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ACTION FIGURES; REPLICAS ROLL OUT OF TOY MAKERS' FACTORIES.

Byline: Ben Sullivan Daily News Staff Writer

Forget a galaxy far, far away. The center of The Force is on Variel Street, just off Oxnard.

It is from there, in a nondescript, warehouse-like headquarters, that collectibles maker Applause Inc. created and is now overseeing distribution of the legions of plastic action figures flooding toy stores, fast food outlets and Internet auction sites to coincide with the release of ``Star Wars: Episode One - The Phantom Menace.''

All told, the company has created 79 separate replicas of Anakin Skywalker, Obi-Wan Kenobi, Qui-Gon Jinn and other George Lucas characters for the film's first wave of merchandising. More will be released in September and then periodically throughout 2000 on a schedule dictated by Lucasfilm Ltd. designed to maximize profits.

The giveaways are big business for Applause. The company expects at least 15 percent of its roughly $200 million in 1999 revenues to come from ``Phantom Menace'' merchandise, a figure that could rise if the current hype surrounding the film continues through year's end. Company executives are optimistic.

``Star Wars property has legs,'' said Chaz Fitzhugh, Applause's senior director of brand management and the firm's point man on Lucasfilm business.

Applause's ``Phantom Menace'' products fall into two categories. The company produces the low-cost action figures distributed en masse with children's meals at KFC, Pizza Hut and Taco Bell. Plus, it has exclusive rights to make highly detailed mega-figures, some more than a foot tall, sold at places like FAO Schwartz for up to $50 apiece. Both groups of products are cast and painted offshore, usually by Chinese or Indonesian workers.

What Applause doesn't make is the mid-range line of Star Wars toys distributed at outlets like Toys `R' Us and Target. Those are the business - and boon - of Hasbro, which expects to generate at least $500 million in sales this year from ``Star Wars'' merchandise alone.

Applause comes to the ``Phantom Menace'' task with an impressive resume. Virtually every big media-collectible tie-in over the last five years has included merchandise from the Woodland Hills firm, and a walk through the company's display room reveals the likenesses of the California Raisins, Capt. Kirk, Michael Jordan, the Looney Tunes cast, Nickelodeon's ``Rugrats,'' the Taco Bell Chihuahua and dozens of others.

``Obviously we're very happy with them,'' said Laurie Gannon, a spokeswoman for Taco Bell, which previously contracted with Applause to produce 23 million toy Chihuahuas for the restaurant chain's ``Yo Quiero Taco Bell'' campaign. ``We do a lot of business with them.''

To get on the ``Phantom Menace'' gravy train, potentially the biggest contract in Applause history, the company sought out Lucasfilm as early as 1995, offering to make collectibles based on characters from the first ``Star Wars'' trilogy.

``We said, let's get in with classic `Star Wars' '' and then try for the prequels, Fitzhugh said.

Ironically, some of the company's early efforts are getting a second shot at life as retailers like the Lucky grocery chain pull the inventory from storage in hopes of riding the latest wave of ``Star Wars'' consumer enthusiasm.

With its foot in the door, Applause successfully negotiated with Lucasfilm for the ``Phantom Menace'' rights. The company won't say what sort of deal it struck with Lucasfilm, whose namesake has gained a reputation for brilliant manipulation of business partners. And there is an air of near fear among Applause officials when pressed about any financial aspects to the Lucas contract.

``They've asked us not to discuss that,'' Applause spokesman Mark McClellan said.

But the company is clearly thrilled with its role in the ``Phantom Menace'' juggernaut and is waiting now for the cash to start rolling in.

``Star Wars'' merchandise of all sorts - from action figures to spinning lollipops - hit store shelves on May 3. And while the first wave of buyers has been made up mostly of adult collectors, retailers anticipate demand will really soar once the film hits theaters Wednesday and children then want the characters they've seen on the big screen.

MAY THE BID BE WITH YOU

They're called collectibles for a reason. Paraphernalia of all kinds from the three previous ``Star Wars'' films is available in abundance online at auction sites like eBay. Clearly, some products are in greater demand than others, as judged by a recent day at eBay:

Rare Boba Fett trading card, ``no emblem on chest'' edition. Minimum bid: $700.

Original 1977 cotton T-shirt. Minimum bid: $100.

Original 1977 poster by artist Drew Struzan. Minimum bid: $26.

Boys' Underoos underwear, small, in package. Minimum bid: $14.99.

Galactic shampoo in C-3PO dispenser. Minimum bid: $3.99.

Yoda Pez dispenser with mint candy. Minimum bid: $3.

CAPTION(S):

3 Photos, Box

PHOTO (1--Color) Chaz Fitzhugh, senior director of brand management at Applause Inc. in Woodland Hills, holds a toy figure of Darth Maul.

John Lazar/Daily News

(2--Color) no caption (Star Wars: Episode I - The Phantom Menace action figure)

(3--Color) no cpation (R2-D2)

BOX: MAY THE BID BE WITH YOU (See text)
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Title Annotation:Business
Publication:Daily News (Los Angeles, CA)
Geographic Code:1USA
Date:May 16, 1999
Words:826
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