Skylanders

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).

Smiling with Grumpy

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:

1. “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.”
2. “We’re ordering the number of episodes we need by medium from the beginning.”
3. “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.

Your humble correspondent stopping for a little food for thought.

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!

NEW YORK—November 6, 2015: Iconix is re-stating its financials for 2013, 2014 and 2015 with a net impact of about $3 million. Ultimately not a huge amount for a public company, but enough to send the stock plummeting 58% today as of 1 p.m. Results for the quarter and year-to-date will be released Monday, but essentially the bad news is out. And it’s no surprise. (See my previous post on Iconix last August for more on the company.) The company also noted that an SEC inquiry into its 2014 financials continues.

Meanwhile, no one has been announced as a permanent replacement for founder/ex-CEO Neil Cole, and although the Peanuts movie opening today, which the company has been betting on to turn its fortunes around, is getting good reviews, they’re not money reviews. “Pleasant” isn’t the sort of adjective that brings out the masses (kind of the equivalent of “she/he has a great personality”), and Iconix is revising downward its forecast of licensing revenues for the year yet again because of Peanuts, because too many of its fashion brands aren’t cutting it at retail, and because of soft performance in key European and Chinese markets.

You’d think Star Wars was the movie opening today, but that’s got more than a month to go. Iconix is surprised that Star Wars is getting the amount of shelf space it is already. Hard to know what galaxy they’ve been hiding under. In a Barnes & Noble in Brooklyn Heights, NY, there are 17 linear feet of tables alongside the escalator that are pure Star Wars, with another 3-4 places around the store offering still more. At Costco two properties dominate the toy aisles: Star Wars and Frozen, the latter the property Disney credits for its strong consumer products performance year-to-date.

Lucy with licensing agent Stu Seltzer of Seltzer Licensing in the mid-2000s.

About 10 years ago, when Peanuts was still licensed by United Media and I owned and published The Licensing Letter, I was granted permission to use a classic panel of Lucy in a lemonade stand to adorn our booth at Licensing Expo. We had invited various licensing consultants to be “Licensing Doctors,” advising newcomers on licensing strategy. We couldn’t change the wording on the actual panel, but we were permitted to attach a little piece of “fence” to get our message across. Feels as though there’s some irony in there somewhere.

Jottings:

Wonderful to wake up to a front page NY Times story about the success of University of Alabama licensing, the first two words of which are “Bill Battle.” Battle, now 73 and truly one of the stars of the modern era of consumer products licensing, played for Alabama in his day. In 1970, at 28, he coached the competition at Tennessee. He founded Collegiate Licensing Company (CLC) in 1981, building the company to handling licensing for about 200 of the leading colleges, universities and conferences before selling to IMG in 2007 for a reported $100 million (IMG is now part of WME). Since 2013 Battle heads the Alabama athletics department. Great to see him get this kind of national recognition. The article, incidentally, notes that CLC guaranteed Alabama $9 million in royalty revenue from sales of licensed merchandise for this year (translate that to about $200 million at retail), and $103 million through the 2024-2025 season (in excess of $2 billion at retail over the next decade).

Activision Blizzard, which is acquiring Candy Crush developer King Digital, is forming a studio to develop movies and TV shows based on the properties it owns, including Candy Crush, Call of Duty, and Skylanders. Unit is headed by Nick van Dyk ex-SVP corporate strategy for . . . Disney.

China’s State Administration for Industry and Commerce is endeavoring to stamp out counterfeiting of Disney merchandise. Unusual for a crackdown like this to focus on a particular company’s IP, but (a) Disney is such a huge chunk of the market and (b) the company is building a theme park in Shanghai. Seems like all roads, no matter where, lead to the House of Mouse.