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Licensing to Theme Parks Builds Revenue & Brand Exposure

One of the editors of The Licensing Letter was recently at a party on the Universal Studios backlot when some fellow guests began, by their own admission, to “geek out” over the distant spires of The Wizarding World of Harry Potter, which is under construction for a planned opening next year. The attraction, based on the J.K. Rowling books and Warner Bros. movies, is expected to draw huge crowds of new and repeat visitors to Universal Studios Hollywood. The power to attract to the particular location is even more impressive when you consider that Universal already has the same basic Harry Potter attractions in operation at its parks in Orlando, Fla., and Japan.

Theme Parks Use Licensing to Draw Crowds

The theme park business is huge and growing. Six Flags Entertainment, for example, posted $1.2 billion in 2014 revenue, its fifth consecutive year of record revenues. NBC Universal realized $2.6 billion in sales from its Universal Studios theme park business, an increase of 17%. Those were but trickles in the flume, however, compared to The Walt Disney Co.’s $15.1 billion in fiscal 2014 theme park revenue. With major new parks scheduled to open around the world in the next five years, including Shanghai Disney Resort in China and Twentieth Century Fox World in Malaysia, the market for licensed rides and attractions will continue to grow.

As theme parks grow, they will need new ways to compete, keep their offerings fresh and attract new and repeat visitors. Using licensing to tap the fandom of popular properties—especially but not exclusively entertainment/character properties like Harry Potter—can be the perfect strategy. Theme park deals also make sense for licensors because they can provide not only a long-term flow of revenue from licensing fees and royalties on in-park merchandise sales, but an equally valuable continued consumer exposure to their top properties. Universal’s licensing deal for The Wizarding World of Harry Potter, for example, runs into 2019 with renewals possible through 2029, according to Warner Bros.’ SEC filings.

Different Types of Deals

Theme park licensing runs the gamut from licensing of entertainment brands for entire parks to deals for single characters licensed for a single ride or attraction. For example, Disney does not own Tokyo Disney Resort; nor does Universal own Universal Studios Japan or Universal Studios Singapore. Instead, the media companies license their brands, characters and other intellectual properties in return for a strong, long-term stream of licensing payments and royalties.

In examples of more narrow deals, Universal Studios licenses Marvel characters from Disney (in a deal that predates Disney’s acquisition of Marvel) for use in Asia and the eastern U.S., in addition to its Harry Potter license. Six Flags licenses the use of DC Comics properties from Warner Bros. and this year is opening three new rides based on Batman, The Joker and Justice League. Each of these deals includes licensing fees paid to the studio, as well as a royalty on related merchandise sales. Six Flags in 2011 paid Warner Bros. a licensing fee of $3.3 million and 12% of inpark merchandise sales related to the DC Comics characters, according to the theme park operator’s annual report.

Looking Ahead

The licensing of entertainment properties for new attractions is spreading beyond major media companies. HIT Entertainment’s Thomas the Tank Engine will anchor Thomas Land at regional attraction Edaville USA in Carver, Mass., beginning August 15. In Sweden, Skanes Djurpark is building Shaun the Sheep Land, based on Aardman Animation’s TV and film character.

Meanwhile, one of the most anticipated properties coming to theme parks isn’t licensed at all. The ability to leverage Star Wars in its theme parks was seen as a major benefit of Disney’s $4 billion acquisition of Lucasfilm in 2012. Disney has said it has ambitious plans to increase the presence of its own Star Wars in multiple locations around the world. Details are expected later this year, but the company has said that new attractions will be based on new films in the series. The first of those, Star Wars: The Force Awakens, hits theaters in December.

New Licensed Theme Park Attractions
2015–2017
Attraction (Licensor) Venue Description Opening
Pandora – The World of Avatar (Lightstorm Entertainment/20th Century Fox) Disney’s Animal Kingdom (Orlando, Fla.) Immersive world with themed rides, entertainment, retail and restaurants is believed to include elements from the original Avatar and its three yet-to-be-released sequels. 2017
Wizarding World of Harry Potter (Warner Bros.) Universal Studios Hollywood Themed rides, shops and restaurants. Opened in Universal Studios Orlando and Universal Studios Japan in 2014. 2016
Shaun the Sheep Land (Aardman Animation) Skanes Djurpark (Sweden) Immersive 3D attraction. 2016
Discovery Adventure Park and Discovery Destinations Hotel (Discovery) New theme park New adventure park and resort hotel built by Discovery in partnership with Apax Group and Andman Moganshan Resort in China’s Zheijang province. Late 2015 (private groups), Spring 2016 (general admissions)
Hello Kitty! Stores (Sanrio) Universal Studios Interactive retail experiences will feature stationery, home goods, accessories, apparel and characters from everybody’s favorite feline and other Sanrio properties. Late 2015 (Orlando)
Nickelodeon Land (Viacom/Nickelodeon) Sea World Australia Kids’ area with rides, shows and characters based on Nick properties including Dora the Explorer, SpongeBob SquarePants and the Teenage Mutant Ninja Turtles. Late 2015
Thomas Land (HIT) Edaville, USA (Carver, Mass.) Brings the Island of Sodor to life with 11 themed rides. Summer 2015
Justice League: Battle for Metropolis (DC Comics/Warner Bros.) Six Flags Over Texas, Six Flags St. Louis 3-D interactive dark ride. Summer 2015
Batman: The Ride (DC Comics/Warner Bros.) Six Flags Fiesta Texas “4D Wing Coaster” with six head-over-heels spins. Summer 2015
The Joker Chaos Coaster (DC Comics/Warner Bros.) Six Flags Over Georgia 7-story roller coaster Summer 2015

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