Piggy's back!

The Walt Disney Co feels her pain.

Since it bought Piggy, Kermit and crew in 2004, executives have struggled to figure out how to put them to work. Efforts in 2005 to rejuvenate the furry creatures created by Jim Henson sputtered as the Muppets got lobbed between corporate divisions, and a new television series – a parody of America's Next Top Model called America's Next Muppet – died in planning.

Now Disney is giving it another go by revving up the full power of its culture-creating engines. Instead of the take-it-slow approach, this time the Muppets are being blasted into every pop-culture nook and cranny that the company owns or can dream up.

The balcony blowhards Statler and Waldorf would be impressed with the ambitiousness of the plan – even if it does come with equally outsize challenges. "We think there is a Muppet gene in everybody," says Lylle Breier, a Disney executive who is the new general manager of Muppets Studio.

Disney Channel is presenting new TV specials, in which Muppets interact with High School Musical stars and the Jonas Brothers, among other teenage wnderkinder. A stream of comic videos is in production for Disney.com, where a new Muppet channel recently made its debut, and viral videos have been unleashed on YouTube.

NBC will broadcast a Christmas special in the US in December, and special skits will arrive on certain ABC DVD releases. (One skit with the working title Desperate Housepigs is on a coming Desperate Housewives DVD.) A new feature film, still untitled, is planned for 2010, with more in development. More Muppet-theme attractions are being discussed for Disney theme parks.

And then there is the merchandise. Coming soon: Muppet clothing at Urban Outfitters and other stores; Muppet-themed items such as stuffed animals and tote bags; and a Muppet boutique at the New York flagship of FAO Schwarz.

Disney does not want to create a flash in the pan; it says it sees the Muppets as a franchise that can sit side by side with, say, Winnie the Pooh. But creating any flash at all is the problem. With the exception of a guest appearance here and there, the characters have largely been in cold storage for the last three years.

And because the Muppets have been without a regular television gig for more than a decade, many children and younger teenagers don't know them.

Breier says recent focus groups indicated that some children could not even identify Kermit and Miss Piggy, much less ancillary characters such as Fozzie Bear and Gonzo the Great. The wisecracking, irreverent Muppets (which combine puppets and marionettes) also don't fit that neatly in the Disney culture, as they differ from most of the company's bedrock characters in two big ways: Kermit and his friends on The Muppet Show were primarily created to entertain adults. Henson was so insistent that they stand apart from his Sesame Street Muppets in personality and tone that he (misleadingly) titled the 1975 pilot that would boost their careers The Muppet Show: Sex and Violence.

Undeterred, Disney expects the Muppets to expand their fanbase beyond nostalgic older generations to the age group between six and 12 that has powered Hannah Montana and High School Musical into international blockbusters. But how do you make 33-year-old puppets, even those as beloved to many people as these, relevant in a Wall-E world? The Muppets are hardly moribund, but they do represent one of the most striking examples of franchise fumbling in Hollywood history. The Muppet Show made its TV debut in 1976, introducing the classic characters. It was full of song-and-dance numbers and skits, often featuring absurdist humour, along with backstage antics. Dancing chickens were thrown in for good measure. Some of the biggest names in entertainment at the time populated each episode. Rudolf Nureyev and Miss Piggy, clad in towels, sat in a sauna and sang Baby, It's Cold Outside; a bejewelled Elton John performed Crocodile Rock with Dr Teeth and the Electric Mayhem, the show's house band.

Witty, somewhat subversive dialogue and the hilarious-looking Muppets themselves quickly won audiences over. The ubiquitous franchise spawned hit movies (The Muppet Movie), hit songs (The Rainbow Connection), loads of merchandise and, eventually, an animated series called Muppet Babies.

But those glory days are long gone. After Henson's death – from a rare bacterial infection, at 53, in 1990 – his five children took control of the company. They set about working on new adventures for the Muppets – but not before dragging them into a nasty court fight with Disney over terms for a Muppet attraction Henson had completed for Walt Disney World. And the franchise's pop-cultural resonance slipped; the last Muppets movie, Muppets From Space, sputtered at the box office in 1999.

The next year Henson's heirs sold the family business to the German media company EM.TV and Merchandising for about $680 million. But as the German conglomerate slumped under crushing debt and an insider-trading and fraud investigation, the Muppets stagnated further.

Even Disney, skilled in immortalising the vision of a single man, has struggled to rekindle the Muppet spark.

Allowing Miss Piggy to serve as a Pizza Hut pitchwoman in a Super Bowl commercial created a major dust-up among fans, even though Henson himself was overtly commercial. (The piano-playing dog Rowlf was created in 1962 to sell Purina Dog Chow.) And family members have at times been frustrated at what they saw as Disney's lack of focus.

"Have they been a little slow? Perhaps," says Brian Henson, co-chief executive officer of the Jim Henson Co.

"But the most important thing to us is that they are careful. Now, more than ever, we believe they are doing just that."

Dick Cook, chairman of Walt Disney Studios and Breier's boss, attributes the pace to the scale of Disney's plans. "Developing the kind of high-quality entertainment we have planned for the global relaunch of the Muppets takes time," he says. "We want to be very, very careful that whatever we do is in the spirit of the Muppets and that we are enhancing the brand."

The new Muppet film, for instance, will be geared to a broad audience, but Disney understands the need to retain an adult sensibility. Cook hired the team behind the raunchy comedy Forgetting Sarah Marshall, Jason Segel (the writer and star) and Nicholas Stoller (the director), to deliver the script.

Leading up to a film rather than starting with one reflects the feeling among studio executives that the film will make a bigger splash if the marketplace is prepped first.

Disney is also trying to tap into a retailing trend popular with children and teenagers: customisation. American Girl Place stores, for instance, give shoppers the opportunity to design dolls to their specifications. FAO Schwarz will do the same for Muppets fans. At the store's Muppet-theme boutique, customers will pick a body shape from various styles and then accessorise it with "a huge variation of Muppet parts," says David Niggli, the president of FAO Schwarz.

The result will be what Jim Henson referred to as a "hand rod" Muppet: one hand goes inside the head of the puppet and the other holds thin rods connected to the puppet's hands, allowing for gestures.

"Younger consumers expect to be able to immerse themselves in the brands they like, so this idea is spot-on," says Samantha Skey, an expert on youth marketing. She adds that as far as teenagers and children are concerned, "it's a great way to bring this brand back from the dead."

That resurrection is being planned at Disney's headquarters, inside what Breier has called the Muppets' war room.

At a recent meeting the Muppets team watched a newly completed video for distribution on YouTube in which Sam, the moralistic eagle, and the rock star Animal, still chained to his drum set, perform Stars and Stripes Forever with a chorus of clucking chickens and other Muppets. Everyone in the room laughed.

The viral videos have exploded on YouTube over the last month, giving Breier confidence that her strategy is starting to work. Four YouTube videos had been viewed a total of more than five million times as of 9 September, according to Disney research.

And some parents are starting to notice that the Muppets are suddenly on the radar screens of their young children.

"I tried getting them to watch DVDs of The Muppet Show probably a year or two ago, and they weren't that interested," says Tom Weber, a New York father of two girls, aged five and nine.

"But now that Disney is making its marketing push, they seem more aware and into it."

Ellie Weber, the five-year-old, confirms it. "Miss Piggy is really funny," she says. "I like it when she plays with the froggy."

More Muppets

• Kermit's signature song Bein' Green has been covered by Frank Sinatra and Van Morrison, among others, and at Jim Henson's funeral in 1990, it was performed by Big Bird's original Muppeteer, Carroll Spinney – in costume

• Despite the fact that Sesame Street was booted off British TV in the 1990s, the Jim Henson Company (run by son Brian) has continued to make children's shows such as The Hoobs and scored a cult science fiction hit with Farscape

• Chris Langham, the controversial star of The Thick of It, was one of the lead writers of The Muppet Show, lending a surreal edge to proceedings, and was once the show's guest star when Richard Pryor pulled out at the last minute

• In 2006 Brian Henson, along with a troup of Muppeteers, toured a production called Jim Henson's Puppet Improv but, as Disney owned the rights to the famous Muppets, they had to create a brand new set of characters fast, from scratch