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TLL Survey

Up 7.6%, Entertainment/Character Leads 2016 Growth

In 2016, entertainment/character was the fastest-growing of all the major property types TLL tracks through its Annual Licensing Business Survey. Retail sales of entertainment/character-based licensed merchandise were up a stunning 7.6% to reach almost $12.8 billion. The rate of growth was slightly down from 2015, when retail sales grew 8.0% to reach almost $11.9 billion.

Nevertheless, this is the property type’s fourth straight year of growth; after five years of decline from 2008 through 2012, the sector posted 3.6% growth in 2013 and a 6% increase in 2014. See the complete breakdown of historical figures through 2008 here in the Licensing Data Bank.

As was the case in 2015, the narrative of retail sales in 2016 was dominated by A-list properties—namely, Disney’s Star Wars and Universal’s Minions. The House of Mouse’s dominance seems to be waning, with some respondents pointing out that new properties like Moana underperformed expectations and that interest in Frozen and Star Wars seems to be waning. But let’s put these comments into context—”underperforming” and “waning” simply mean “slightly less profitable.”

Entertainment has firmly broken out of its shell, going beyond kid’s toys and into nearly every product category imaginable. And as mass-market retailers continue to play it safe, it was still an uphill battle in 2016 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. Power franchises are the name of the game, with a new Star Wars or superhero movie from Marvel or DC Entertainment set to launch every year.

The rest of the industry is starting to realize the large boon Star Wars granted to the entertainment space. The magic of what Disney did was in forging new partnerships with retailers and manufacturers who had never done a licensing deal before. Now that those parties are not stocking Star Wars as feverishly as before, they’re opening up to making new partnerships with others. Still, it’s not like the other 50% of the industry doesn’t have to tip-toe around the House of Mouse, scheduling film releases and product launches releases as to not coincide with their powerhouse properties.

But for those that can sieze on the gaps Disney is leaving behind, business is good. Licensing execs have become increasingly adept at exploiting not-so-new digital opportunities like ecommerce, social media, streaming, etc.

Product Category Trends

As entertainment/character led all other properties types in growth in 2016, 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 experienced over 10% growth. In some product categories, the 2016 growth of entertainment/character-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. 7.6% in entertainment), consumer electronics (2.9% vs. 10.4%), and domestics (2.0% vs. 9.6%). Health and beauty products were flat overall, but grew 6.4% in entertainment.

In four categories, rates of growth were closer, by with less than a percentage point in difference: furniture/home furnishings (2.5% overall vs. 3.3% in entertainment), infant products (0.7% vs. 0.5%), publishing (3.1% vs. 3.8%), and video games/software (2.2% vs. 2.3%).

The fastest-growing cateogries were gifts/novelties (up 12.8% to reach $318 million) and food/beverage (up 12.0% to reach $472 million). These dramatic growth figures are largely a function of the lower dollar amounts—and for gifts/novelties, a comeback from a 6.6% decline in 2015. Food/beverage remains a large growth area for the

Toys/games was the biggest winner, growing 11.3% to reach $4,165 million in retail sales. According to the NPD, overall U.S. toy sales grew by 5% in 2016, reaching $20.4 billion. As in 2015, Star Wars was the top property by sheer dollar amounts, reaching nearly $760 million in 2016. That’s a bit over 18% of all entertainment/character-based retail sales in toys/games.

Retail Sales of Entertainment/Character-Licensed Merchandise, by Product Category, 2015–2016
Note: Numbers may not add up exactly due to rounding.
(Figures in Millions)
Product Category Retail Sales, 2016 Retail Sales, 2015 Change, 2015–2016 Share of Market, 2016
Accessories $1,188 $1,104 7.6% 9.3%
Apparel $1,190 $1,079 10.3% 9.3%
Consumer Electronics $521 $472 10.4% 4.1%
Domestics $326 $297 9.6% 2.5%
Food/Beverages $472 $421 12.0% 3.7%
Footwear $300 $299 0.5% 2.4%
Furniture/Home Furnishings $294 $285 3.3% 2.3%
Gifts/Novelties $318 $282 12.8% 2.5%
HBA $593 $557 6.4% 4.6%
Housewares $227 $218 4.3% 1.8%
Infant Products $378 $376 0.5% 3.0%
Publishing $815 $785 3.8% 6.4%
Sporting Goods $202 $198 2.0% 1.6%
Stationery/Paper $483 $478 1.0% 3.8%
Toys/Games $4,165 $3,742 11.3% 32.6%
Video games/Software $892 $872 2.3% 7.0%
Other $417 $413 1.0% 3.3%
Total $12,781 $11,878 7.6% 100.0%

We don’t crunch the numbers for experiential licensing, but it should be noted that licensing for events like character meet-and-greets, stage shows, and touring experiences is growing at an unprecedented rate. Many respondants who do both types of licensing noted that even if they saw dips in consumer product sales for the year, their experiential licensing programs were profitable, making for a solid balance sheet.

Distribution Channels

Retail distribution of entertainment licensed products mirrored that of licensed products overall, with sales accelerating in the ecommerce channel while most other retail channels continued in a traditionally steady vein. Ecommerce grew to represent 16.0% of all entertainment/character-based licensed product sales in the U.S. and Canada in 2016, up by one-tenths of a percentage point. Similar increases were seen in the specialty store and department store/mid-tier channels.


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