In the entertainment/character space, Disney’s scored with a one-two punch in 2014 and 2015, using the combination of Frozen and Star Wars to knock back most competitors.
Frozen, the licensing phenomenon of 2014, showed its stamina in 2015 with sales strong enough to land multiple toys on mass merchants’ holiday hot lists. The license on every list imaginable, however, was Star Wars—the classic Lucasfilm property that, under Disney’s masterful hand, started to pick up steam in 2014 and became a full-fledged powerhouse by the back-to-school season. The studio engineered “Force Friday,” Sept. 4, to kick off its merchandising window an unprecedented 15 weeks before the theatrical debut of Episode VII, Star Wars: The Force Awakens with a first of its kind 18-hour “unboxing” marathon that traveled around the globe on YouTube. Amidst the building marketing and retail activity suggestive of an unmatched licensing program, Macquarie Securities analyst Tim Nollen in late August predicted that sales of licensed products for The Force Awakens, could reach $5 billion worldwide in their first year. (Star Wars was No. 2 on TLL’s list of properties with more than $100 million in licensed retail sales in the U.S and Canada in 2014, with $1.1 billion in North American sales and $2.4 billion globally.)
Industry consultant Ira Mayer, former Publisher and Executive Editor of TLL, predicted that Star Wars will lead all retail sales of licensed merchandise based on entertainment properties in the U.S. and Canada to a 7%–9% gain for 2015. He called the property’s performance a mixed blessing, however, writing on his eponymous blog that Star Wars was responsible for “sucking the juice out of every other pop culture property this year.”
While it may be true that Star Wars’ force blunted the potential of other properties, that’s not to say that it and Frozen were the only successful entertainment properties of the year. Minions and Marvel’s Avengers, also a Disney property, undoubtedly posted strong growth in 2015 amidst a continuing dominance of contemporary A-list properties. We also expect several up and coming properties tied to toys or TV series to break into the “$100 million club” of franchises whose annual retail sales in the U.S. and Canada exceed that mark, including Peppa Pig, which surpassed $1 billion in 2014 global retail sales but did not launch a major retail campaign in the U.S. until mid-2015, and Paw Patrol, which launched at retail in late 2013 but continued to builds its footprint at retail in 2015. Case in point: Spin Master’s Paw Patrol Paw Patroller is among the hottest toys for the holidays.
The NPD Group forecast 6.2% growth in U.S. toy sales for 2015, due in part to entertainment/character licenses including Frozen, Minecraft, Paw Patrol, Minions, Star Wars, Avengers and Jurassic World.
A new property that launched in the U.S. this year but will not hit its licensing stride until 2016 is import Yo-Kai Watch, which sold more than $2 billion in licensed merchandise in its native Japan in less than two years.
Streaming Growth Delivers for TV Licenses
This year, major streaming services Netflix, Amazon and Hulu received an unprecedented 14 Golden Globes award nominations, the latest sign of how content streamed over the Internet is changing the TV business.
TV has long had a dramatic effect on consumer licensing and for content owners, this age of Internet TV multiplies the options for getting new properties in front of consumers as the services seek out original content such as that recognized by the Globes. It also can increase exposure and lengthen the lifecycle of properties that have their primary exposure on traditional broadcast or cable networks.
Nowhere is this more apparent than in kids’ TV. The fact is that all viewers consume TV differently than in years past, with even very young children accustomed to accessing their media whenever and wherever they want through streaming and subscription services on mobile devices and computers, as well as watching linear programming on the living room TV. This shift has made Netflix, with 65 million subscribers around the world, a new power player in kids’ TV and has caused many cable networks to move begin developing their own so-called “over-the-top” Internet-delivered programming services. It was a driving factor in Sesame Workshop’s move to partner with HBO for the next five years and run an expanded “Sesame Street” across the pay TV service’s on-demand options in addition to its weekday slot on PBS.
Netflix this fall began the addition of seven new original series for older kids to its streaming service—including shows based on established licensed brands including LEGO and The Croods and created by major producer/licensors DreamWorks Animation, Saban Brands, American Greetings and others.
Magazines Reinvent Themselves as Lifestyle Brands
Consumer magazines are looking to licensing as the key to survival and prosperity in the digital age. One approach is to develop lifestyle licensing programs for the magazine’s audience, such as the highly successful Seventeen product line for teenage girls sold exclusively at Sears, or the collaboration between Walmart and Meredith for Better Home and Garden garden and outdoor products.
A more radical version of the strategy is to reinvent the magazine property as a licensing company. A leading example is Sequential Brands Group’s recent merger with Martha Stewart Living Omnipedia. The plan is to continue the shutdown of the MSLO media operation and concentrate on licensing the highly recognizable Martha Stewart brand.
Playboy has taken a hybrid approach of continuing the magazine, albeit in a transformed format (nudity is out, urban sophistication is in), and aggressive expansion of licensing the Playboy brand for lifestyle products.