Hot Yu-Gi-Oh Cards Are Coveted Holiday Gifts By Joseph Pereira Yahoo Finance November 7, 12:51 PM

Hot Yu-Gi-Oh Cards Are Coveted Holiday Gifts

DOMINIC DONES is having a change of heart. Once an acolyte of the Pokemon craze, the Milton, Mass., six-year-old lately has turned his attentions to Yu-Gi-Oh, another lineup of play characters that hail from Japan.

"For his birthday in June, we threw a huge Pokemon party," says Jane Dones, Dominic's mother. "Don't tell me I have to start all over again with Yu-Gi-Oh."

Maybe so. For Christmas, Dominic says, "I'm going to write Santa to bring me all the Yu-Gi-Ohs in the whole wide world."

Spurred by a popular cartoon on the WB television network -- and some deft marketing -- Yu-Gi-Oh cards, toys and videogames stand to be among the most coveted holiday gifts this year. Some retailers foresee shortages -- perhaps with a little help from marketers who kept a lid on production of some of the goods, to avoid early oversaturation.

"If we get a shipment on Wednesday, I'm sold out by Friday," reports Doreen Greeley, manager of New England Comics, a Quincy, Mass., shop.

The Yu-Gi-Oh line, including home videos and music CDs, is expected to ring up $500 million in retail sales this year, making it one of the hottest tickets for Christmas, analysts say. "I've had to increase my Yu-Gi-Oh estimates several times this year," says John Taylor of Arcadia Investment Inc. "It's turning out to be much bigger than I had originally thought."

The marketing of Yu-Gi-Oh offers a look at how marketers used the old soft sell to engineer a hit with children, an ever more sophisticated consumer group. On several counts, the product's success wasn't foreordained.

For starters, the character line is very similar to Pokemon, minimizing its novelty value. Retailers were skeptical because the target audience for Yu-Gi-Oh merchandise -- pre-teen and young teenage boys who watch the TV cartoon show -- have shown disdain for anything resembling a toy, seeing it as kid stuff. These tough customers also are developing a resistance to direct advertising, marketers say. Many of them prefer to believe they have discovered new pastimes on their own.

Yu-Gi-Oh, the brainchild of Kazuki Takahashi, a Japanese comic-book illustrator, is the tale of a high-school wimp named Yu-Gi who morphs into a spike-haired hero, with a following of monsters and dragons that battle others of their ilk. Like the Pokemon menagerie, the Yu-Gi-Oh critters' strengths are charted on the back of trading cards that kids collect or use in games.

When the trading cards were introduced in April, many major retailers decided not to carry them because of the Pokemon similarity. "I really had a hard time pitching the product," recalls Roz Nowicki, marketing vice president at 4Kids Entertainment Inc., which brought the TV show to the U.S. and is the master licenser of the property here.

Yu-Gi-Oh's demographic, eight- to 14-year-olds, presented a major problem for some retailers, who said skateboards and sports are more important to these boys than are toys. Plus, "they just don't like to be marketed to," Ms. Nowicki says.

So to avoid the appearance of advertising, Yu-Gi-Oh promoters -- including Konami Inc., which makes Yu-Gi-Oh videogames, and Upper Deck, which makes the trading cards -- flooded the Internet earlier this year with press releases about Yu-Gi-Oh's pending U.S. launch. Hungry for content, many youth-oriented Web sites ran them. "It helped that many of the press releases were rewritten as news stories by Web masters," says Brian Hershey, who pitched the story idea for SSA Public Relations Inc. "The idea behind the Internet push was to let kids think that they were discovering Yu-Gi-Oh themselves while surfing the net."

As early shipments of the trading cards were going out to retailers in April, the TV show, which had been running only on weekends, began to air six times a week. "Coincidentally, the story line also started to pick up in April," says Donna Friedman Meir, head of programming for Kids WB, a unit of AOL Time Warner Inc.

In the plot line, Yu-Gi and a group of kids landed on an island and had to play cards for the right to take on Maximillian Pegasus, the ultimate baddie, in a "Millennium Match." The climactic five-part battle didn't air until September. The long wait stoked interest even more, Ms. Meir says.

In August, Wal-Mart Stores Inc., the nation's largest toy retailer, test-marketed the trading cards in a handful of its stores. They sold quickly. In September, Wal-Mart, Kmart Corp. and other major discount chains decided to carry Yu-Gi-Oh cards, toys and video games for the holiday season. "Our Yu-Gi-Oh sales are great right now, and we're carrying a broad line of [Yu-Gi-Oh] items," says Melissa Berryhill, a Wal-Mart spokeswoman.

Despite the wide distribution, retailers say shortages -- especially of the cards -- are likely, because of controlled distribution by the manufacturer. In a fall 2002 Scrye Magazine survey of more than 2,000 independent, or non-chain, toy stores, more than half of respondents said the cards are in short supply and they would like increased shipments. "We've decided to control distribution to prolong the life of the property," says Mary Mancera, spokeswoman for Upper Deck, of Carlsbad, Calif.

Promoters have taken a page out of the Pokemon and Beanie Babies play books by producing "limited editions." Since April, Upper Deck has produced three limited runs of Yu-Gi-Oh cards -- Blue Eyes White Dragon, Metal Raiders and Magic Ruler. One more will be issued this month, in time for the holidays. Each limited run lasts about eight weeks and features about 100 new characters. With nine trading cards in a $5 pack, it takes at least $60 to collect 100 characters -- and in reality, much more.

Unable or unwilling to spend that much, many kids have resorted to shoplifting. As a result, Wal-Mart, Kmart, KB Toys and some other retailers keep the cards locked up behind the cash register. Many rarer cards are selling at premium prices -- in a few cases as much as $50 each -- in card and comic-book stores.

So as not to offend its prized young customers, 4Kids says it won't let Yu-Gi-Oh appear on lunch boxes, party hats and other young-kids merchandise. At least, not just yet. "Older boys just don't like to be seen playing with their younger brothers' toys," Ms. Nowicki says.

Will Yu-Gi-Oh reach the heights attained by Pokemon? The bar is high: Retail sales of Pokemon stuff have climbed to about $15 billion since the line's 1998 launch in the U.S. In that period, 4Kids, which also owns the Pokemon property rights, has sold about 350 merchandising licenses, for everything from bed sheets to boxer shorts. But fearing that overcommercialization may have sped Pokemon's demise, 4Kids says it is limiting Yu-Gi-Oh licenses to about six this year, with two dozen planned for 2003.