How Are You Doing 2.0? More Reports From The Coronavirus Field
New York, NY, March 23, 2020 -We’re at a point where people and companies have begun settling into their new WFH routines, dealing with both their personal needs and circumstances, as well as the business imperatives they face for the inevitable aftermath of the current worldwide emergency. (And one can take a small measure of comfort from snippets such as the one in the report below from LMCA’s Allan Feldman that “Our China offices reopened a week ago.”)
According to our conversations and email exchanges with a wide variety of licensing professionals, everyone is still in the process of thinking through the business implications (both macro and for their own companies), and walking that fine line between trying to maintain “business as usual” and conceding that nobody truly knows what business will look like whenever market conditions approach some semblance of “normal.” How do you put together a rational marketing plan at a time like this?
Into the Breach
In the meantime companies in the children’s space are trying to jump into the breach with educational, creative (we’ve heard a lot about children’s author Mo Willems and his daily “Lunch Doodles” livestream), informational and emotionally supportive content (such as from Nickelodeon and Sesame Workshop). And existing material (such as virtual tours of museums, zoos, and other attractions) are emerging resources for stressed parents and their kids.
At the same time (as is apparent in the contributions below), business continues. We hear stories from licensees about brand owners contacting them for such things as forecasts and sell-in figures for this year, as well as hi-res photos for approvals. At the same time, everybody’s trying to establish new processes (or adapt existing ones) for product design, production and submissions.
More Virtual Events
At Licensing International, we’re stepping up the pace on our webinars (our next two are scheduled for this Wednesday and April 7) and creating new virtual events to keep licensing professionals both informed about ongoing business issues and connected to the community.
As in the last week’s first edition of “Reports from the Field,” we’re trying to give everyone a sense of how people and companies are adjusting on the fly, and what this community is learning about operating in the world as it is.
“We’ve been told that we’re in this for the long haul so the key will be finding ways to stay positive and motivated,” writes David Born of Born Licensing. “I’ve been speaking with family and friends around the world more than usual which I highly recommend. Staying connected and supporting each other will be a critically important part of getting through what lies ahead.”
As before, we want to hear from you about how you’re functioning/coping in the current environment, the issues now and ahead, as well as licensing community stories of kindness and good deeds in this troubling period. Send them all to Marty Brochstein (mbrochstein@licensing.org) or Mark Seavy (mseavy@licensing.org).
Here’s some more of what you’ve been telling us in the last few days:
Allan Feldman, Founder and CEO, LMCAAll of our U.S. staff is working from home… and are as busy as ever. Our China offices reopened a week ago. Interest in entering into new licenses is strong–we haven’t seen a slowdown–but concluding new agreements will take longer than normal. A lot more caution at play. Having to readjust sales and royalty expectations on existing licenses is inevitable … its begun, but slowly. Everyone is in the same boat on this virus and I believe that renegotiations will be treated realistically/intelligently by our licensor clients. Nobody believes this is the end of the world.
Trevor George, CEO, Trevco“Do you know what is spiking for us on Amazon? “Jesus” t- shirts. As of today, more and more people are searching for Jesus t-shirts; that is a first in company history. It’s as if people are turning to faith during a hard time like this.
“I don’t think licensors really know what is happening. For a licensee, the damage comes in two cadences: For direct-to-consumer companies, the damage is immediate and the reaction to cut costs and survive needs to happen in real time.
“For licensees with a focus on brick and mortar, the damage is delayed [by] 2-6 weeks. Their orders were committed weeks or months ago. Now they are selling in for summer/Fall. As retailers close doors, they will A) stop buying and B) delay buying. Then, as they move into Q4, and foot traffic is inevitably down — Brick and mortar will get hit the most — sales the remainder of 2020 will be down significantly.
“This means, for direct-to-consumer licensees, they may reach out now, and licensors are not prepared for it. Business as usual. But the real pain will come when brick-and-mortar is damaged long term. This is going to be a rough 2020 for licensors, but it won’t come til later this month and into Q3/Q4. Just as there are layoffs in the manufacturing/licensee side, it will trickle down to the licensor when they can’t get royalties because of the COVI-19-driven recession. They need to start planning now, and I’m not sure they even fully understand to what extent this will affect them because they can’t feel the effect until their next quarterly royalty check.
“Demand for apparel & accessories is down for sure. It is for us and everyone else. People are focusing (and spending their pay checks) on the essentials (food, toilet paper, cleaning supplies). Then, combine that with the hundreds of thousands of layoffs and furloughs this week, it will carry.
“Trevco is re allocating its focus to real time impacts to its direct to consumer business. We are answering the question ‘What can we do now to drive sales?’”
Jay Asher and Adina Avery-Grossman, Partners, Brandgenuity“The speed in which everyone has adjusted to WFH is really quite remarkable. We anticipated this move several weeks ago and made sure we implemented all the necessary IT tools to ensure that everyone could be productive at home. One of the keys to maintain productivity is to amp up communication both internally (with co-workers around the globe) and externally with clients and licensees to see how they are doing (professionally and personally).
“The virus is not affecting every client or licensee in the same manner. Some have already been hit exceptionally hard by the business slow down and others know that it’s coming, but hasn’t yet hit them. We are discussing impacts to their business for the short-term but also discussing business plans for when the situation has stabilized.
“Messaging is very important internally and outwardly. It’s easy to get pulled down by all the negative news. We need to acknowledge the severity of the situation but also remain positive that we will pull through this, like we have every other challenge in our nation’s history. Creative thinking and positive outlook should be reinforced but we also need to mindful that this is difficult for many.
“We are adding structure during this time of change and disruption. We are asking for more scheduled check-ins with direct reports and extended teams.
“Almost every interaction begins with acknowledging the situation and how different life feels right now. We take time to ask how people are doing personally as well as with their work.
Some of us live in hot spots and have been at this for longer. Sharing tips and tricks and being empathetic really matters.”
David Born, Director, Born Licensing“At Born Licensing we’re focused on licensing IP in the advertising space. This time last week, we were celebrating the stellar launch of the Direct Line campaign starring Donatello, Bumblebee and RoboCop.
“Unfortunately, the advertising industry seems to have taken quite a hit already. This week productions seem to have stopped, budgets have been reduced or redirected and creative has changed direction as a reaction to the ongoing situation. We’ve had a number of projects either put on hold or cancelled entirely within the last few days.
“With our global focus and reach, we’ve been able to see the disruption in the advertising industry across markets all over the world. Advertising campaigns we were working on across the UK, Europe, U.S., Australia, New Zealand and South Africa are in complete limbo. With that said, we know the use of characters and IP in advertising is on the rise and we fully expect the industry to bounce back when things start to return to normal. Thankfully, we’ve experienced year on year growth since launching 5 ½ years ago, and we’re in a great position to weather this storm, even if it stretches longer than expected.
“On a personal level, the team is working from home and we are catching up every morning on Skype to talk through what needs to be done to keep driving our business forward. I’ve made a real effort to stick to the same morning routine of exercise, meditation and ‘getting ready’ for work even though I don’t leave the house. It helps me shift from ‘home’ to ‘work’ mode. I’m making sure to go for a walk at lunch for some exercise, fresh air and a change of scenery. At the moment, it’s to the supermarket every day to see if they have things in stock that I haven’t been able to pick up recently (they don’t most of the time).
“We’ve been told that we’re in this for the long haul so the key will be finding ways to stay positive and motivated. I’ve been speaking with family and friends around the world more than usual which I highly recommend. Staying connected and supporting each other will be a critically important part of getting through what lies ahead.”
Steven Heller, Founder, The Brand Liaison“Some clients are looking to the future and some are putting things on hold. We have an agreement in contract, but it’s not going to be signed until this clears up. But we’re all looking at what happens when business resumes.
“Right now we have not had any discussions on concessions, but that probably won’t happen until Q1 ends later this month, and they probably won’t start in earnest until payments become due in mid- to late-April depending on whether it’s a net 20-day or net 30-day agreement.”
Allison Ames, CEO, Beanstalk“As we all manage this unprecedented situation, we are actively monitoring developments on a daily basis to support our people, ensure business continuity and plan for the future.
“Our main priority has and will continue to be ensuring the safety and health of our people. We have encouraged social distancing and as of March 16th, all Beanstalk employees have been working remotely and are fully operational.
“As we settle into our new working arrangements and juggle a new work/life balance, Beanstalk’s executive team is meeting on a weekly basis to discuss the everchanging situation in real time in order to plan and be as prepared as possible for future business changes. This includes updates regarding employee health and resilience, client feedback and updates, licensee feedback and updates, other business development changes, among other topics.
“In addition to monitoring the health of all of our employees, clients and partners, the uncertainty of the financial impact to everyone’s business is the one of most pressing issues. It’s still early to determine the extent of the impact to the disruption of the business. We are being super vigilant every day and overcommunicating is of the utmost importance.
“Everyone is beginning to adapt to this new working arrangement. It’s better to see each other than simply speak on the phone, email or text. As I’m sure most people are, we are making great use of video conferencing applications to communicate with clients, partners and each other ensuring that we continue to provide the highest level of service during these challenging times. Microsoft Teams has been a lifesaver. It is a highly effective way to virtually collaborate and visually connect to each other.
“A few ideas beyond having IT infrastructure in place:
Communicate often with internal and external stakeholders.
Encourage regular video communication among teams to boost morale and maintain business continuity.
Encourage individuals to create a comfortable work-from-home environment and routine.
Get outdoors every day to maintain physical and mental health.”
Mark Segal, CFO, Spin Master Corp.“Since early March we have seen a substantial improvement in our Asian supply chain, particularly in China, as expected. However, the disruption we are now seeing in key customer markets resulting from the impact of COVID-19 is significant and we are withdrawing our fiscal 2020 guidance statement as a result. Our balance sheet remains strong, with cash on hand and committed credit lines available, which provides us with significant financial flexibility. Spin Master is known for its resiliency and entrepreneurial spirit. We believe in our ability to withstand any issues and continue to succeed.”
Brian Mariotti, CEO, Funko“Our number one priority is the safety of Funko’s employees, local communities and partners worldwide… We are grateful to our dedicated team members and remain confident in the strength of our Pop! platform and the diversity of our business model, which extends across licenses, product categories, distribution channels and customers. While we are facing uncertain and unprecedented times, we are taking immediate actions to cut costs and mitigate disruption as we navigate this rapidly evolving situation.”