With licensed sales expected to grow to over $100 billion, 2015 will be the fifth straight year of growth. The licensing industry is nothing if not unrelentingly optimistic, and this coming year will likewise prove to be no different.
In 2015, we saw an acute period of transition, where consumers embraced brands as part and parcel of their greater lifestyle experience. They sought to buy into a lifestyle that exemplifies their values and aspirations, revisit nostalgic franchises, build and customize products and participate in a greater community through social media. Consumers responded to immersive shopping and entertainment experiences that allowed them to access multiple channels on demand. And their needs were met with greater proficiency and force than ever before, with smaller brands and companies becoming increasingly on point as they are losing ground on retail shelves.
A-list brands are increasingly crowding out the rest, and the cream of the crop are franchises. The franchise is now an omnimedia behemoth, accessible on demand through social media, apps, websites and digital media outlets as well as traditional screen. And goods are becoming available in an increasing variety of product categories. (Branded bathtubs? Sex toys? Remote controls? Check, check, check.)
Top Trends of 2015
The maker movement, defined by customizable or build-your-own products, took hold of 2015 with increased interest in construction and building toys, arts & crafts and customizable products. We expect this lifestyle trend to embrace an increasing variety of brands and products as consumers
The increasing globalization of the marketplace is also making its mark on brands, particularly in the more univeralizable sports and preschool categories. U.S.-based brands are spreading overseas, and vice versa—one key example being Peppa Pig, a $1 billion property that we expect to reach over $100 million in sales of licensed goods in the U.S. for 2015. Successful brands must realize that the global market is not flat; in an increasingly culturally fragmented world, they must cater to the unique needs of consumers in each foreign territory.
It was only a matter of time before the artisan movement, which prizes home-made and local over famous labels, began to affect fashion. Exhibit A is perfumes. The combo of star power and big designer promotion—the Taylor Swift from Elizabeth Ardens of the world—that has historically driven fragrance sales is coming to be seen as corporate and cliché. As consumers seek something more creative and original in their fragrance, hundreds of artisan perfumers are emerging to supply the products to meet their demands.
The Global Convergence of Sports Licensing
Although sports licensing revenues continue to grow in both the U.S. and Europe, the business model is changing. Sports leagues and teams are expanding beyond their home markets and developing their brands globally. The best illustration is the import of European soccer clubs into the U.S. A few years ago, only the blue bloods like Manchester United, Real Madrid and Bayern Munich dared to venture across the Pond and sell licensed team apparel and other goods in the U.S. But now many lesser known (at least in the U.S.) clubs are developing U.S. licensing programs, including Tottenham Hotspur and Crystal Palace in the English Premier League and Juventus from Italy’s Serie A.
In turn, U.S. licensors and licensees have been more active in seeking out opportunities in Europe. For example, 35% of NBA’s licensing revenues now come from outside the U.S., with Europe representing the second largest market behind China.
Experiential Entertainment Extends Licensed Brands
As consumers increasingly hanker to experience brands—particularly entertainment brands—rather than simply own them, licensors are happy to oblige, making experiential licensing a particularly fast growing business in 2015 across airlines, theme parks, touring shows, place-based attractions and shopping malls. Airlines, cruise ships, theme parks, touring exhibitions and other location-based attractions can be vehicles for licensed properties that provide both revenue and ongoing exposure to build or maintain relationships with fans.
Disney, of course, has long been luring fans with movies turned into broadway shows and character-filled cruises. This year, Canadian airline WestJet added a Frozen Boeing 737, complete with images from the megahit on its fuselage, overhead bins, headrests and even bathroom mirrors. Other branded travel experiences included EVA Air Hello Kitty Shining Star Jet nonstop flights to Taiwan and other locations in Asia, Paris and the U.S. and Thomas & Friends flights on Virgin Atlantic.
DreamWorks Animation plans to leverage the value of its properties through attractions including include Shrek’s Adventure! London, an immersive storytelling attraction near the London Eye; DreamPlace, a mall-based next-generation Santa’s workshop; and themed Royal Caribbean cruises. Expected to come online from other licensors in the next year: Shaun the Sheep Land at Skanes Djurpark in Sweden and The Wizarding World of Harry Potter at Universal Studios Hollywood. The Hunger Games, meanwhile, will be the basis of both a theme park attraction in Dubai and a live stage show in London.
Place-based entertainment, meanwhile, is just another pinnacle scaled by Frozen. Feld Entertainment, producer of Disney on Ice, expected to sell more than three million tickets for the full run of its Frozen version of the ice show, making it the most successful Disney on Ice ever.
New Technology
Although wearable technology has finally taken off this year, with a slew of deals and partnerships, it remains a niche market. Sports and fashion brands are the most active deal makers, with most licensing targeting the luxury market versus entry-level units.
Virtual reality is promising, with two consumer headsets released in late 2015 and more to come in 2016. But the technology has yet to take off—although a sizable market is expected to exist in the next five years and major entertainment/gaming companies are investing heavily, it’s unlikely that licensing will see a boost from VR anytime soon. It is more likely that brands will see support through VR marketing partnerships.
3D printing has taken off in fashion for manufacturing, and is spreading to licensed goods with 3D printer models for DIY-ers as well as ready-made products. Other emerging categories include 4K Ultra-High Definition televisions, connected thermostats, and unmanned systems (drones and home robots).
Mobile Devices & Content
Mobile apps are an ubiquitous presence, with licensors pushing their brands into digitals games and content as a matter of course, and digital native brands treading into consumer products. So far there are no signs of the next Angry Birds, but as the category is expanding to include a wider diversity of properties it is expected to stabilize and grow as a whole.
Licensed mobile devices like children’s tablets have sold well in the U.S., Canada and U.K., where they are marketed with an educational slant. As foreign markets grow to accept screen-based learning (U.S.-based educational TV shows, for example, have not historically carried over well into other territories), the market is expected to spread.
Social Media
There are two parts to the story for social media: native brands emerging for licensing, and traditional brands using social media as a vehicle for growth. Digital celebrities and other native brands like lifestyle, fashion and food, have finally come into their own. We fully expect this category to grow as digital stars are fast outgunning traditional screen stars in popularity. With publishing as a springboard, digital celebrities are swiftly emerging from a niche market into the mainstream.
Perhaps more important than digital celebrities themselves is the new form of content they are engaged in developing. The way we are consuming media is changing, and that has implications for which emerging properties will be the next big thing and which evergreens will die out.
Millennials Drive Growth in Food/Beverage Licensing
For five years in a row, food/beverage has been the fastest growing property type in the corporate trademark segment, according to The Licensing Letter’s Annual Survey. Such properties now have the largest share of the corporate trademark market at 7.3%. Growth is equally dynamic on the product category side with nearly 33 cents of every dollar in corporate licensed sales coming from food/beverage merchandise.
Food/beverage deals continued to sizzle in 2015 both in terms of volume and variety. Although it spans all generations, the current frenzy for licensed foods is being driven by the lifestyle and eating trends of millennials such as “grazing,” healthy and organic diets, craving for new and exotic flavors, less in-home stove use and demand for meals that can be assembled rather than cooked.
Fifty Shades of Green: The Surge of Licensed Sex Toys
Gambling, beer, wine, booze and even marijuana remained fertile trends for licensing in 2015. But this year the business found success in a new domain: the bedroom. By making kinky middle class and mainstream, Fifty Shades of Grey was the impetus and spearhead property, spawning everything from S&M negligees to a line of sex toys at, of all places, Target. Predictably, bloggers took the retail giant to task for stocking “vibrating love rings” next to kids’ toothbrushes. But the Fifty Shades line attracted attention and added a not entirely unwelcome tinge of naughtiness to Target’s image. And manufacturers are banking in; licensee sex toy maker Lovehoney saw its revenues surge by 50%.
It would be easy to dismiss all this as a Fifty Shades phenomenon. But in June, Lovehoney inked a deal for branded sex toys for British metal band Mötorhead whose hit songs include “Vibrator.”
What’s next? “A Beyonce or Kardashian collection would be nice,” says Lovehoney co-founder Neal Slatford, “and it’s only a matter of time before someone like that gets into the category.”