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Worldwide Sales by PT & PC: Entertainment/Toys Drive Growth

As reported earlier, global retail sales of licensed merchandise grew 2.7%—or over $4 billion—in 2016 to reach $167.5 billion, according to TLL’s Annual Licensing Business Survey. On the property side, entertainment/character sales swelled 5.0% in 2016, while on the product side, toys/interactive games led with 3.8% growth.

The major source of growth were brands from the U.S./Canada, which now make up almost 65% of the global market for licensed goods. By comparison, European-based properties account for 15.5% of total share. Blockbuster Hollywood productions, sports teams, and pretty much anything that can be disseminated through the internet are dominating the world stage as consumption and manufacturing become increasingly globalized. Most Survey respondents cited social media is a major upcoming trends and sales driver, affecting every property type we track.

But that doesn’t mean that the converse is also true (to some extent). Local brands from Europe and Asia are realizing similar success stories. European sports teams (i.e., football) and kid’s entertainment properties (especially preschool series like Peppa Pig and Masha and the Bear), and mobile game apps (Angry Birds) are some notable areas of growth. Asian character brands (Hello Kitty is ranked No. 4 for entertainment/character sales in the U.S./Canada), video game brands like Pokémon, and anime/manga properties (although those remain more niche areas) are other hot areas. And we admit, the numbers are a bit disingenuous—and harder to calculate—when taking into account co-productions or ownership for properties that span multiple territories, although we split those gains equally between territories when that is the case.

Sales for properties with their origin in the U.S/Canada grew 3.4% to reach $108 billion in retail sales. European brands grew 3.6% to $26 billion, and Asian brands 1.6% to $18 billion. Other territories, which include Australia/New Zealand, the Middle East and Africa, grew 0.3% to almost $15 billion.

We’ve also included the five-year rate of growth for each territory below for comparison. While growth of European and Asian-based brands are more “flat” compared to the U.S./Canada, whose brands have been the leading source of growth for licensing worldwide, their growth represents a combined $2.5 billion rise in retail sales over five years. The share of sales dominated by North American brands grew 0.3 percentage points over five years, compared to a 0.7 point decline for Europe and a 0.6 point decline for Asia.

Retail Sales of Licensed Merchandise, by Geographic Source of Property, Worldwide, 2015–2016
Note: Figures may not add up exactly due to rounding.
(Figures in Millions)
Geographic Source of Property Retail Sales, 2016 Retail Sales, 2015 One-Year Change, 2015–2016 Five-Year Change, 2011–2016 Share of Market, 2016
U.S. and Canada $108,286 $104,773 3.4% 11.6% 64.6%
Europe (Western and CEE) $26,018 $25,481 2.1% 6.5% 15.5%
Asia $18,336 $18,057 1.6% 5.6% 10.9%
Other $14,855 $14,811 0.3% 24.0% 8.9%
TOTAL $167,496 $163,121 2.7% 11.1% 100.0%

Property Type Trends

Entertainment/character led the charge with 5.0% growth, accounting for $30 billion worth of licensed goods sold. The growth is slightly down from 2015 (6.3%), but still moved the category 0.4 percentage points from 17.6% share to a solid 18.0% share worldwide.

As noted above, American entertainment brands like the Disney stable (Star Wars, Marvel, and evergreens like Mickey Mouse) and Universal’s Minions dominated growth, and were somewhat supplemented by the success of local properties.

One interesting trend to note globally is the emerging presence of adult TV series, especially in the U.S./Canada and Europe (scripted, “reality” shows are not doing as well). These include American shows like “Game of Thrones” and “Walking Dead,” but also European dramas like “Doctor Who,” and game shows. While respondents noted that other territories like Asia saw a boom in interest in TV series as pop culture influencers, those do not typically have merchandising programs and did not lead to a direct rise in licensed sales. One more thing to note about Japanese, Chinese, and South Korean serial dramas: they do not typically have multiple seasons, but those with high ratings will release “sequel” films that, while they may have merchandising programs, more often than not rely on ticket sales to earn profits.

The biggest concern with entertainment/character is the dominance of ‘A-list’ properties as chain retailers remain firm on stocking only “proven” brands. As this strategy is neither nimble nor unique (sorry, buyers), it is unsustainable over time. Consumer fatigue will necessarily result in depressed sales for major properties—a gap that we hoped would be filled with lesser-known, but strong-selling properties. However, major retailers remain risk-adverse, even in ecommerce. We’re still in early days yet, and major shifts in retail (the closing of brick-and-mortar locations, expansion of ecommerce, and growing familiarity with and reliance on licensed lines) might change this trend. But at least in 2016, any fall in sales for ‘A-list’ brands meant a fall in sales across the board.

The next-largest category was fashion, at 24.1% share. Sales of fashion-based merchandise grew 2.7% to reach $40 billion. While other categories took a tiny bite out of apparel and accessories sales, and lower consumer spending power meant that interest in “luxury” items was down, agressive retailing strategies targeting mass merchandisers and ecommerce platforms largely translated into strong sales. After years of price-cutting following the Great Recession, fashion houses are now looking to shake off any possible devaluations in brand value by tightening their lines and bringing licensed products like eyewear, footwear, and accessories in-house. On the flip side, activity is stable in product categories like furniture, where the houses don’t necessarily have manufacturing capabilities. They’re also taking a warmer approach towards their own in-house ecommerce operations.

With 21.4% share, corporate trademarks/brands grew 2.7% to reach almost $36 billion in licensed retail sales. The biggest increases across the board were in home-related goods (goods like kitchenwares, decor, furniture, and tools) and food/beverages—although, naturally, the categories vary depending on the flavor of corporate brand. While the category is beginning to look somewhat undervalued in comparison to entertainment, it is more stable on the whole. One trend some Survey respondents noted was increased consumer interest in “vintage” corporate brands with strong history, and by extension, nostalgic pop culture value.

Sports properties based on American and European teams did especially well across the board as teams and leagues increased efforts to sell overseas and in a broader variety of categories. Sales increased 3.5% (a rate second only to entertainment) to reach almost $21 billion.

Art properties were the worst off, with much of their share being eroded by poor sales in the product categories they are typically licensed into (such as stationery) or supplementation by other property types. Global sales declined by 2.6% ($204 million) to land at almost $7.8 billion. That represents a roughly 15.6% decline from 2013. Museum properties fared better than art and design brands.

Retail Sales of Licensed Merchandise, Worldwide, by Property Type, 2015–2016
Note: Figures may not add up exactly due to rounding.
(Figures in Millions)
Property Type Retail Sales, 2016 Retail Sales, 2015 Change, 2015–2016 Market Share, 2016
Entertainment/Character $30,149 $28,709 5.0% 18.0%
Sports $20,602 $19,901 3.5% 12.3%
Fashion $40,367 $39,312 2.7% 24.1%
Corporate Trademarks/Brands $35,844 $34,908 2.7% 21.4%
Art $7,789 $7,993 -2.6% 4.7%
Other $32,745 $32,298 1.4% 19.6%
TOTAL $167,496 $163,121 2.7% 100.0%

Product Category Trends

As in 2015, product category performance was influenced by two key factors: property type and retail channel. Products were likely to do best if they were: (1) based on entertainment, fashion, or sports properties; and (2) sold online or via value, dollar/discount, and/or grocery channels. Conversely, products were most likely to struggle if they were: (1) based on art properties; and (2) sold in specialty or department stores.

Apparel/accessories/footwear was up 2.7% to reach almost $68 million in sales. At 40.5% share, sales in the category went up in every territory we track. The greatest area of growth was in everyday casualwear at mid-price points, especially in areas like athleisure and caps. Sales are up for licensed adult apparel for property types that have traditionally been thought of as children’s (entertainment, video games, publishing) as well as corporate brands. Jewelry sales, which were down for the last couple of years, rebounded.

The year’s strongest product category was toys and games, which grew 3.8% to reach almost $19 billion in sales. Its share increased by 0.2 percentage points to 11.3% of all sales. This was largely on the strength of entertainment brands, but as interest in traditional games increased, other types of properties licensed in those areas also saw increases.

At 3.4%, the home furnishings/housewares/domestics category enjoyed strong growth, largely thanks to returns in consumer confidence and a wide variety of branded offerings as manufacturers sought to distinguish themselves. Retail played a strong role here, with short seasons and frequent overturn. The category also began moving outside art-based licensing into areas like corporate trademarks, digital brands, and fashion designers.

Food/beverage grew 2.5% to reach $12 billion in sales, with hot growth areas including corporate and entertainment brands.

Health and beauty products (HBA) was up 2.7%, with strong growth in makeup and skin care. Fragrance licensing remained flat or down in most regions.

Publishing surged 3.7%, largely due to trends in specialty and book retailing, which prioritized stocking of licensed offerings, and expansion by nearly every property type we track into the category. The category increased just 2.1% in 2015.

Stationery/paper shrunk by 0.5%, as digital mediums largely supplanted products like traditional greeting cards and sales in speciality gift retailers continued to slow.

To that point, gifts/novelties was up 2.7% in 2016, after dipping 0.9% in 2015. The increase was in the novelties side—sales of gift merchandise (sole purpose/use is for gifting) were down.

Retail Sales of Licensed Merchandise, Worldwide, by Product Category, 2015–2016
Note: Figures may not add up exactly due to rounding.
(Figures in Millions)
Product Category Retail Sales, 2016 Retail Sales, 2015 Change, 2015–2016 Market Share, 2016
Apparel/Accessories/Footwear $67,836 $66,064 2.7% 40.5%
Toys/Interactive Games $18,843 $18,155 3.8% 11.3%
Home Furnishings/Housewares/Domestics $12,629 $12,218 3.4% 7.5%
Food/Beverage $12,227 $11,924 2.5% 7.3%
HBA $11,591 $11,288 2.7% 6.9%
Publishing $8,911 $8,596 3.7% 5.3%
Stationery/Paper $5,192 $5,220 -0.5% 3.1%
Gifts/Novelties $4,690 $4,567 2.7% 2.8%
Other $25,577 $25,088 1.9% 15.3%
TOTAL $167,496 $163,121 2.7% 100.0%


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