Reuters revisits Star Wars merchandising:

But companies have gotten burned in recent years by stocking up on too much movie merchandise. Although retailers in 1999 rang up about $2 billion in worldwide sales of products associated with "Star Wars: Episode I -- The Phantom Menace," oversupply was a problem.

Restaurant chain Taco Bell, a unit of Tricon Global Restaurants Inc. and toy maker Hasbro Inc. were among many to find that The Force was not with them when Episode I failed to live up to the promotional hype.

"It clearly was over-licensed," said Bret Jordan, an analyst who follows Hasbro at investment bank and brokerage firm Advest Inc. "And, the movie myth failed to deliver on the content side."

This time, Lucasfilm Ltd., the parent of the Star Wars franchise, has cut the number of domestic licenses for Episode II to about 50 from the 85 that were granted for Episode I.

"We'll be the first to admit that, at the end of the day, it was over-proliferated," Howard Roffman, a licensing executive at Lucasfilm, said. "We're much more tightly focused this time."

Gone are what Roffman describes as "fringe" items such as fast-food tie-ins or Star Wars inflatable furniture. Instead, Lucasfilm is focusing on toys, games and books -- categories that typically sell well. Episode II is forecast to generate $1.6 billion to $1.7 billion in worldwide merchandise sales, Roffman said.

For Episode II, privately held Lego Co. and toy maker Hasbro hold license agreements to make action figures and other toys. There are also deals with snack food company Frito-Lay, cereal maker General Mills Inc. and publishers Random House, owned by Bertelsmann, and Scholastic.

Hasbro is making a smaller line of toys for Episode II. An executive told analysts on a conference call last month that the company wanted to "make sure the demand is proper and we keep it a little bit hungry."

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