Interview with Damon Lau from Round 5 collectibles

The Fight Nerd recently caught up with Damon Lau, president of Round 5 (www.round5MMA.com), a Markham, Ontario-based company which works with top MMA stars to create collectible figurines. Series 1, featuring Randy Couture, Matt Hughes, Quinton ‘Rampage’ Jackson and Tito Ortiz, debuted in April 2008 and Series 2, with Rich Franklin, Sean Sherk, Anderson Silva and Wanderlei Silva, dropped in November. Round 5 has announced that Series 3, including Andrei Arlovski, John McCarthy, Frank Mir and Antonio Rodrigo Nogueira, is scheduled to launch in April, and that two additional figurines – Andrei Arlovski and Gina Carano, will be among the three other Series to be made available in 2009.

FN: To start, Damon, tell us how you and your brother got the idea to produce MMA figurines.

DL: My background, actually, is in advertising and marketing. My brother Damon and I own a mid-size agency, servicing clients like Calvin Klein, Yahoo!, and luckily, through those experiences, I had the opportunity to work with a couple of different guys in the sport, including Randy Couture. After awhile, I became friendly with Randy, and when he was in Toronto for a promotional tour in the spring of 2007, we went to dinner and began throwing around ideas for MMA products. We started out by talking about fake, over-sized “cauliflower ears” that fans could wear into the arena. But then, we moved to a discussion about collectible figurines and that was really the germ of the idea.

FN: It’s been a pretty quick rise since then, hasn’t it?

DL: Yes, it’s been quite a whirlwind. We are now in over 3,500 stores in the United States, we have numerous exclusive fighter licenses, distribution in the UK, Japan, and Brazil and France by the end of this year.

FN: You mention the exclusivity deals. Which fighters do you have exclusive contracts with?

DL: Currently speaking, right now, nearly all of our agreements with fighters are exclusive to Round 5. Out of the current series that we have right now, the only fighter that is listed that is not exclusive is Anderson Silva. He is only exclusive to us, outside of the UFC. Other than that, all of the others are exclusive that we have out in the market right now.

FN: How did you come up with the name ‘Round 5′?

DL: Well, I think during the time we were developing the concepts of the company, there were a lot of sort of ‘edgy’ names for their business, like ‘Punching Your Face’ Gear or ‘Tap Something Out” Gear or something of that sort. Being a big fan of the sport, something that everyone always recognizes is that Round 5 is the Championship round, it’s the end of the match, so that was really the rationale behind the name.

FN: You guys are the only ones, it seems, to have beaten the UFC to the punch, so to speak, in a marketing endeavor. How have you managed to do that?

DL: I think, really, that an important reason we have been successful is that the collectible figurine business is different than other MMA merchandise businesses. It’s obvious that the most exploited area that is associated with MMA is clothing and apparel, and even though there are lots of great ones, and there are also a whole slew of nondescript ones, there seem to be many opening up every day. With Round 5, we got involved in a business that was somewhat more opportunistic. The concept of producing toys and figurines is relatively new in the sport, so us approaching the whole business when it was not on anyone’s radar helped; everyone was thinking about the next clothing innovation, but there’s a bigger commitment involved in getting a collectible to market. It’s one thing to go and silk screen t-shirts, but another to get 5,000 workers to make sure they do toy testing with marketing, advertising, toy regulation, and the like. We had the advantage of being in the advertising/marketing world and already had a lot of those connections. So there was, and still is, certainly less competition.

FN: Are you a fan of the UFC?

DL: You know, I think people criticize the UFC a lot, but I’m actually a big fan of the UFC. People ask if I have a problem with the UFC, and I really haven’t. I have never spoken to Dana [White], never spoken to the Fertittas, we just sort of went out and created a unique business that doesn’t allow for very many competitors. My background in the sport is, I have been a fan for many years – I was one of those guys that would stay up all night hunting down PRIDE results on Sherdog.

FN: What has been the most popular product?

DL: From the research that we do online, probably our Quinton figurine has been the most popular, but when you look at sales, what we have found – and I think this is a good testament to how the UFC has built its roster – that even though there are a few fighters in our lineup that are more popular than others in general, saleswise they maintain a pretty even plane. Most people are interested in the entire collection. Just like when you watch a UFC or Strikeforce or Affliction or whichever, there are the big names to headline the cards, but to keep the eyeballs on TV, it’s having a well-rounded roster that makes for a good show.

FN: How do the fighter contracts work? Do you come up with different deals for each?

DL: I think one of the most important reasons why we have been able to be successful is that we have standardized contracts for everybody, it never really changes, with the exception of the semi-exclusive nature of the Anderson Silva deal. It’s a really beneficial contract for the athletes in that the compensation is four-to-five-times the normal rate for a straight toy licensing deal, but more importantly I think a lot of fighters nowadays are realizing more and more that they want to have a say in how their image and likeness is being used. If you’re using a picture of somebody, you want to know where it is going, what it is being used for.

FN: Tell me about what input the fighters have in creating their figurine.

DL: What we do is allow the fighters to actually get involved in the development of their figure; most toy companies don’t want to do something like that, because it creates too much back-and-forth communication between different parties to get a final product done. But from our perspective, we’re really a fan-based company, we’re an office of about 20 people, everyone is a massive fan, and the more input we get from fighters, the better. It creates a more authentic product. They decide on what they want their faces to look like, what pose it will be in, what clothes they are wearing, they even get to solicit their own sponsors and if there is any financial compensation for it, they get to keep that.

FN: We touched earlier about the exclusivity of contracts and the kind of end-around you have been able to pull off thus far around the UFC, but there is a competitor out there now, Jakks, which is in a licensing agreement with the UFC, and they have made a little bit of a splash recently too. How does that affect Round 5 and its future?

DL: I feel like the product lines are completely different from each other. The bottom line is that, for us, we are creating products – including our current line and a planned larger, MacFarlane style that we’re working on for the end of the year – that are geared towards the hard-core demographic, guys who watch MMA, typical 16-to-40. Jakks Pacific, their product falls more in the same category as WWE, GI-Joe-style figurines, for the kids market. Do I look at them as competition? Absolutely not. I think what differentiates us is, number one, we have a lot of really great licenses that are exclusive to us, and two, I think we are one of the companies that are for the fans, trying to create products for the guy, in his cubicle, for his collectors case, sitting beside his TV, on the coffee table, like that.