New Product Introductions, Marketing Campaigns Call for Understanding Online and Physical Retail Realities
BROOKLYN, NY; March 3, 2020—Created for Karen Raugust and my “10 Keys To Success in A Changing Retail Landscape” session at NYTF, these slides can serve as an outline for just about any product introduction or marketing campaign, toy or otherwise. Let us know if we can help you ask the right questions and flesh out the outline when working on your next project.
Amazon’s Big and Others’ Little Boxes: An Idiosyncratic Take on Licensing Expo
NEW YORK, NY; May 26, 2018—In the end, it’s all about boxes, isn’t it?
Amazon was, is, and will remain The Topic for licensors, manufacturers, retailers, consultants, agents, and anyone else involved in the business of licensing. And what is Amazon about if not boxes?
The headline out of Licensing Expo in Las Vegas this month had to do with Merch Collab, the online retail behemoth’s new program offering design and manufacturing/sourcing expertise for fast-to-market licensed merchandise to be sold on its eponymous website.
But as much as has been written about Amazon’s impact on retailing, that impact can’t be overestimated. Whether Epic Rights’s Dell Furano holding forth on the shift of music and celebrity t-shirt and jersey sales from venues to physical retail to online or Cartoon Network’s Pete Yoder enthusing about the technology behind Amazon Go, the company’s prototype supermarket (and likely all-merchandise) store of the future, to cite but two conversations during Expo, any conversation about retail inevitably turned to Amazon.
A part of that discussion that tends to be underrepresented, however, concerns Amazon’s various experiments with physical retail. Just as many “digital-only” magazines discovered the need to develop physical magazines because that’s what advertisers demanded, so, too, Amazon clearly recognizes that physical retail isn’t going to disappear.
My friend Marty Porter, executive director of the Media & Entertainment Services Alliance (MESA), and author of the Record Plant Diaries, calls this phenomenon “physigital,” and predicts that physical media will cater to the luxury segment of the market while digital will be for the masses. Amazon understands and lives that concept instinctively.
That’s one type of box. In my idiosyncratic take on what was fun and interesting at Licensing Expo, though, there’s another:
Cross Bratz with Shopkins, mix in the unboxing craze, add steroids, and you have Boxy Girls, which debuted exclusively at Walmart via Jay@Play the week of this year’s Licensing Expo. The child gets the doll in a box that has additional little boxes with clothes, accessories, makeup and other items. There are add-on boxes with multiple surprise boxes, boxes with two limited edition dolls plus little boxes, and so on. This is completely of-the-moment. Jay@Play is represented by Cynthia Hall Domine’s licensing agency, Synchronicity.
Cartoon Network (CN) has worked with subscription box licensees Loot Crate and Box Blvd., notes CN’s Pete Yoder, who sees boxes as viable long term rather than a fad, particularly as the ratio of consumables is increased in the mix.
In a larger context, boxes (and unboxing) are part of the trend toward licensing experiences rather than products. CN has been upping the number of live and touring shows it does, says Yoder, especially in Latin America and EMEA. CN launches its first cruise ship in 2019 — cruises have become a staple for Disney — and the network has its CN-themed Six Flags amusement park in China. In the U.S., Adult Swim’s Rickmobile started touring the country last summer; now there’s an Adult Swim music and comedy festival scheduled for Los Angeles this October and featuring Run the Jewels, among other acts.
BuzzFeed had one of the more curious booths — certainly for those of us who aren’t regular BuzzFeed addicts (that includes me). Visitors toured its big red box of a booth, with only the name out front by entering a series of doors that led to rooms that had displays and might also be housing BuzzFeed execs for meetings in action.
There wasn’t much to fill you in on exactly what the rooms represented (I went through three times at different points in the show, uniformly hearing people mystified and curious) until you read the thick newspaper-like handout that explained the rooms were themed to popular BuzzFeed channels — in particular the foodie Tasty brand room, which had a display of kitchen utensils and a chef preparing pancakes and other goodies. Turns out the line of Tasty-branded utensils are also a Walmart exclusive.
Shout out to BuzzFeed for the best swag of the show: When you got to the end of your self-guided tour there were bags on pegs and shelves from which to select whatever items you wanted — multi-colored measuring cups and whisks, cosmetics cases (or maybe they were pencil cases?), glass water bottles, miniature yo-yos…Eric Karp is heading up the licensing effort.
And moving beyond boxes. Way beyond boxes:
The dinosaur roaming the show entrance near the Universal booth and scaring the bejesus out of unsuspecting passersby was presumably promoting the upcoming Jurassic World: Fallen Kingdom movie opening June 22. I say presumably because no one was indicating what he was about, despite a handler upfront in dinosaur-wrastling get-up and a handler in the back keeping people away from the giant tail. The guy inside this costume wielded it phenomenally well.
Lenovo’s Jedi Challenges, available since late last year but offering demos at the show to attract other properties is the first augmented reality game I’ve seen that defined the genre for me: Put on the goggles, extend your lightsaber and you’re jousting lightsaber to lightsaber with a Jedi. Or in local mode, with another player. Asked whether the Star Wars relationship with Disney bodes well for Marvel and other Disney franchises down the road, a spokesperson suggested that “it’s easy to imagine” such a scenario but for now they are “concentrating on Star Wars.” That said, more software is needed to justify the expense of the $199 headset, but the play value is pretty incredible.
Walking malls in recent months conducting licensing tours, I’ve been struck by the variations on the classic photo booth — booths that upload to Instagram, selfie booths (contradiction in terms, no?), booths that feature licensed properties. At the show, Sony Pictures had an interesting iteration with a screen featuring characters from its upcoming Hotel Transylvania 3, opening July 18. Facing it, when you moved, the character mirrored your moves. Your image appeared in the corner near the movie character. More traditional: When Grumpy Cat wasn’t available in person for a photo, you could step in an old-fashioned photo booth and pose next to a preprogrammed Grumpy Cat.
On the promotional side — and what is Licensing Expo if not a promotional event? — kudos to WWE and, especially Sesame Street (see photo up top for your humbled blogger and friends), for the photo ops in the show’s registration area. Great way to talk into a show.
The booth garnering the most speculation was perhaps that of Jonathan and Drew Scott, known for their HGTV Property Brothers home-fixer-upper TV show. The booth referenced Property Brothers but the license being offered was Scott Brothers.
I assume Property Brothers is owned by the network and that the Scotts want to control their own licensing. (That’s akin, so to speak, to the situation many chefs featured on, say, Food Network, find themselves in: Network owns the show and controls licensing rights, but savvy chefs have retained the rights to their individual names.) The Scotts’ booth — a large, multi-tiered, beautifully outfitted affair — was packed when the brothers were on hand, and not very populated the rest of the time, save for a few staffers.
Licensing Expo is not just about entertainment, though it can feel that way. There are heritage brands, literary properties and artists along with fashion labels, sports properties, and others. Among the heritage brands new to the show this year were two fourth generation members of the family that founded Capezio, the classic dance apparel and footwear brand. While the brand was once licensed to a wider audience, it has in recent years been more limited to the dance community. Reimagining the brand through licensing is the plan.
The Licensing University program sponsored by LIMA orients hundreds of newcomers to understanding the benefits of licensing, the structure of the business, the trendlines and more.
I had the honor once again of leading the opening “Basics of Licensing” panel with “godfather of licensing” Gary Caplan, of Gary Caplan Inc., and Hallmark’s Katy Briggs. Thanks to you both, and to LIMA’s Marty Brochstein for inviting all three of us to participate.
Finally, at the airport leaving Las Vegas, there was a great pop-up booth dedicated to local hockey team the Vegas Golden Knights, who made it to the Stanley Cup finals. Sporting goods stores in Fashion Show mall were also festooned with Knights merch, but the pop-up was a great unintentional last impression of the show!
Looking for a licensing assessment to assist with strategy and new business development? I’ll help you identify the white space for your licensing program through competitive analysis. Visit www.iramayer.com for details.
Licensing Expo At 35,000 Feet: Sustaining Licensed Properties In A Multi-Platform Universe
EN ROUTE, LAS VEGAS, NV to NEW YORK, NY; June 23, 2016—Over 26 years attending Licensing Expo, whether sitting down to interview people or walking the aisles, I always get variations of the same question (especially from exhibitors who rarely get to leave their booths): “What are you seeing on the floor?” “What’s new?” “What’s hot?”
The truth is, when you’re at the show, the elaborate exhibits, the characters walking around, the noise, the constant visual bombardment make it difficult to process what you’re experiencing beyond realizing that the longest line at the show was to have your picture taken with Grumpy Cat (except for those of us allergic).
So to all who asked me that question this year, while I was in my tradeshow stupor, and to those just wondering, 35,000 feet on the way home offers the needed distance to pull some thoughts together.
The key theme for me: Sustainability has dual meanings. One is environmental, which is subject for another time. The other is about sustaining the life of a property in a digital age. I’m going to focus on the entertainment/character/gaming worlds here, but that subject is top of mind for every brand, fashion, sports, art, and other licensor, manufacturer, agent, and other player as well.
Traditional media still count, certainly to companies rooted in it, but the fact is many of the digital content producers don’t yet understand the importance of multiple platforms, including the traditional ones.
“Linear still has the reach and consistency you need” to support a licensing program, Cartoon Network’s Pete Yoder told me. “But we also know mom hands off [he moves his smart phone from one hand to the other] to the kids.” Three key changes in the digital age:
- “We’re developing content specific to each digital medium. It’s based on the same IP but we’re not just re-editing 11-minute programs to 90-seconds.”
- “We’re ordering the number of episodes we need by medium from the beginning.”
- “Years ago you needed 6 months to a year after a program was a hit to get a licensing program underway. Now the question is, ‘When are you launching the first access to the brand’” via any medium.
At Activision, the “traditional” medium is games, and that — just as obviously as TV is for Cartoon Network — continues to be the core. But the news at Activision is a Netflix commitment to two seasons of a Skylanders Academy series. “Our audience is 6-12, with a real sweet spot of 6-9,” the company’s Ashley Maidy noted. A linear program, for her, has the potential to “bring new kids in — younger kids whose older siblings know the game, as well as others who just haven’t been exposed to it at all. . . .It’s a marriage of digital product and multiple platforms.”
The transformation of Skylander across platforms has proven easier than for Call of Duty, but a film is in the works for that, as well.
Activision’s challenges — and a common refrain at many companies: “We still have to educate buyers and retailers who are tradition-bound that our customers aren’t watching TV. And with no ratings for Netflix, how do you measure success?” [Aside: One of the most promising areas to Activision founder Bobby Kotick, Maidy says, is eSports, which Kotick believes — and Activision will be playing an ever-greater role to accomplish — could be as big as the NFL in five years. Why not think big?]
Both Yoder and Maidy agreed with me that even two years ago if someone had offered them Netflix as an outlet for a series they would have turned up their noses. Not anymore.
That said, hyperbole from the digital world doesn’t really help on the measurement count, in part because it feels as though (not just at Licensing Expo, but in the “wider world”) that the digirati don’t really understand what’s important to know. They can measure all sorts of things, but those numbers don’t necessarily translate to something the IP, ad, or licensing worlds can use.
Consider Paladin Software’s James Creach, speaking as part of the Digital Licensing Summit program at the Expo, who observed that “the Super Bowl is watched by 112 million people but 1 billion people are active on social media in a month.” Well, an event watched simultaneously by 112 million people — roughly one in three Americans — is a very different story than a billion people spread across almost as many messages of all sorts. The latter isn’t unimportant, but the comparison does no favors in selling the medium.
I didn’t get to speak with anyone from Youtube, but their booth looked like a lost opportunity. Clearly a major player as an outlet for new IP as well as for creating new channels for existing programming, the company had a huge space. But from the outside all one saw was a small sign with some of the properties named. No effort to educate what the properties are, where Youtube fits in, how it translates into consumer products or even just to pique interest. I don’t think I’m alone among show attendees (OK, of a certain age — but younger as well) in having heard of only a very few of the properties named.
I’ll get off my soapbox in a moment. But coming from the print publishing world, one of the things I’ve watch many “digital-only” publishers discover is that at this point in time, to satisfy advertisers, they still need print. Similarly, digital video celebrities or others will find it difficult to sustain their fame or develop long-term careers without multiple platforms — and I don’t mean just multiple social media. Just as traditional media have been forced to embrace new media, so new media will need to embrace the old. Tyler Oakley, who is part of the Dreamworks/Awesomeness stable, gets it: he’s out there touring with a live show, there’s a documentary, AND he keeps up his video and social media output. Rock and roll, watch out. [Commented one music merchandiser: “We survived superheroes and Star Wars. Music is trending up.”]
Most trenchant observation by a newcomer to licensing at the show, though: John Haugh, the 3-months new CEO and President of Iconix, at a reception for Peanuts licensees: “I know many of you would like a Peanuts movie every year. We would too, but nobody does a movie every year, not even Star Wars. And I want to remind you that many of you have done very well with Peanuts for 50 years before there ever was a movie!” Talk about sustainability!
Walking Toy Fair 2016: Trends, Start-ups, and Licensing Opportunities
NEW YORK, NY: FEBRUARY 16, 2016—My favorite parts of Toy Fair are invariably the far aisles on the main floor upstairs and the downstairs exhibits. That’s where many of the start-ups and smaller players are and where you get a sense of the ideas that are propelling toy inventors and designers.
Here are my idiosyncratic impressions after two days walking the show at the Javits Center, with a few added comments based on a recent spate of store visits.
Star Wars isn’t disappearing any time soon. Sphero will have competition for its BB-8 later this year when Spin Master brings out its own version of the robot. The creator of the Spin Master BB-8, Thomas Tretter, was doing the product demos, happily admitting he “gets paid to do what he did as a kid.” Also via Spin Master, Air Hogs will have an expanded Star Wars line.
But SW was ubiquitous, if anything moreso than even last year and eclipsing even the strongest of the strong. Manufacturers uniformly report that Star Wars is still going gangbusters, and many are still developing new assortments. Marvel is Marvel, DC is DC, and they’re next in line. I was surprised not to see more new Minions on the boards, as retail is still going strong with that as well. Universal’s Secret Life of Pets clearly has momentum, though, with Spin Master’s Best Friend Max wobbly-walking dog from that upcoming film a candidate for next Christmas’s must-have toy (Elmo beware). Commonwealth and Spin Master are also working Angry Birds in anticipation of that film.
The expansion of Melissa & Doug, once exclusive to specialty toy retail, is nothing short of astounding. The company used to eschew licensing, but has some Disney and other properties. However, unlike LEGO, which reinvented itself (and came back from the walking dead) through licensing, Melissa & Doug hews true to its origins even if distribution has expanded to mass, education stores, and more.
JoyLabz had perhaps the oddest display among the robotics/electronics startups: Makey Makey was demonstrated using a piece of tin foil folded on a table, with hand-written marker instructions, and five bananas with connector leads in them hooked up to a laptop. Touch the foil with one hand and use the other hand to hit the bananas (“it could be anything conductive; we just used bananas,” the demonstrator noted, though their sales materials feature bananas too), and you get music from the laptop. The kit can also be used to make game controllers, instruments, and “inventions.”
There’s really no breakout company in robotics. If I were a buyer, I’d be hard pressed to decide who to go with — both whether they have the wherewithal to deliver, and what might make the product stand out. Most seem to create different lighting or noise patterns from generic component parts, and there’s little guidance for what you can do further. As a group, they’re coming of age, but they’re not there yet.
Among the more traditional science kits, Smart Lab used licensed Star Wars and Disney Princess to distinguish itself. Based on retail visits as well as the show, Smithsonian and National Geographic are dominating this sector at specialty, in book stores, and at mass.
3Doodler and Creopop are among several companies offering handheld 3D printer pens. 3Doodler has had an adult version on the market at $99; the new child version is $49. Different colors of instant-hardening plastic are available. Using the pens requires pretty serious fine motor skills; not clear to me exactly who the market will be for kids versions. 3D printers are also rapidly coming down in price to where they might have potential as consumer items, but again, the killer app that could transform them from “having potential” to “must have” has yet to surface.
A year or two ago formable sand products for home and school were relatively high end, sold by Brookstone initially; the variety is expanding rapidly now under a variety of names (Kinetic Sand from Spin Master, but Magic Sand, Aqua Sand) — in colors (including glow-in-the-dark from Sands Alive), packaging, and price.
Zing’s StikBot Studio — a toy-size green screen with little characters you can use to create your own stop motion animated videos — expanded its one-year-old line with a more extensive “Pro” kit. Zing also has Wet Head, which is a hat with a little reservoir for water and stick plugs coming out. It’s essentially “Russian roulette with water,” as a demonstrator put it — the hat is filled with water, players spin a wheel to indicate which plug to pull out, and eventually one of the pulled plugs releases the water.
AzIAm Girlz yoga dolls, which first shipped this past December, is growing its line.
There’s growing availability of sophisticated tool sets. New at the show this year was Toydriver from the “smart screw specialists.” Toydriver is a mini powered screw driver designed for the small screws used in children’s toys but also for small hands. Sidenote: Toys R Us carries an extensive line of Home Depot-branded tools and child-sized workbenches and the like that are truly standout.
On the gardening front, Triumph Plant has been doing a beautiful job with Crayola for a number of years. There’s a My First Plant series, and a Color A Plant Pot kit. And they’re re-introducing a Charlie Brown tree to go with their Charlie Brown Grow a Pumpkin kit; the tree had been around for a few years, but the company wasn’t able to get the seeds for the last two years. Triumph’s Jim Johansen also said the company has licensed the Garden State Parkway for a wildflowers line. It’s an outgrowth of Lady Bird Johnson’s highway beautification program and could be expanded to cover other states’ highway wildflower programs.
Morphmallow’s Spaghetti Headz hair accessories remind me of the coiled shoe laces that were a fad for a couple of years. Generic versions of Spaghetti Headz have been on the market at $9.99 list for about two years; Morphmallow, exhibiting at Toy Fair for the first time, is now adding licenses including Care Bears, Garfield, Betty Boop, and the upcoming Steven Spielberg film The BFG selling at $12.49. Target is tweens to young teens, with the designs with feathers at the end appealing to the older end of the spectrum.
Capson and Zoofy, to name just two, are outfitting caps (brand name Brick Brick) and backpacks, respectively, with boards that work with Lego and other similarly sized building blocks as well as with miniature versions so kids can customize their look. Capson had the Disney logo, an As logo, and a Hello Kitty image to show what you can do, but was quick to say they don’t license those images, “they’re just to demonstrate what someone can do.” In fact, they don’t even sell blocks — those are user-supplied. Zoofy used generic designs to illustrate the potential on its backpacks.
Pinbox 3000 is likely typical of many toy startups these days: They used a Kickstarter campaign to raise the $15,000 they needed to make the diecuts they needed for the first run of their cardboard “pinball machines” which are blanks. The examples they showed demonstrate how you can draw or photograph your own backgrounds, use discarded toys or household objects, and so forth to create your own game. Make, an online magazine (makezine.com) wrote about the product last July and started selling it. That sent them back for a second run. They’ve also developed special education and library market versions. The basic kit is $49.95; a large “double kit” is $89.95.
Speaking of make your own: Yottoy, which is both a publisher and makes plush and collectibles with licenses for Babar, Madeline, and others, signed on as an Eloise licensee about a week before Toy Fair. A beautiful lunch kit was hand painted to get it on display in time, VP creative director Peter Doodeheefver showed me proudly. Sales of licensed Madeline merchandise benefited enormously from a museum exhibit at the New York Historical Society, as did sales of Paddington goods with release of the Paddington Bear movie. Next up for them is The Little Prince movie; but Yottoy typically has these properties long-term; the movie and museum shows are bonus opportunities.
Not a toy per se, but a fun product: Fan Hands (company and product name) — special gloves designed to make a loud clap when at a sports event. Marc Jones, President/CEO and inventor of the gloves, has had the patent since 2013 and has been selling a generic version. But if this isn’t a product designed for licensing… Jones has a relationship with CLC for another product line he developed; he’s looking to expand that to Fan Hands, and to add MLB and NHL “to start.” NFL, he says, is too complex and too expensive to deal with starting out.
Colorforms and Highlights are two children’s brands that have been largely dormant for a number of years. Both are re-establishing their reach through licensing programs the results of which were in evidence at Toy Fair this year and should be more in evidence at retail over the next 12 months. Colorforms is owned by Out of the Blue; Highlights is independently owned.
The success of eOne’s Peppa Pig — which itself is expanding its licensee roster through U.S. master licensee JazWares — is prompting a small surge in other pig properties. Not that pigs haven’t always been popular, but this year sees the addition of Pass the Pigs dice from Winning Moves, among others. Note to Warner Bros.: Is it time for a Porky comeback?
That’s all folks!
Ira Mayer, former publisher and executive editor of The Licensing Letter, conducts competitive research and consults for marketers; takes clients on retail tours; and offers courses on licensing through colleges and universities. You can contact him by clicking on the “Contact” button above left.
Ira’s Fearless Forecast: Entertainment Licensing 2016-2017
NEW YORK, NY; DECEMBER 9, 2015—Over the next few days I’ll post some prognostications on various sectors of the licensing business. While I (and everyone else on the planet) have written plenty about Star Wars in recent months, that is unquestionably the story of the moment. So let’s start with a look at the impact Star Wars is having on entertainment licensing and where the market is headed.
Looking at 2015, Star Wars has been the best news in entertainment licensing and, assuming the movie performs as expected, will likely be the entertainment segment’s blockbuster for 2016 as well.
But Star Wars has also been the worst news in licensing for 2015, sucking the juice out of every other pop culture property this year, likely keeping even hot newcomers such as Nickelodeon’s Paw Patrol from realizing their full potential, and holding back other retro properties that have had difficulty gaining placement at retail, such as Iconix’s Peanuts. Minions has held strong. But Superheroes? Maybe their powers aren’t infinite, at least in the licensing universe (and maybe those powers were diminishing even before the Star Wars onslaught).
From Hudson newsstands at airports to Nordstrom’s children’s department to Walgreens, Star Wars is ubiquitous and has been since back-to-school.
I wasn’t monitoring the licensing business in 1977, but this is the movie credited with initiating the modern licensing business. Given the institutionalization of licensing today, and the Disney machine behind Star Wars now, we’re no doubt looking at a licensing blockbuster of a whole different order of magnitude.
Today, for manufacturers and retailers waiting to release merchandise with the new movie’s art — remember, so far, with a few notable exceptions such as the BB-8 Droid, it’s been all classic images — it’s a matter of waiting for the force to awaken and do its part.
What will the net effect be on entertainment licensing for 2015-2017? Star Wars does not appear to be carrying the rest of the business up with it. Rather, it is displacing just about everything else. Still, in the aggregate it is more than compensating for others’ lost growth or stagnation, which is why entertainment licensing overall will show substantial growth for 2015 and probably 2016.
Licensing today is generally a matter of who are you going to knock off the shelf in order to get on. Star Wars is different, though: In addition to usurping others’ shelf space, Stars Wars found new distribution (such as at Nordstrom and Hudson) that hadn’t been given over to entertainment toys, apparel and collectibles to this degree before. That is enlarging the segment as a whole.
If the movie does indeed perform as expected, Star Wars will also be the worst news in licensing for everyone else in 2016 and, for Disney, an even worse story for 2017. Why?
Once Star Wars merchandising runs its course — and it will run its course — Disney will have to replace the Star Wars licensing juggernaut with something else. Even though there’s another movie scheduled for 2017, the second release in a series never generates the same in merchandise sales (and rarely at the box office) as the first. If superheroes are still in style — and that’s a big “if” — Disney will have Marvel to fall back on. Or perhaps they’ll have another Frozen. But it’s hard to bet on those scenarios.
The good news is that once Star Wars does run its course, that should re-open the shelves to other entertainment properties, and there’s no dearth of those in the wings.
Ira’s Fearless Forecast: Retail sales of licensed merchandise based on entertainment properties in the U.S. and Canada will be up 7%-9% for 2015.
Ira Mayer, former publisher and executive editor of The Licensing Letter, conducts competitive research and consults for companies in the licensing business; you can contact him by clicking on the “Contact” button at left.
Is Star Wars the (Old) New Frozen?
In the decade following the release of the original Star Wars movie in 1977 the licensing business overall grew more than 10 times, from $4.9 billion in retail sales that year to $54 billion in 1986, according to The Licensing Letter Databook.
Star Wars is credited as the catalyst for much of that growth — certainly in the entertainment sector, but across the rest of the licensing business as well. In recent years, worldwide retail sales of merchandise based on the Star Wars characters and imagery has hovered in the vicinity of $2 billion annually.
So as the rollout of new Star Wars merchandise begins this Friday, with a new movie coming in December, what are the prospects for Star Wars sales now?
A widely reported bullish analysis of Disney’s stock by Macquarie Securities analyst Tim Nollen puts the number at $5 billion in the first year following release of the movie (which is a funny time to start counting, since the merchandise is going on sale more than three months before the movie comes out). Good forecast or is Nollen building unrealistic expectations for investors?
“Star Wars is on a whole other level from anything we’ve ever done,” Dynomighty’s Sydney Pham told me at the NY NOW gift show in New York recently. Dynomighty makes Tyvek wallets, passport holders, and other accessories, and festooned its booth with Star Wars displays.
“We started pre-selling the classic images a month before the [mid-August] show; we’ll have new images from the movie for the spring. But even the classic images are outselling all of the best-sellers we’ve had for eight years,” Pham said.
That’s pretty strong language. Joyce Washnik, editor of Giftbeat, a newsletter for the gift industry, sees Star Wars crossing all retail channels, including specialty gift stores which, traditionally, might not touch a pop culture phenomenon such as Star Wars because so much merchandise is available at Walmart, Target, and everywhere else.
Still, Washnik says, gift stores had a great run with Frozen and she sees Star Wars following in those footsteps. Frozen did just shy of $1 billion in retail sales of consumer products in its first year following release, based on my analysis of various Disney statements over the past few months. And that was for a property no one had ever heard of and for which Disney probably could have done more had the studio, retailers, and manufacturers anticipated the immediate success of the movie. (Not being able to anticipate that is why movies and merchandising are art not science, thank you.) In the case of Frozen, the licensing program had to be revved up quickly in response to the movie’s wildfire takeoff; needless to say, Disney knew what to do.
For perspective, Mickey Mouse and Hello Kitty do a little less than $4 billion each in retail sales of licensed merchandise annually, worldwide. Disney Princess and Winnie the Pooh are just below $3 billion each, and Cars and Star Wars have done about $2 billion each. Note that all but one of those — Hello Kitty — are owned by Disney.
If the new Star Wars movie bombs, which seems unlikely, Disney will still have built momentum and had three months to sell the goods. That’s analogous to most fast food promotions which end before the movie opens…just in case.
Nollen writes that Star Wars “could generate $5 billion in consumer merchandise sales in its first year of release…[and] this would easily net Disney about $500 million in licensing and retail revenue.”
Using the loosest of calculations, $5 billion — which is greater than the value of the entire licensing business pre-Star Wars! — would be $2.5 billion at wholesale. Since royalties are mostly calculated on wholesale, and the rule-of-thumb for rough estimates across all categories is a 10% royalty rate, that’s $250 million net to Disney. Even if the royalty is higher (likely), it’s still not going to come to $500 million. But $250 million? Even Mickey wouldn’t sneeze at that.
Good forecast or unrealistic expectation? As Robert Browning wrote, “Ah, but a man’s reach should exceed his grasp, Or what’s a heaven for?” Written for Star Wars, no?
What I Learned At Licensing Expo 2015, Part II: Beyond ‘Device-Agnostic’
The younger the consumer the less he or she cares which device they watch or listen to. It’s been apparent for several years now that they don’t think in terms of computer, stereo, smartphone, TV, radio, etc. They want their content on whatever device is convenient at the moment.
But they also don’t think in terms of film or a game or a traditional TV show or a Netflix or YouTube or other video. It’s all entertainment to them, a fact that is underscored by the way PBS Kids emphasizes digital games for its preschool shows; movies deliver trailers a year out and prolong the life of a release through, again, games and other online extensions; or TV shows extend their season with mini-episodes online.
All of this is cause for a wholesale re-thinking of how all forms of entertainment are marketed — let alone how entertainment consumption is measured.
A complaint that came up repeatedly at Licensing Expo this year from toy companies, movie studios, TV and video networks, and other IP owners, and which I’ve heard from people in music and other entertainment sectors as well, is how difficult it is to measure the popularity of a given movie, TV show, music recording, game or other piece of “content” across even the major platforms.
Whether YouTube or Netflix or Amazon or Facebook or Twitter or Spotify or… the owner of a piece of intellectual property has to go into each platform’s analytics independently, with no shared interface to simplify the process.
For marketers that means learning a host of analytics systems when all they really want is “the numbers” and probably aren’t statisticians. For large companies with dedicated departments that’s not a big issue. For anyone else (and that includes most companies), it is a very big issue indeed.
Is there anything out there that aggregates this wide range of user data across platforms?
When Is A Dinosaur Not A Dinosaur?
Licensed products weren’t an easy sell to the consumer on the original Jurassic Park movie. “A dinosaur is a dinosaur” is what people said at the time, or as one licensee of the upcoming sequel, Jurassic World (this June), puts it, “Dinosaurs are universal.” (No pun intended relative to the film’s distributor, Universal Studios.) This one’s also not so lovable and cuddly, at least based on the trailer. That’s usually not a positive indicator for licensing but can mean boffo at the box office, as Variety used to say.