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TLL Survey

Entertainment/Character Once Again Fastest-Growing Property Type in 2015

By Marcy Magiera

Entertainment/character licensing put on a display of superhero strength and speed in 2015, growing 8.0% to dash past $11 billion in retail sales in the U.S. and Canada, according to The Licensing Letter’s Annual Licensing Business Survey. It was the property type’s third consecutive year of notable growth: after five years of decline from 2008 through 2012, the sector posted 3.6% growth in 2013 and a 6% increase in 2014.

At $11.9 billion and 11.5% of the market for licensed products in the U.S. and Canada, entertainment/character is still the fourth largest property type, behind corporate ($27.7 billion in retail sales, 26.8% share), fashion ($20.9 billion, 20.3%) and sports ($14.8 billion, 14.3%).

“It was a really big year for entertainment brands,” says one licensor in the sector. “Because entertainment is working so much, people are chasing dollars in it.”

In 2015, as in the previous year, one property was a clear leader (though not the only success). But while 2015 champ Star Wars and 2014 victor Frozen are both Disney properties, their paths to market leadership couldn’t have been more different.

Star Wars’ Direct Path to the Top

Like the entire entertainment/character universe, which began to grow in 2013 but really took off in 2014, Frozen was introduced with the Disney film in 2013, but did not reach its full potential until 2014, after retailers who were initially caught off guard by the movie’s popularity rushed to catch up.

Star Wars, however, is a powerful evergreen license and products tied to new movie The Force Awakens hit retail with a campaign larger and earlier than ever before, as respondents to last year’s Survey predicted it would. Disney threw the merchandising window wide open with a unique 18-hour global unboxing marathon broadcast live on YouTube to celebrate the debut of The Force Awakens products on Sept. 4 for a retail holiday dubbed “Force Friday,” a full 15 weeks before the movie hit theaters on Dec. 18 (as opposed to the usual six weeks).

“It was hard to get anything besides Star Wars on shelf,” says one agent. “Anything that did get on wouldn’t be taken very deep.”

Like Frozen before it, Star Wars stole from other brands, said Survey respondents—even brands outside the entertainment/character property type. Demand for music licensed apparel and other products, for instance, was softed (down 1.7%, per Survey findings), according to one agent, because of competition from Star Wars and other movies. “We found that it was a bit soft at mass market and in young men’s” for music properties, the agent says. “A couple of movie properties were capturing the consumer—Minions and Star Wars. The buyers were allocating dollars to those brands.”

The Force Awakens may have grabbed an overwhelming share of attention in 2015 from consumers, the media and others, but it was not the only property driving sales of entertainment licensed goods.

Other franchise properties also were successful during the year, some of them pure entertainment/character licenses, and others toy licenses that crossover into entertainment. Frozen continue to sell well, although possibly not at the same level as in 2014, according to Survey respondents. “Frozen still garnered a lot of space, says one licensee.

Properties mentioned as market leaders include Teenage Mutant Ninja Turtles, Minions, Avengers, Paw Patrol, Minecraft and DinoTrux. Imports from outside the U.S. that were gaining traction stateside during the year include Peppa Pig and Yo-Kai Watch, the hot Japanese kids’ property that launched in the U.S. in fall 2015. “Minions had a lot of presence at retail going into the holidays,” recalls a licensor. “And Frozen is one of those things people keep chasing.”

Combination Punch: Movies and TV

While “TV licensing in general is up,” as one licensor explains, the continuing popularity of edgy TV series for adults contributed to growth. Adult collectors were strong spenders in 2015, particularly for TV shows such as “Breaking Bad,” “The Walking Dead,” “Outlander,” “Doctor Who,” and “Game of Thrones.” Edgy entertainment is the basis for relative pricy collectibles, apparel and other merchandise, such as a “Dr. Who” Tenth Doctor Sonic Screwdriver Universal Remote ($115) or a “Game of Thrones” Targaryen Zip Up Hoodie ($50). “A lot of the growth was in properties that cater to fandoms,” says one licensee.

Specialty toy companies and retailers “get excited for something that isn’t Disney,” adds a licensing agent. Merchandise tied to adult hits including “Game of Thrones” and “Walking Dead” propped up retailers like Hot Topic and Spencer’s, the agent says. “These guys are doing great because the content is so strong.”

While some respondents continued to bemoan the short life span of movie properties, as in past years, others pointed to the power of entertainment properties that have both movie and TV exposure and the growing potential of digital platforms to launch or extend properties.

“Movies popping in and out, while having baseline TV stuff. That’s what retailers want, to be honest with you,” said one licensor. Examples of this strategy at work include Disney’s use of its cable network Disney XD to keep properties including Spider-Man, Avengers and Star Wars on boys’ radar between feature films with shows including “Ultimate Spider-Man,” “Star Wars Rebels” and “Avengers Assemble”; Warner Bros.’ seeding of primetime network TV with “Supergirl,” “Gotham,” “Arrow” and “The Flash” to maintain awareness of the DC Comics properties that it is drafting for a steady flow of feature films; and Nickelodeon’s Teenage Mutant Ninja Turtles cartoon series as a companion to the 2014 and 2016 theatrical films.

Digital platforms like Netflix, Hulu, YouTube and Amazon Prime can also effectively extend media exposure for licensed properties, and possibly even launch the licensing programs of some properties. “Netflix has moved the needle on shows that have gone from broadcast to Netflix,” one agent says. And while respondents were split on how well digital platforms serve to launch new properties, it should be noted that Marvel’s “Jessica Jones” and “Daredevil” both are distributed as Netflix originals.

Prediction: Franchise Domination Will Continue

“The reality is, now there’s Disney and then there’s everyone else,” explains one entertainment licensor. “Disney is half the market and the rest is pretty fragmented.” Studios often schedule release dates for their movies around Disney, the executive says, which can have a large impact on licensing plans in international markets as well as in the U.S. and Canada. “Sometimes you’re moving quarters within the same year. Sometimes you’re moving years. Disney is the 800 lb. gorilla and we wait and see what we do.”

The dominance of platinum properties from Disney and other select licensors is likely to continue as Hollywood production is increasingly geared to franchises. There will be a Star Wars movie, related to either the core franchise or a spin-off concept, distributed to theaters every year through at least 2019; at least one Marvel movie per year in the same timeframe; and a similar schedule of films based on one or more characters from the DC universe from Warner Bros. Add to that Comcast’s planned combination of DreamWorks Animation with its Universal Pictures operations, and the return of Avatar with four sequels bowing from 2018 from 2023, and there’s no sign of abatement in the domination of power franchises.

Category Trends

As entertainment/character led all other properties types in growth in 2015, product category performance in the sector also outperformed the overall market. Of the 16 product categories broken out in entertainment/character licensing (not including the grab-bag “other”), 13 performed better than the market as a whole and five grew at a rate above 10%: apparel, consumer electronics, domestics, food/beverages and toys. A year earlier, apparel was the only category to top 10% growth. In some product categories the 2015 growth of entertainment licensed products was as much as four or five times larger than it was in the general market, such as accessories (1.8% overall vs. 8.0% in entertainment) and domestics (2.1% vs. 11.0%). Health and beauty products were flat overall but grew 6.0% in entertainment.

Food/beverage was the fastest-growing product category in entertainment/character licensing in 2015, surpassing even apparel, with 12.4% growth, almost double the 6.7% growth of the overall food/beverages category. Survey respondents attributed the pace of growth to several factors including a trend among packaged food companies to expand promotional partnerships to year-round licenses; entertainment brands seeking to be affiliated with healthy foods for kids; and the rise of entertainment licensing for non-traditional categories like liquor.

Industry analyst The NPD Group said in its 2015 recap that content—including movies, TV, apps and short-form Internet video—was the key driver behind the growth of the toy industry last year. Toys tied to movies outperformed the general toy market in 2015, growing 9.4% in sales, NPD reported, compared to 6.7% in the overall toy market.

Star Wars was the top licensed property in toys in 2015, selling a third more toy than 2014’s top toy property, Frozen, and representing more sales than Jurassic World, Minions and Avengers combined, accord to NPD. The research firm estimated that Star Wars rang up more than $700 million in toy sales, compared to Frozen’s $531 million in 2014.

The only product category that declined for entertainment licensing was gifts/novelties, which showed a decline of 6.6%, steeper than its 4.0% decline in the overall market.

Retail Sales of Entertainment/Character-Licensed Merchandise, By Product Category, U.S./Canada, 2014–2015
Note: Numbers may not add up exactly due to rounding.
(Figures in Millions)
Product Category Retail Sales, 2015 Retail Sales, 2014 Change, 2014-2015 Share of Market, 2015
Accessories $1,104 $1,023 8.0% 9.3%
Apparel $1,079 $964 11.9% 9.1%
Consumer Electronics $472 $426 10.7% 4.0%
Domestics $297 $268 11.0% 2.5%
Food/Beverages $421 $375 12.4% 3.5%
Footwear $299 $303 -1.3% 2.5%
Furniture/Home Furnishings $285 $277 2.9% 2.4%
Gifts/Novelties $282 $302 -6.6% 2.4%
HBA $557 $525 6.0% 4.7%
Housewares $218 $212 2.9% 1.8%
Infant Products $376 $373 0.8% 3.2%
Publishing $785 $771 1.8% 6.6%
Sporting Goods $198 $193 2.5% 1.7%
Stationery/Paper $478 $474 0.8% 4.0%
Toys/Games $3,742 $3,389 10.4% 31.5%
Video games/Software $872 $847 2.9% 7.3%
Other $413 $275 50.1% 3.5%
TOTAL $11,878 $10,998 8.0% 100.0%

Sales by Distribution Channel

Retail distribution of entertainment licensed products mirrored that of licensed products overall, with sales accelerating in the e-commerce channel while most other retail channels continued in a traditionally steady vein. The e-commerce channel grew to represent 15.9% of all entertainment licensed product sales in the U.S. and Canada in 2014, a change of three-tenths of a percentage point, about half of 2014’s channel growth but still the largest growth of any channel in 2015. Smaller increases were seen in the value/dollar/convenience channel, discounters, and food and drug stores.

Some entertainment licensors, like those in fashion, are attempting to place more product in the value/dollar channel, once exclusively a last resting place for slow-to-sell merchandise, as shoppers gravitate to both the upper and lower ends of retail.


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