AdAge: 8 Trends Ahead for the $263 Billion Licensing Industry
June 1, 2017
By Michael Stone and Allison Ames
With the Licensing Industry Merchandisers’ Association announcement that global sales of licensed merchandise grew by just over 4% in 2016 to $262.9 billion, the annual International Licensing Expo took place last week in Las Vegas (May 23-25). And with the retail landscape and consumer purchasing habits changing at warp speed, exhibitors were definitely trying to keep up. The keynote, by Cole Gahagan, Chief Commercial Officer of Fanatics, emphasized this very point as he noted how corporate strategies must adapt to changes in how content is consumed and products are purchased, all driven by younger demographics. Here are our key takeaways from the Expo last week:
- It’s More Than Just Nostalgia. Bringing back entertainment properties -- characters, movies, TV programs -- from the past has always been a pastime of entertainment companies. We saw this at last year’s Expo and we see it again this year with exhibitors promoting the return of “Twin Peaks,” “Queer Eye,” and the popular childen’s series, “Magic School Bus Rides Again.” And two of the 80’s biggest cultural icons, Rubik’s Cube and PacMan, are collaborating for a limited edition merchandise collection. However, it now seems like it’s more than just nostalgia. Consumers are overwhelmed with marketing messages, targeted at them through various media. They have more information pushed at them than ever before and less time to make purchasing decisions. Trusted brands, with equity attached, can break through the clutter and noise. That’s why dormant brands, brands to which we were recently emotionally attached but died or went bankrupt, are trying to have second lives, and are doing so through the licensing model. Exhibiting at the Expo we saw Sharper Image (which has been living its second life through licensing for several years), FAO Schwarz (shuttered and then sold by Toys “R” Us last year) offered for licensing by IP owner ThreeSixty Group (that also owns Sharper Image ) and Quirky, which went bankrupt in 2015, and is now staging a comeback through licensing with IP owner Q Holdings, LLC. FAO went all out with its booth and really immersed visitors with the experience of this beloved brand. FAO will be launching at stores near you (they told us from Macy’s to Bergdorf Goodman) later this year with everything from drones to plush. Expect more brands looking for a revival.
- New Media Embraces Old Media. As we all know, over the past decade or so, new media has sent shock waves through traditional media. Online news sites are forcing traditional news media to make radical changes in how news is delivered. And other product and service categories are not immune from this attack (consider the changes going on in the grocery channel with the influx of meal subscription services). But as some of these new media players become so successful, we find them turning to old media ways to expand and reach consumers in other ways. This is particularly true if you consider licensing as a marketing and communications tool, and a media tool, as we do. Take Amazon for example. Amazon Studios focuses on developing TV shows and other entertainment. Some of those shows have become popular enough that parents are asking where they can buy products inspired by the programs their kids are watching on Amazon. Hmmm, what to do? Amazon exhibited at Licensing Expo and was seeking licensees for its pre-school and teen series including “Tumble Leaf,” “The Stinky and Dirty Show,” “Wishenpoof,” “Creative Galaxy” and “Just Add Magic." Products will be distributed online at Amazon.com, but is brick and mortar retail distribution far behind? And let’s not forget that Amazon opened its own eighth store, in Manhattan, just this month. It’s not just Amazon. Buzzfeed was a first time exhibitor last week, highlighting its Tasty brand for licensing (Tasty originated as a series of simple, instructional recipe videos), as well as Goodful (catering to healthy eating), Nifty (home décor and DIY), and Top Knot (style and beauty). We expect to see more new media brands turning to old media ways of reaching their consumers.
- It’s All About the Experience. Much has been written about how traditional retailers have to offer consumers an experience in order to better compete with online retailers. After all, some consumers actually like to touch and feel the product (or, daresay, try something on) before purchasing. Increasingly, licensors want to offer their consumers more than just products. They also want to offer them the opportunity to experience the brand in different ways through content. Theme parks, of course, have been doing this for many years. The idea is to mix content with experience with product. And we saw a good deal of this on display last week at the Expo. National Geographic is developing Ultimate Explorer Family Entertainment Centers with IP2 Entertainment, set to roll out in international markets in 2018. And Nat Geo will also open its first Encounter: Ocean Odyssey experience, in association with SPE Partners, in NYC’s Times Square this Fall, an immersive attraction that transports audiences from deep ocean to outer space, in a 60,000 square foot venue. Don’t miss the retail shops at these “experiences”. And don’t miss Ghostbusters Virtual Reality “Now Hiring.” The first chapter of the experience, entitled “Firehouse”, puts players in the role of a newly hired member of the Ghostbusters team. This is likely the first step of a much larger plan to bring Ghostbusters to other experiential mediums. And then there’s Nitro Circus, an “action sports collective” featuring Travis Pastrana and his friends, traveling around the world riding dirt bikes, base jumping and performing other stunts. Inspired by its MTV program, they will do close to 100 “shows” this year. Licensed merchandise is part of the strategy to engage consumers.
- Put on a Happy (or Sad) Face. It seems like every year is the Year of the Emoji, and this year was no different at the Expo with all sorts of emojis being offered for licensing. The Emoji Company’s “official” emoji brand is registered in all major countries in up to 25 classes of goods and services. Offering over 5,200 icons, and with 650 trademarks around the world and already over 300 licensees making thousands of products, the booth was insanely crowded even on Thursday (the last day of the Expo, which is usually quiet). And there were other emoji brands available for licensing, like EmojiOne, another provider licensed to a wide range of media and consumer products, and SONY Pictures’ “The Emoji Movie” in theaters this Summer.
- “International” Means Something This Year. Asian countries were more than aptly represented at this year’s Expo. It’s a bit of an invasion. Line Friends, the South Korean character brand from the developers of the Line messaging app, were created as a set of sticker characters, and quickly became a sensation across Asia. They’ve surged to global popularity, having opened 73 official pop-up stores worldwide, and are in a host of licensed categories including over 5,000 products, animation, games, cafes, and a hotel and theme park. The company is set to open its first store in the U.S. this July in New York City's Times Square. Toei Animation, the Japanese animation studio, announced a raft of new license agreements for the U.S. and Canada for its “Dragon Ball’ franchise, one of the most successful manga and anime series of all time. In addition, the Korea Creative Content Agency (KOCCA), was showcasing 23 Korean animation and character production companies seeking opportunities. And, for the first time, Licensing Expo participated in the U.S. Department of Commerce’s International Buyer Program Select, which helps U.S. companies facilitate the expansion of their brands into international markets. The Department was on the Show floor helping international buyers looking for products or brands and U.S. companies seeking licensees for their properties in overseas markets.
- The Mouse Still Roars. Disney still dominates in the entertainment/character space. It’s the world’s most successful licensor, selling $56.6 billion worth of licensed merchandise in 2016, up $4.1 billion over 2015, and far out-earning the #2 licensor (Meredith Corporation, owner of Better Homes & Gardens, among other magazines) by almost three times. Franchises such as “Jungle Book,” “Frozen,” and “Star Wars,” as well as this year’s hit, “Beauty and the Beast” contribute to Disney’s success. And, Mickey and Minnie Mouse made a splash at the Expo with examples of recent product introductions including a collection of Coach leather goods featuring the famous mouse and a line of Ethan Allen products featuring Minnie Mouse.
- Girl Power. The action and adventure is not being left to the boys any more. There’s a raft of pre-school girl action characters including Nickelodeon’s Nella the Princess Knight and upcoming series Sunny Day, Genius Brands’ Rainbow Rangers and Disney’s Elena of Avalor. And of course, the upcoming release of Warner Bros.’ “Wonder Woman” – the ultimate female empowerment figure, appealing to all ages. With all of these female leads, licensed products are responding, with role-play toys and weapons, and construction and gaming products being released, skewed to girls. Talking to several exhibitors, everyone agrees that there are more girl-focused super heroes around these days. What most agree, however, is that we are moving towards a gender neutral toy aisle in the not-to-distantfuture. Stay tuned.
- Food on Fire. Food and beverage licensing continues its ascendency as evidenced by more and more brands being represented at the Expo for licensing into close-to-core food categories. From Krispy Kreme Doughnuts partnering with Betty Crocker for a line of cake mixes, to Tapatio Hot Sauce flavored sunflower seeds, to Guinness beer battered fish, and Godiva’s announcement that it is seeking new opportunities in beverages, desserts, and ice cream, (full disclosure, Guinness and Godiva are Beanstalk clients), food and beverage brands are recognizing the power of licensing to extend their flavor profiles to reinforce brand loyalty and reach new consumers.
Some other observations included a fairly quiet Candy Crush booth – maybe they’re coming down from past years’ sugar high. With the exception of Jinx (a sponsor and agent of e-sports), the explosion of e-sports was missing from the show. The lack of a single governing body may be impacting the sport’s readiness for licensing. Also missing, except for the NFL Players Association, were the major leagues (MLB, NFL, NHL, NBA). And, despite the legalization of marijuana in a growing number of states, and celebrities and brands beginning to extend into an assortment of cannabis products, we did not see anything from this emerging space on the show floor. Let’s see how this space grows. This week, it’s back to work. See you next year in Las Vegas.