EW Staff
July 09, 1999 AT 04:00 AM EDT

To believe recent reports, the folks in the movie tie-in business are probably climbing onto their window ledges right about now. After all, the news flashes from the merchandising trades have been, well, menacing: Fire sales on Star Wars items! Austin Powers is overexposed, baby! Tarzan: Me Disney, me blow another opportunity!

Clearly, it’s easy to lose perspective in the wacky world of film tie-ins, where billions of dollars hang on the fickle tastes of summer moviegoers. The Phantom Menace, presold as the surest of sure things, warped this reality even more. Which is why when stores began marking down Phantom merchandise, industry observers began chattering like frightened Jawas. Says Marty Brochstein, executive editor of The Licensing Letter, ”Star Wars retaught everyone there are no sure things.”

But are things really that dire? Yes and no. In sales terms, 1999 is on track to become a record-setting year for the industry. But the $64,000 question is, Could it have been bigger?

That depends on whether you think Menace has met its goals. ”The big picture is very simple,” says Howard Roffman, Lucasfilm’s VP of licensing. ”After five weeks, the film has sold over $300 million in merchandise. That’s phenomenal success.” True, but much of that came in the hot-selling action-figure field. The demand for other items — clothes, mugs, beach towels — has been far lower. Last week, stores around the country were marking down Phantom items by as much as 50 percent. And despite a marketing blitz by fast-food partners KFC, Pizza Hut, and Taco Bell, the chains have seen only a 1 to 2 percent sales boost, according to Merrill Lynch analyst Peter Oakes. Says Jim Silver, editor of The Toy Book, ”The bars were set way too high and just can’t be met.”

Roffman admits some areas ”are not working,” notably department stores. As for the fast-food partners, spokesman Hal Oates says figures won’t be disclosed until late July. For now, says Oates, ”we’ve had solid traffic, and consumers are having tons of fun.”

So have Tarzan and Wild Wild West been able to pick up the Phantom slack? To a degree. Retailers say Tarzan toys, backpacks, Jane dolls, and even fuzzy Terk-the-gorilla purses are moving at a brisk clip. But retailers didn’t order enough Tarzan stuff, thanks to Menace mania and fallout from a string of post-Lion King licensing duds. Now that the movie’s a hit, Disney’s grappling with higher-than-expected demand. Officially, studio execs say they always planned to run a lean licensing program. Says a spokesperson, ”When it comes to merchandising, bigger is not necessarily better.” (A PR gaffe with one of the action figures didn’t help either: After customers noticed that the Rad Repeatin’ Tarzan’s up-and-down arm motion and jungle yell made the Lord of the Jungle seem, uh, self-involved, Mattel had to send reps to stores around the country to reposition the doll’s arm.)

Similarly, West’s line is limited in scale. Licensee WB Toys doesn’t even have a fire-breathing iron-tarantula figure. Again, retailer demand was held in check because of Phantom overload. ”We really wanted to make that tarantula,” says Ron Hayes, senior VP at WB Toys. ”But it’s a tough summer for toys if you’re not Star Wars.” Fast-food partner Burger King still has faith. ”It’s the perfect time for Wild Wild West,” says Richard Taylor, the chain’s marketing VP. ”People are looking for something new.”

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