Nine of the top 10 video games, by sales, in 2011 were sequels, including Call of Duty: Modern Warfare 3 and Madden NFL 12 . The lone exception? Skylanders: Spyro's Adventure , a curious kids' game from Activision that zapped real-world toys into a virtual universe by way of a "Portal of Power" accessory that plugged into consoles.
Not only did the game, released last October, energize its respective charts, so too did the toys. The plastic cartoon characters, which retail individually for about $10, were sold out at toy stores for months. Some were even auctioned off on eBay for hundreds of dollars each.
As Skylanders heads into its own inevitable sequel – Skylanders: Giants , releasing on Oct. 21 – it's become a veritable phenomenon.
Activision chief executive Eric Hirshberg says that while launching a new intellectual property is always risky, especially during the cramped holiday games season, Activision knew Skylanders would be a hit. While most publishers were moving away from kids' games because of the waning popularity of the primary console for that market, the Nintendo Wii, the company felt confident that it could buck the trend.
"The one piece of data we had that none of the analysts or journalists had access to was we were seeing kids playing it," he says. "I've done a lot of consumer testing in my life and I've never seen something bat a thousand. This thing did and we were emboldened by that."
Part of success lies in a child-friendly technology that works perfectly. The first game was originally slated for a 2010 release, but it was delayed a year so that the developers at Novato, Calif.-based Toys For Bob could get it right.
"You don't have to enter a code, you don't have to slow down. You just slam that toy down on the Portal and in a visceral instant it comes to life in the game," Mr. Hirshberg says. "That really was new."
All of the toys have RFID chips in them that store information from the game. If a player levels up a character, for example, that data is effectively remembered by the toy. In a true gaming first, the toys are also transferable across consoles – a child can play on his own PlayStation 3, then bring the character over to a friend's house and pop it onto his Wii's Portal of Power.
Other game makers – particularly Nintendo – have tried to marry real-world objects, mostly cards, to video games with varying success. Where Activision got it right, Mr. Hirshberg says, is through character and story design. The characters, ranging from the precocious pistol-toting Trigger Happy to the fish-like Gill Grunt, are instantly recognizable and understandable by kids. The story, meanwhile, involves its players – the kids are the only ones who are able to unfreeze the Skylanders and bring them to life.
The question now is whether the burgeoning series can sustain its momentum. With children being a fickle audience at the best of times, there is the possibility that Skylanders could follow the likes of Furby, Tickle Me Elmo and even Cabbage Patch Kids into the land of Christmas fads – here one year, forgotten the next.
Mr. Hirshberg doesn't believe that will be the case.
"We never designed Skylanders to be a fad, we designed it to be a franchise," he says. "There's nothing about it that has the shallowness or momentary appeal of a one-hit wonder. This isn't a pet rock."
What sets Skylanders apart from other fleeting holiday successes, he says, is the fact that it is based on a fictional universe that kids can develop long-term bonds with.
Activision brought in Oscar-nominated screenplay writers Alec Sokolow and Joel Cohen, the duo who penned the original Toy Story film, to create the first game's story. Their goal was to create a universe that will evolve into something similar to Harry Potter or The Avengers, an ongoing intellectual property that can ultimately be expanded into other media, such as television and film.
Skylanders: Giants introduces the eponymous giants – characters that are twice as big as the originals – as well as new Lightcore Skylanders, or toys that light up when on or near the Portal of Power. Together, the heroes fight for good in the Skylands, a fantasy land ruled by evil bosses and their minions.
Given its young audience, it's too early to tell whether Skylanders will have legs as a franchise. But if sales of the sequel match those of the original, expansion into other media is likely to follow.
"Those are things that we're looking at very closely. It's definitely something we're considering," Mr. Hirshberg says.