A Special Report For TLL Prime Subscribers
This is an excerpt from TLL’s annual Licensing Sales Report, which draws from our industry survey and a variety of other data sources to create the most complete picture of sales performance in the licensing industry.
The full 2022 Licensing Sales Report is due for release next week, but the Summary Report can be accessed by TLL Prime Members by clicking on the July issue of TLL at THIS LINK.
By Gary Symons TLL Editor in Chief
This year’s Licensing Sales Report for 2021 begins with good news and encouraging signs for the future … and then takes a sharp detour into bad news territory, due to the outlook for late-2022 and beyond.
Through our survey and other research, The Licensing Letter has found that the licensing industry powered through the second year of the pandemic in stellar form, largely recovering from the impact of a pandemic that caused major declines in some sectors in 2020. The good news was not just in the recovering economy, but also in how well the licensing industry adapted to difficult and trying times.
The bad news, however, is just beginning. If one were to look at the situation in biblical terms, it’s as if the first three Horsemen of the Apocalypse have been let loose on the world.
First, the white horseman representing Plague swept across the planet, in a pandemic killing between 6 million to 15 million people, and causing economic dislocations across every region. Factories were closed due to COVID-19, thousands of restaurants were bankrupted, travel ground to a near halt, and in-person events were postponed, and then postponed again.
And yet, the licensing industry persevered through the worst months of 2020 and drove the entire industry into recovery mode in 2021.
Then, in February 2022, the red horseman, representing War, took to the field as Russia launched an unprovoked invasion of neighboring Ukraine. The titanic struggle in that country has not only killed tens of thousands of people; it has also caused the price of oil and gas to soar, further roiled global logistics, threatens the starvation of millions of people because of Ukraine’s inability to export wheat, and caused runaway inflation around the world.
As a result, the IMF, the World Bank and the OECD have all dramatically lowered their economic growth projections for 2022, with an equally dire outlook for 2023, should the war continue past December.
Worst of all is that the black horseman, representing Famine, is now saddling up and preparing to ride. In histories written around the same time as the Book of Revelation, it is written that the indicated price of grain was 10 times normal, something we are now seeing in our modern times as the Russian blockade of Ukrainian ports is preventing grain exports, and sending food prices into the stratosphere.
In a typical year, Ukraine produces about 20 per cent of the world’s high quality wheat, and about seven per cent of all the world’s wheat. With some other major areas of grain production facing droughts (the United States) and others facing floods (the Canadian Prairies), it is believed that tens of millions of people could soon face starvation. In wealthier countries with better access to wheat imports, the impact is being felt in terms of increasing food costs and a lowering of consumer confidence.
As food and fuel take up a growing portion of household income, the global Consumer Confidence Index has plummeted to its lowest level since the Great Recession of 2008-2009, worse even than in the depths of the COVID-19 pandemic in 2020.
For all these reasons, the annual Licensing Sales Report is divided into two parts; the first telling of the dramatic recovery of the licensing industry in 2021, and the second examining the economic impact of the war in Ukraine, with an outlook for the remainder of 2022 and extending into 2023.
Licensing Survey Portrays A Bright 2021, But Fears for the Future
Every year The Licensing Letter surveys our membership on trends in the licensing industry, and we also provide research gleaned from a variety of institutions, including the Conference Board, the OECD, the IMF and various governmental databases such as those provided by the US Dept. of Commerce or the Dept. of Labor.
Licensing as a sector responds quickly and dramatically to changes in the world economy because it’s an industry that always looks forward. Licensing executives are always looking for the next big thing, and constantly scan the horizon for potential hit movies, toys, TV shows, video games, influencers, star athletes and trends.
For that reason, we typically find our annual Licensing Sales Survey and the Licensing Royalties Survey (to be released later this month) are excellent bellwethers for a changing economy. Frequently, we find our respondents to TLL surveys are quite prescient, very accurately predicting both economic growth and economic declines.
In this year’s Licensing Sales Survey, 61% of respondents told us their retail revenues rose in 2021, and only 8.7% saw a decrease in revenues. That is a near total reversal of the situation in 2020, when only 25.5% said they enjoyed an increase in sales, and a whopping 45% said they experienced a decrease. The turnaround says a lot about the industry’s ability to adapt to difficult times.
This is an excerpt from the full Licensing Sales Report in the July issue of The Licensing Letter. For the full text, TLL Prime Members can download the publication and the report by clicking on the July issue of TLL at THIS LINK.
If you don’t have a Prime membership, you can arrange to get the report or a Prime Membership by contacting Andrea Stowe: andrea@plainlanguagemedia.com