Paw Patrol

NEW YORK, NY: December 19, 2016—I’ve been formally asking marketers about the challenges and opportunities for the year ahead at least since 1988 (before that if you want to limit it to music, home video, and video games). And I’ve been fashioning the responses into an annual (more or less) Fearless Forecast ever since.

Truth is the answers haven’t varied much over the years. For the licensing community in particular, the overriding challenge: Securing the right retailers for new and old licensing programs. The opportunity: Hitching onto the Next Big Thing (challenge: before it’s too late).

The word clouds here sum up this year’s survey responses as well as the longer-term themes, and even give voice to some of the more existential concerns (e.g. “Is licensing still the right nomenclature to describe the business?”)

Licensing Challenges 2017

Licensing Opportunities 2017

Not wanting to prejudice responses, I deliberately did not ask about the implications of the U.S. election and growing nationalist sentiment in many parts of the world. Interestingly, no one brought those factors up unaided.

In conversations, however, when asked, it is clear there is concern about potentially stricter trade laws and how they might affect deal-making. Will IP owners and manufacturers hold off on some decisions — especially as they relate to B and C properties — until the dust settles and we have some direction? (Not a new phenomenon, even when there aren’t trade questions on the table.) Will there be greater focus on “made here,” in terms of origination of IP as well as manufacturing, wherever “here” may be?

More challenges:

1. Closing licensing deals takes six months at the very short end of the spectrum, with 12-15 months an unscientific median.
2. The move to “fast retail” that is spreading beyond apparel, challenging traditional licensing models.
3. See #1 and #2 above, and note the inherent conflict.
4. Managing expectations. There are very few seven-figure (let alone eight-figure) advances on licensing programs, and with the exception of a handful of high-profile entertainment and sports properties, precious few that will generate retail revenue of $10 million+ annually, certainly not in Year 1 or 2 shy of some major fad that would likely be short-lived. Yet IP owners new to licensing — and sometimes folks experienced in the field — invariably set those goals, only to be disappointed or to fail.
5. Figuring out who to push off the shelf in order to get on the shelf. It’s the most elementary question for any new licensing program. Even in the age of “unlimited shelf space” online, the fact is consumers go for the handful of best-sellers. As in traditional brand marketing, it’s the #1 and #2 in a category that account for by far the greatest percent of sales.

Consider: In a pre-Christmas Target tour, looking at licensed properties, close to 10% of the toy section was given over to Star Wars, and just shy of 5% for Marvel. Paw Patrol, Teenage Mutant Ninja Turtles, even Shopkins, one of this year’s hottest girls’ offerings, were about 1% each.

More opportunities:

1. Speed is of the essence. See #1, #2 and #3 above! The winner is he/she who can “turn it around” while the property is still hot — goes for the IP owner AND the manufacturer — and that can keep refreshing the assortment on a 3-6 week cycle rather than quarterly or semi-annually.
2. Be realistic. See #4 above. Always best to exceed expectations.
3. Giving retail the differentiators it needs. Not just a single “exclusive” SKU, but a program.

Here’s to 2017’s numbers being better than 2016’s. And to your own participation in marketing and licensing being more fun, more productive, and more rewarding in the New Year!

NEW YORK, NY—MARCH 7, 2016: Is Nickelodeon carving out a new hybrid major league sports-entertainment genre for itself? Others have made efforts in this arena, but none on a platform as wide as Nick’s.

Nick went through a long dry spell as far as developing new, licensable IP. Not for lack of trying, but it isn’t an easy (or scientific, no matter how much testing) process.

Now Nickelodeon is expanding its two-hour Nicktoons sports programming block with the introduction of two high-profile new series produced by Rob Drydek, and one unique licensing program combining a sports figure and a hit animated property:

• Crashletes is a video clip series hosted by New England Patriots’ player Rob Gronkowski;
• Jagger Eaton’s Mega Life is a reality series starring teen skateboarder Jagger Eaton;
• NBA star Carmelo Anthony, aka Melo, is behind an exclusive-to-Macy’s TMNT x Melo fashion line built around the Teenage Mutant Ninja Turtles.

Asked whether Nick will be able to create licensed merchandise incorporating Gronkowski and Eaton, the network’s Pam Kaufman told me at the Nick Upfront that they certainly hope to. “We’re figuring that out.”

Joint licensing of sports and entertainment isn’t a new idea, but TMNT x Melo carries the concept several steps beyond the usual Warner Bros. or classic Disney characters on jerseys, teddy bears, and bobbleheads.

Success will breed plenty of imitators; that’s inevitable. But Nick can use a concept that has built-in renewability; its mix of sports and entertainment can expand with new athletes and be applied to new hit properties as they emerge.

It’s 17 years since SpongeBob SquarePants debuted on Nickelodeon. Sixteen years since the first Dora the Explorer episode. It wasn’t until 2012 that Nick revived TMNT, and 2013 that Paw Patrol began its run and that the revitalized Power Rangers re-emerged in their 20^th season as Power Rangers Megaforce.

From a licensing perspective, that left Nick with a more than decade-long lull where, because there was no new breakthrough animated IP, the network’s consumer products division had to do its best reinventing SpongeBob and Dora to carry it. Warner Bros. has faced similar issues over the years, with DC Comics (Batman, especially, but Superman as well — even in non-movie years), Looney Tunes, Tom & Jerry (at least outside the U.S.) and other classics tiding them over.

“Cross-licensing, primarily involving character/entertainment properties along with leagues, teams, and/or players, has long had a presence in the sports sector,” wrote Karen Raugust last month in her excellent trend-rooted RaugustReports blog. “Going back at least to the mid-1990s, the four major U.S. leagues were partnering with classic characters such as Peanuts, Mickey and Minnie Mouse, and Looney Tunes.

“The trend,” Raugust noted, “tends to ebb and flow cyclically, but has been on the upswing lately, with characters from Hello Kitty and Tokidoki to Domo and Betty Boop all being featured with team or athlete imagery on a range of merchandise, in association with the leagues and/or their players associations. The technique also has expanded internationally; examples range from Sesame Street and the Australian Football League to Smeshariki and the Zenit St. Petersburg soccer club in Russia, to name just two.”

With few exceptions (Disney had an NHL/Phineas & Ferb deal in 2011, and there have been several crossovers in Europe), these deals are character rather than program-driven, and are often promotional rather than based on long-term consumer products campaigns.

As for Nick’s current stable of properties, Paw Patrol — produced by Spin Master with Nick and Canada’s TVOKids — is the big recent new hit property and the reconstituted Turtles and Power Rangers have proven resilient as shows and on retail shelves with licensed merchandise.

Whether Nick can parlay Gronkowski’s and Eaton’s live action shows into merchandise, or whether they and other athletes can be teamed, so to speak, with others from Nick’s animated stable to build on this niche, remains to be seen. Nick is well-positioned, though, to make it happen.

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 to corporations and at colleges and universities. You can reach him by clicking on the “Contact” button above left.

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.

Star Wars at Hudson News in JFK Airport Thanksgiving weekend

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.

Nordstrom boys clothing department at Old Orchard mall, Skokie, IL

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?

Walgreens, downtown Chicago

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.