4Kids Entertainment Inc. - Hitting the Jackpot: 2000s
Hitting the Jackpot: 2000s
The new century found LCI and its parent company, 4Kids Entertainment, Inc., switching from the NASDAQ market and joining the New York Stock Exchange. The firm's new ticker symbol was KDE and 4Kids was indeed riding high when it earned Fortune's top slot on its 100 Fastest Growing Companies for 2000. The company's sales were just under $88 million, up more than 242 percent from the previous four quarters in 1999. According to Variety magazine, the Pokémon franchise had earned upwards of $16 billion worldwide since its original launch in Japan, and 4Kids, as the exclusive licensor for all things Pokémon, had racked up not only impressive sales but net income climbing to an all-time high of $38.8 million ($15 million higher than the last year). Knowing the Pokémon bubble would burst at some point, LCI continued to ink other licensing deals, including a new contract with Marvel Comics to market merchandise for its comic book properties such as X-Men, Incredible Hulk, and Fantastic Four.
During 2001 4Kids and LCI had several licensing properties gaining popularity, but not with the speed and impact of Pokémon. X-Men and Hulk projects were underway, while Cubix, an animated program about robots on the Kids' WB was gaining an audience. 4Kids scored a marketing coup when both McDonald's and Burger King were featuring its licensed products in their children's meals during the summer of 2001. Though the timing was unintentional, 4Kids had signed with Burger King to place its Cubix action figures in meals beginning the week of August 27th, while McDonald's was putting Mattel's Hot Wheels in Happy Meals with a special Monster Jam Trucks (licensed by 4Kids) placement to occur in August or September.
4Kids stock reached a high of $29.30 per share in the third quarter of 2001 due in large part to a successful bid to lease Fox television's "FoxBox" block of Saturday morning children's programming beginning in early 2002. 4Kids went up against Nickelodeon (of Rugrats fame), DIC Entertainment (known for its Sonic the Hedgehog and Sabrina the Teenage Witch series), Discovery Communications (purveyor of Animal Planet, TLC, and the Discovery channels), and Nelvana (Franklin the Turtle)—all of whom coveted the four-hour programming block. 4Kids won the $100 million four-year deal, yet it did not include old stalwart Pokémon or new phenom Yu-Gi-Oh!, which was promised to the Kids' WB.
Yu-Gi-Oh!, an animated series based on a Japanese comic book and card game, debuted on the Kids' WB in the fall of 2001. Yu-Gi-Oh! revolved around a boy who played a special card game and in doing so was able to transform himself into the "Master of Games" (a rough translation of the show's title) and battle monsters. The show's targeted audience was older than its predecessor Pokémon's, primarily due to the upstart's darker tone, elaborate plots, and scarier monster content. Like Pokémon, however, Yu-Gi-Oh! was already a hit when 4Kids became interested in the franchise's licensing rights. According to Variety, Yu-Gi-Oh! had racked up earnings of more than $2 billion in Asia by 2001 when 4Kids brought the animated series to the United States. While year-end net revenue for 4Kids fell from its all-time high in 2000, it was still a respectable $41.5 million in 2001. Net income came in at $12.2 million—and 4Kids believed its newest import would soon drive its sales to previous heights.
As Kahn envisioned, Yu-Gi-Oh! the television series attracted a growing audience of kids, mostly male, during its first six months. By April 2002 the show was no longer just on Saturdays but ran six mornings a week. Like Pokémon, Yu-Gi-Oh! spawned merchandise tie-ins such as action figures, trading cards, games, video games, apparel, lunch boxes, music, and even linens. Net revenues rose accordingly, up to $53.1 million, a $12 million leap from the previous year.
In early 2003 LCI and 4Kids resurrected the animated television series Teenage Mutant Ninja Turtles as well as a series version of Back to the Future into its Saturday morning FoxBox programming. Both 1980s favorites were revamped and updated to good results. 4Kids also lent its famous animated Yu-Gi-Oh! characters to the White House's Office of National Drug Control Policy in a new anti-drug crusade called "Honor—My Anti-Drug." The new campaign was launched in July 2003 and featured special Yu-Gi-Oh! collectible stickers available through Blockbuster Entertainment video stores nationwide. Another deal came with the unusual pairing of Yu-Gi-Oh! characters and NASCAR, to create a Yu-Gi-Oh! paint scheme for car number 43 at the Talladega Superspeedway in a September 2003 race. The back of the Dodge car featured the Yu-Gi-Oh! famous line, "Let's Duel!"
4Kids Entertainment, parent to many subsidiaries, including marketing master Leisure Concepts Inc., continued to bring some of the world's most famous characters into the homes of mainstream Americans. Much of its success could be credited to Al Kahn, chairman and CEO, whose vision seemed to know no bounds. 4Kids had more than lived up to its name and would likely continue to do so in the years to come.
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