While the industry is still recovering from the long-term effects of the 2008 recession, the economy has more or less stabilized. The last couple of years have seen a slew of top, A-list properties dominate shrinking retail space and push other players out of the game. But we’re seeing more opportunity for those smaller players with the growth of ecommerce. And in fact, the internet is enabling brands that never had the chance to enter licensing to truly capitalize on this unique marketing tool.
The Need for Speed
It’s not quite right to say that we’ve settled into a new, post-recession normal. 2017 will truly be the year where speed is essential to success. We first observed this trend in fashion; if was on the catwalks, consumers wanted to be able to wear it immediately. Commercial art- based products is another area where retailers have been pushing for completely new, innovative designs—in increasingly smaller time frames. Those that can adapt, big or small, will survive. Keep in mind that the “traditional” deal can take anywhere from six months to over two years to negotiate—a smaller window of time than most fads survive.
In this sense, smaller, more dynamic outfits will benefit from being able to quickly turn around product and sign deals. However, larger players with already-established relationships and more resources still have a leg up in the game if they can avoid bureaucratic inefficiencies.
One possible solution that we’ve seen, especially amongst “mid-sized” or “older” players? Deals with trusted partners that aren’t limited to any one brand or product, but allow for licensees to develop new merchandise as soon as the opportunity arises, without further contract renegotiation. A manufacturer’s ability to quickly develop, distribute, and sell extensions is paramount—and going online is one way to cut out a step in the process. The licensor’s participation is also essential here; a well-planned brand launch with a developed, focused style guide and strong advertising support—to say nothing of the content itself— makes the licensee’s job easier.
Existential Crisis?
We’ve noted the growing uncertainties of how to talk about licensing—is it a business? An industry? Just a marketing tool? And does it make sense to keep terms like “licensee,” “licensor,” and even “agent” or “retailer” in circulation when so many of the lines that traditionally defined these players are being blurred?
We don’t use the word “partner” when reporting on deals (and some don’t even like that word!) because many of them aren’t technically business partnerships—but conversationally, the term is becoming adopted by some of our readers as a compromise to better define the types of broader relationships they have and to ease confusion.
But no matter what words we use, education is key as new faces enter the game, both to tap down on exorbitant expectations and to stress the importance of constant collaboration as a vehicle for success.
No Shelf Space? Go Online (or Mass)!
With more shoppers making purchases online versus in-store, shrinking retail space isn’t necessarily a bar to brands hoping to push product. Ecommerce is one of the biggest trends to emerge from 2016; its share of licensed retail sales grew a whopping 14% in 2015 and is expected to grow in the future. New or underserved brands in particular have a previously unmatched opportunity to hit consumers.
But let’s not overstate the chances: there is only so much “screen space” available (especially on the growing mobile commerce platform), and big retailers like Wal-Mart and Target are looking to stock their online shelves with much the same brands that they have available in their physical locations. Instead, successful programs will target the niche consumer who would otherwise shop in brick- and-mortar specialty retailers.
Also growing in share are discounters/mass retailers and dollar/value/off-price stores as consumers increasingly con ne their shopping to deals. Off-price retailers will continue to take share from department stores through 2017. Helping to grow the space are brands in fashion, lifestyle, and entertainment who are expanding—usually through special initiatives like capsule collections at lower price points—after poor experiences at department stores.
Entertainment/Character leads Growth
Although growth is expected to fall slightly in 2016 from the maniac 8% growth rate observed in the U.S./Canada in 2015, the strength of top A-list properties will buoy the category to one of the top performers in 2016. Top trends from this past year include the continued growth of sequels, reboots, and adaptations; the growth of adult-oriented TV; and franchise films.
The dominating forces of 2015—Star Wars, Frozen, and Marvel—remained steady, but (non-Disney) competition was strong from properties like Teenage Mutant Ninja Turtles, Wizarding World, Trolls, Paw Patrol, and Shopkins.
Top Toy Trends
Parents are embracing toys that impart a well-rounded education: STEAM is the new acronym, with art & design joining science, technology, engineering, and math. New this year was the proliferation in toys that aimed to teach coding and app-connected coloring books (the next step for adults?). But even as kids embraced tech elements like app connectivity, voice activation, smart watches, and drones, the last year also saw growth in classic products like construction sets and wooden toys.
Nostalgia and retro were some of the top trends as entertainment reboots, re-launches, and spin-offs made their way into toys throughout 2016. As noted above, Star Wars, Frozen, and Marvel remained a mainstay in toy aisles, but new properties like Paw Patrol and Shopkins are expected to make TLL’s $100 million list for top-selling entertainment/character properties for 2016 on the strength of their toy sales. Amongst top holiday toy picks from retailers, the most popular brands were NERF, Num Noms, Shopkins, Paw Patrol, and Star Wars.
all Brands, all the Time
More than ever before, consumers are demanding constant access to brands on multiple platforms—and more companies are responding with their own versions of “360 degree programs” that incorporate linear and on-demand digital entertainment, live experiences like shows and theme parks, social media, ecommerce, traditional print and TV advertising, and (naturally) consumer merchandise as essential parts of their brand strategy.
let’s Get Social
Modern social media programs don’t just focus on You- Tube (they’re also on Twitter, Instagram, and Snapchat, amongst others)—though the platform remains the most popular money-maker. Online-based brands are only growing—successful properties include digital celebrities (from humans like PewDiePie to animals like Grumpy Cat), emoji (both the brand and the licensed stickers), and characters like Pusheen.
Toy brands like Shopkins and LEGO (with its partners) are using social platforms to grow their licensed sales at an unprecedented rate with short-form content propelling them into the entertainment space. But let’s not forget about “traditional” entertainment brands; they’re increasingly eschewing traditional programming and releasing content on social media in addition to launching on digital streaming platforms like Netflix and Amazon.
Video Games Are Back
Video games and mobile apps made a comeback in 2015 (up 2%); and 2016 saw classics like Minecraft, Halo, and Pokémon being joined by newcomers like Five Nights at Freddy’s. After sinking the category’s sales in years past, Angry Birds also made a rebound thanks to its new movie.
Sports Brands Hit It Out of the Park
This is the golden age for sports—2016 retail sales in the sector are expected to exceed 2015’s $14.8 billion figure. Sports properties now account for 14.3% of all licensed goods sold in the U.S. and Canada. The best performing league? Major League Baseball, which knocked the Nation- al Football League out of the top spot. Meanwhile, Major League Soccer and international soccer clubs are some of the fastest-growers.
eSports is taking off, and it’s not just the usual video game and sports companies who are playing. While most fans today are male millennials, the industry is set to expand to an even wider, and younger, subset. One new development from 2016 is tournaments for branded mobile games.
Cannabis: The New Frontier
A new product category is emerging with cannabis licensing. The top-sellers for licensed merchandise are currently musicians like Bob Marley and Snoop Dog, but others like celebrity chefs and Whoopi Goldberg are entering the game. Most businesses are adopting a “wait and see” approach (cannabis was one of the most-viewed topics online for TLL in 2016) before jumping into the space, but industry experts advise that the best time to jump in is now—before nationwide legalization takes hold.
Wearable Tech, VR Still Developing
Wide-spread adoption of wearable technology like fitness trackers and smartwatches never did take off; after a jump in sales in the beginning of 2016, adoption of the tech dropped off mid-year. However, we’re still seeing steady growth in the sector as more technology, fashion, and sports brands are taking the plunge or evolving their offerings. Notably, the children’s market is continuing to grow as cheaper tech and more branded offerings become available.
Virtual reality (VR) and augmented reality (AR) boomed in popularity and marketers began responding later in the year with initiatives both large (in the form of exhibitions and concerts) and small (on mobile devices, accessible through scan-able codes located on anything from novelty figures to store receipts). Despite its slow take off as a gaming platform, increased awareness of the tech and the proliferation of cheaper headsets like Google Cardboard means that the sector will only continue to grow into 2017. For now, most consumers are experiencing the best of this new tech outside the home.