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Brothers Turn Childhood Hobby into Big Business

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Los Angeles Daily News

Tuesday, August 15, 2000

By Robert Monroe
Staff Writer

NORTH HOLLYWOOD -- Even as a kid, Jason Labowitz was very particular about how he played with his "Star Wars" action figures: half were drafted into battle on the floor of his Van Nuys home, half stayed in the original packaging.

They'll be worth something some day, the 8-year-old would say.

Now Labowitz and his brother, Aaron, cater to kindred spirits out of a North Hollywood warehouse, cashing in on the evergreen market for "Star Wars" toys and hot-and-cold markets for those tied to other movies. What they sell are all manner of action figures from "Star Trek" to "Farscape," a new Sci-Fi Channel show.

They need no proof action figures are worth something to lots of people. Their online toy retailing business, Entertainment Earth, cleared $1.5 million in sales last year and they expect to double that this year.

"We're not a 'dealer,' we're not a scalper," said Aaron Labowitz, 32, distinguishing from the collectibles market. "If it's available now, we'll sell it now at a regular retail price."

That down-to-earth philosophy has made them a force to be reckoned with. They say action figure maker Hasbro rates them among the biggest sellers of its "Star Wars"-themed toys, behind only a half-dozen giant retailers such as Toys 'R' Us and Wal-Mart. Hasbro officials could not be reached to confirm that Thursday.

And their marketing and sales strategy should spell success, analysts say. They sell only online and advertise mostly through "Star Wars" fan Web sites, though they make a few appearances at fan conventions. They offer a guarantee that the toys, and, of course, their packaging, will be in mint condition when delivered.

Aaron Labowitz said Entertainment Earth tends to draw older customers, collectors looking to fill out their ensembles of figures related to, say, the movie "Austin Powers," the company's second hottest seller.

"Parents tend to go to e-Toys," said Aaron, now a Granada Hills resident.

It's the collectors of the world that could keep Entertainment Earth afloat, said Melissa Williams, an analyst with Gerard Klauer Mattison Co. Their penchant remains unquenched even in the absence of new "Star Wars" movies, progenitors of 75 percent of Entertainment Earth's business.

"It's a fad-driven business," Williams said. "(But) if you target the market properly, then sales are very stable."

The distinction is fine between selling to collectors and selling collector's items. Sticking to the retail price keeps the Labowitzes on one side of the fence though some of their items fall somewhere in between.

From them, you can buy the $30 light saber that makes lights and sounds or the $1,500 exact replica light saber. You can buy a $4,000 life-size replica of Darth Vader or a $1,000 replica of the Terminator's metallic head. An entire Terminator skeleton is coming soon.

Some of the items still in Entertainment Earth's stock weren't collectors items until they had aged a bit. For example, you can buy, for $57.99, a Millennium Falcon produced by Kenner in 1995 that most retailers don't sell anymore.

The brothers started the business in 1996 out of their garage with $9,000 worth of action figures. Now they have seven employees and a 17,000-square-foot office and warehouse decorated to the hilt with "Star Wars" movie posters.

Through it all, none of Jason Labowitz's own 700- to 800-piece collection of mini Luke Skywalkers and Darth Vaders was depleted to raise capital.

"It never even crossed my mind," said the 30-year-old Sherman Oaks resident. "Collectors aren't in it to sell. They're in it to enjoy the collection."

Infidelity Recordings Studio

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