Disney looks to popular brands for holiday toys

LOS ANGELES (Reuters) - Walt Disney Co is betting that toys inspired by hit franchises like "Hannah Montana" and "High School Musical" or linked to the Internet will drive cash-strapped parents to its brands during the crucial holiday season.

Disney is going to market this year with a crop of holiday toys based on its popular brands at a wide range of prices and with an emphasis on toys that offer online and offline play.

"Toys that ... are part toy, part new technology, part interactive hookup -- those are the things I think that are going to be desirable," Andy Mooney, chairman of Disney's Consumer Products division, told Reuters in an interview.

Despite gloomy holiday sales predictions, Mooney is "pretty optimistic about the holiday season," believing the toy-buying public will gravitate toward brands they associate with value.

Disney Consumer Products runs a $30 billion global licensing business as well as 334 retail stores, and has partnerships with mass-channel toy retailers worldwide.

Toy analyst Anita Frazier said consumers "will be looking for more value -- not necessarily a lower price but something that can deliver a big 'wow' factor."

Parents are more likely to work off a child's "wish list" and to make fewer impulse purchases this season, making early-season marketing more important than ever, Frazier said.

For instance, Disney has sold "huge" volumes of its singing Hannah Montana holiday collectible doll, and singing "High School Musical" dolls with karaoke microphones are doing well, said Len Mazzocco, Disney Consumer Products' creative director for toys.

A line of musical instruments ($79.99) and the Disney Vocal Star Trainer ($99.99) also draw on the popularity with "tweens" -- children age 9 to 12 -- of its music-themed Disney Channel franchises, High School Musical, Camp Rock and Hannah Montana.

'OFF THE CHARTS'

Early sales show that parents "are finding a way to go out for ... the single big-ticket item," said Mazzocco.

"For the second and third purchase, they are searching for that price point they are comfortable with."

Among Disney's hottest sellers so far is a new line of toys based on its Club Penguin virtual world. The toys start at $5.99 and include a code to unlock special features on the Web site.

"The sales are off the charts. It's the biggest launch of a new toy line we've seen so far," said Chris Heatherly, vice president of technology and innovation at Disney Consumer Products.

Another hit falls on the opposite end of the price spectrum: a $249.99 robot based on the "WALL-E" movie character.

"We've sold every one of these things we could make," Heatherly said.

Disney has gone big this season for toys that connect kids to its growing Internet and video game businesses, hoping that their parents will view them as a good long-term value.

In Disney UltiMotion games, selling for $79.99, preschoolers use toys, such as hammers and wands, to move characters around in video games based on its Disney Fairies, Sleeping Beauty and Disney Channel franchises.

Disney Fairies Clickables, ranging from $5.99 to $29.99, are wearable jewelry with computer chip sensors that interface with the Pixie Hollow virtual world, allowing little girls to trade online gifts for their fairy avatars. The hybrids are Disney's first.

Frazier said Web-connected toys, such as the Webkinz line, have generated $520 million in sales at retail during the year ended August 2008.

"These have certainly been very hot," Frazier said of the category.

(Editing by Susan Kelly)