Retail sales of licensed merchandise reached $106.5 billion in the U.S. and Canada in 2016, growing 3.2% from 2015, according to TLL’s Annual Licensing Business Survey. At last, the industry has surpassed the 2008 pre-recession high of $104.5 billion.
This last year marks the sixth year of positive growth for the region; 2015’s $103.3 billion figure was only the second time retail sales passed the $100 billion mark. Licensed sales also greatly outpaced GPD growth; in 2016, U.S. GDP grew by 1.6% and Canadian GDP by 1.2%.
But as the GPD figures hint, the 3.2% growth in licensed sales wasn’t even across the board. Entertainment/character, sports, and trademarks/brands (in particular, food/beverage) were the biggest drivers, while most other categories lagged behind. Yet, bucking the trend of previous years, most categories outperformed U.S. GPD, with only four (publishing, estates, non-profits, and music) faring worse. Perhaps most telling, there were no big losers—music brands, as the worst performing category, sank just 1.5% in 2016.
Despite low spending power, consumers were willing to buy licensed products with a “value-added” proposition. Pop culture brands dominated 2016, moving into more categories with a greater breadth of (low and high) price points.
Entertainment Drives Licensing Once Again
Entertainment/character brand-based licensing grew 7.6% to $12.8 billion in retail sales in 2016, once again capturing the highest growth rate of any property type. The property type now counts for 12.0% of all licensing activity in the U.S./Canada. And once again, Disney was a major driver of growth with the continued success of powerhouses like Star Wars and Marvel. But 2016 also saw Universal’s Minions take the stage as a real contender to the House of Mickey’s dominion.
Entertainment has firmly broken out of its shell, going beyond toys and into nearly every product category imaginable. And as mass-market retailers continue to play it safe, it is becoming increasingly more difficult for any brand outside top, A-list superstars, to get shelf space. This coming year sees the biggest concentration of big-budget films to sport licensing programs—just in April alone, retailers are stocking up for Smurfs: The Lost Village and Furious 8. But an important thing to note is that these properties are franchises with strong histories and potential; newer or lesser-known players are struggling to capture attention on the same scale. Unlike the last two years, however, it’s becoming a little easier to wiggle into the gaps that Star Wars and other A-list properties are leaving behind—especially online.
Another trend emerging from entertainment is the growing popularity of adult TV shows and properties that air on non-traditional sources, such as online streaming (Netflix) and social media (YouTube).
Sports Scores an Impressive Goal
For the third year in a row, sports is the second-strongest property type with 4.3% growth in 2016, up to $15.4 billion in licensed retail sales. Collegiate is also enjoying strong traction at 2.5% growth, reaching $3.5 billion in sales.
The major American sports leagues, such as the NFL, MBA, and up-and-comer MLS (which enjoys double-digit growth), enjoyed an impressive year as their retail strategies in developing physical locations, ecommerce partners, and event-based merchandising continued to pay off. In particular, the growing popularity of soccer meant that European and Latin American teams, in addition to MLS, are seeing a rise in retail sales domestically.
Video Games Makes Decisive Comeback
The category with the biggest (relative) jump in retail sales was video games/interactive/online at 3.5% growth, thanks to the growing success of video game titles like Halo, Pokémon, and Minecraft, and emoji, which have siezed popular culture by storm. The category recorded a 4.0% drop in 2014 (thanks to Angry Birds), and rebounded with 2.0% growth in 2015.
Performance of Other Property Types
Trademarks/brands generated a whopping $28.4 billion in retail sales, or 26.8% of the licensing business. Overall, trademarks grew 2.9% with the biggest earners in food/beverage (up 4.3% to $7.9 billion); hardware, appliance, and tool (4.0% to $2.9 billion), and electronics/technology (4.0% to $3.4 billion). The property type enjoys another year of dramatic growth after increasing sales 3.0% in 2015 and 2.0% in 2014. Much of the growth from hardware and electronics stems from companies moving production out of house, in addition to greatly expanding or launching licensing programs.
At 3.0%, growth of traditional toys/games was slightly up from 2.5% in 2015. While the mega-success of entertainment/character properties stole sales last year, Survey respondents are pointing to brands like My Little Pony, Barbie, and collectibles brands like Shopkins as key reasons for the jump.
Fashion-based licensing grew just 2.4% to reach $21.4 billion in retail sales. Part of the reason for the dip in growth (the category expanded by 3.1% in 2015) is the trend of fashion licensors bringing back manufacturing in-house in an attempt to seize greater control of their brand.
Celebrities dipped in growth to 1.9%, reaching $5.8 billion in licensed retail sales. Although the smallest slice of the pie at just $1.0 billion (the first time it’s hit the landmark), digital celebrities is the fastest growing subcategory at 5.4%. In contrast to the dynamic digital property type, entertainers/models, the largest at $2.6 billion, grew at a more modest 1.3% clip. One respondent pointed at the decline of entertainers in home products in particular as a reason for the decline. In the same way, chef/home celebrity properties are plateauing following 2015’s 1.1% growth with an equally lackluster 1.0% in 2016.
Art is chugging along with 1.6% growth in 2016, reaching almost $5.8 billion in sales. Compared to 2015’s 2.1% growth however, the category is slowing down across the board. But some Survey respondents pointed to pockets of growth, such as non-profit licensing, and other categories with traditionally lower price points.
Publishing grew 1.5% to $4.6 billion in 2016 after relatively flat year in 2015 with 1.0% growth. Books recovered slightly from a 2.5% decline in 2015 to just 0.5% decline, while newspapers/magazines (2.0% growth in 2016 versus 1.8% in 2015) and comic books/strips (1.3% versus 0.7%) rebound with increased growth. While the biggest competition for publishing brands remains (as for all) entertainment, licensors are differentiating their brands and moving into new product categories.
Music fared the worst in 2016, down 1.5% to $2.4 billion in sales. Pop culture brands (entertainment, and now video games) continue to erode the sector as new acts fail to deliver strong results. Classic evergreen properties such as rock brands, however, continue to fare well.
|Note: Numbers may not add up exactly due to rounding.|
|(Figures in Millions)|
|Property Type||Retail Sales, 2016||Retail Sales, 2015||Change, 2015-2016||Share of Market, 2016|
|Art and Artists||$4,289||$4,226||1.5%||4.0%|
|Hardware, Appliance and Tool||$2,933||$2,820||4.0%||2.8%|