on their standard MOQ (minimum order quantity). The lower their typical MOQ, the higher the royalty. Matt Nuccio is president of Design Edge, a New York-based graphic design and research development studio. For more information, he can be reached at Matt@DesignEdge.net.


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