Toy maker seeks piece of mainstream action

Palisades Marketing reports 20% growth

Small Business

Michael Horn likes playing with dolls, but he's not alone.

The 32-year-old president and chief executive officer of Palisades Marketing LLC has built a nearly $3 million company making and selling action figure collectibles for kids and adults.

Even with a slow economy this year, the 8-year-old company has continued to grow by 20 percent, Horn said, and is moving into new territory.

As Horn looks for a space in Howard County to move Palisades Marketing out of Oella Mill in Ellicott City, he also is seeking to make products for a broader audience.

Until this year, Palisades concentrated on characters from gruesome video games and dark science-fiction television shows. But new series lines to be unveiled next year include Muppets action figures and play sets in celebration of the show's 25th anniversary, and a rerelease of Micronauts, a late-'70s toy that was a precursor to Transformers.

Horn said he expects the broadening will help the company expand.

"We've made a lot of adjustments based on what the market has told us. At the beginning of [this] year, we were a video game-brand action figure company. Now video games is a much smaller focus," he said. "There are a larger group of people who have a connection with The Muppet Show than with a Resident Evil [video game]."

According to the Toy Industry Association Inc., an industry trade group, manufacturers sold $823 million worth of action figure toys in 2000, the year for which the most recent figures were available.

Palisades began in 1994 as a marketing firm that Horn ran from his bedroom in his townhouse in Canton. Horn, who had worked for a comic book distributor, decided to do sales and marketing for manufacturers. Through the connections he established there, he made the contacts needed to begin a manufacturing company.

Palisades started slowly, letting other companies handle the production of the figures while Palisades handled the marketing and distribution. But by 1996, the company was on its own, making resin statues of characters that retail for up to $150 and small action figures that sell for as little as $6.

Although none of the figures are manufactured in Maryland, the nine employees in the office sketch designs for the toys, engineer how the parts will fit together, review the casts sent from the manufacturing plants and create the advertisements and marketing for each piece.

The company's first claim to fame was a line of action figures based on the Quentin Tarantino movie Reservoir Dogs. From there, the company licensed the rights to make characters based on several popular video game series such as Mortal Kombat; other movies, such as Predator, and television shows such as Buffy the Vampire Slayer.

Only occasionally, like when it did action figures from Star Trek, and from the dancing video game Space Channel 5 earlier this year, has the company produced less threatening characters.

No matter, though, for hard-core collectors like the ones who frequent comic book stores, said William D. Schanes, vice president for purchasing of Diamond Comic Distributors in Timonium, which distributes Palisades toys.

"Palisades' product mix is perfect. It's very well-accepted within our product line," Schanes said. "The guys that buy things in our shops are already collectors. They play the video games, and when a three-dimensional product comes out, they want that, too."

Schanes said next year's products are likely to push Palisades into more mainstream venues.

"They've got a chance for Target and Wal-Mart," he said. "Their current [line] ... has even more mass-market appeal. Wal-Mart is looking for the soft and cuddly, so the Muppets would work for them."

Last year, the company made eight series of action figures and 20 statues. Next year, the company plans to make four series of Muppets action figures and play sets alone. The contract will take it through at least 2003, Horn said.

In the distant future, Horn has hopes his company could create more than action figures from someone else's license.

"We want to develop our own characters," he said. "To me that's the next phase of evolution."