While Joe Dante was making his horror film, Warner Brothers set about finding licensees who would be willing to produce merchandise tied to Gremlins. When the licensees saw the cute Gizmo, they lined up to slap him on just about anything.
Even toilet paper.
When Spielberg’s mega hit E.T. hit theaters there was not much merchandise on store shelves. Universal and toy manufacturers rushed to remedy this problem, though much of the merchandise was produced after the initial craze began to subside. E.T. had been a hard sell to licensees before the film was released because he wasn’t seen as being particularly cute. That was a mistake since his merchandise still sold quite well once it was produced. Nobody was willing to pass up the opportunity this time, especially since Gizmo was so adorable.
While some of the licensees did have some reservations about the actual gremlin character designs, they still went forward with putting them on merchandise. It probably wouldn’t be too risky- after all, how scary could a film with little Gizmo be?
Warner Brothers would not be caught off-guard when it came to merchandise. Kids would be able to march out of the theaters and into the stores to get instant gratification, taking a plush Gizmo (or two) home with them. Warner Brothers would be caught off-guard by the anger over the violence in the film, however. The controversy would lead to big changes in Hollywood.