Star Wars

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: Jedi Challenge Expo 2018Put 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, Hotel Transylvania photo booth Expo 2018I’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.

Scott Brothers Expo 2018

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. Capezio Expo 2018Among 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.

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Gary Caplan, Ira Mayer, Katy Briggs

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.

Knights hockey team popup 2018Finally, 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.

 

Walking The Aisles: NY Toy Fair 2018

BROOKLYN, NY: February 23, 2018—An idiosyncratic distillation of New York Toy Fair this week.

Is Rubik’s the Toy World’s Betty Boop? Max Fleischer’s Betty Boop first appeared as a cartoon character in 1930. She has since been successfully licensed for thousands of products. Even young people who don’t recognize the name know the image. And as you travel, you’ll find Betty in store windows around the globe as a come-on, even when the stores barely carry any Betty merchandise.

I was reminded of Betty at Toy Fair seeing the number of booths with a Rubik’s Cube at the sign-in desk. It only really sunk in my second day, so I can’t tell you if they were all licensees, or distributors, or putting it out there to amuse visitors while they wait for their appointments, or legitimate knock-offs (patents have expired, though trademarks are still in effect for the word Rubik and Rubik’s).

Bricks, Briks, and Pix. If you start your annual tour of Toy Fair as I do downstairs at the Javits Center in Manhattan, where the newer, smaller, scrappier companies tend to be, and head north from the southernmost aisle, one of the first booths you would have seen this year is Rubik’s Briks, from Strictly Briks, which are compatible with other brick sets such as LEGO’s.

Speaking of compatibility with the Danish company’s toy blocks, that’s been a theme for years now, with plenty of toy companies riding LEGO’s coattails into construction set glory. The above video of a replica of Coney Island’s Cyclone roller coaster illustrates a personal favorite among the relative newcomers to what I term construction brick interoperability — whatever the brand, they’ve all got to work together. As for the Cyclone, I live in Brooklyn, NY after all, just a few miles from the real thing. The set is manufactured by CDX (CoasterDynamix) and has been out since mid-2017.

Non-tech Toys With Tech-ish Names. Another variant on interoperability with LEGO is Pix Brix, which offers “pixel art” by way of mini-bricks (also compatible). That plays into yet another theme: companies with traditional (read that non-electronic/non-digital) toys trying to imbue those toys with a hint of interactivity by borrowing tech-ish descriptors — for example, “pixel” art, or their tag line, “What will you pixelate?” Similarly, Charles Zadeh’s booth featured art kits urging kids to “Explore your inner selfie” while puzzle-maker 4D Cityscape Time Puzzle, which makes upscale 3D puzzle (not sure what the 4th dimension is here), incorporating 4D into its name. That company has about eight Game of Thrones titles, just signed Harry Potter and has 6-8 Potter puzzles forthcoming. Nothing tech about these.

From Tech-ish to Tech — And Every Gradation In Between. My bad for not being aware of the term “mixed reality” until the show, certainly not in the context of toys. But there it was on signage touting MergeVR’s Merge 6DoF Blaster, one of at least half a dozen devices at different booths integrating a smartphone as its screen.

Merge VR

Thank you Wikipedia for the formal definition: “Mixed reality (MR), sometimes referred to as hybrid reality, is the merging of real and virtual worlds to produce new environments and visualizations where physical and digital objects co-exist and interact in real time.” Move in a real space and you move similarly in the parallel universe of the imaginary space on the screen.

Variations On Classic Themes. Slime is back. A generational fad if ever there was one (comes back about every 17 years). When Cra-Z-Art saw sales of its glue soaring as children used it with other ingredients to make slime, the company licensed the Nickelodeon name and produced a now best-selling slime-making kit. Meanwhile, Keycraft Global’s variant comes in Goobands (remember SillyBandz?), and Steven Spangler has DIY slime science kits. That’s just three of many slimey products. . . .Twee (funny name for a company, but hey) offers gorgeous sidewalk chalk that comes in the shapes/images of sushi, glittery donuts, and more. . . .Bobble Head banks from Tin Box Company featuring DC, Star Wars and other licenses. . . .My Arcade’s miniature arcade replica games licensed from Bandai Namco and Data East.

Hot Brands. Rick & Morty. Game of Thrones. Minecraft. I keep hearing that Paw Patrol is falling off, but it’s still omni-present. Ditto for Star Wars, but more on that in an upcoming post. Coming on strong: Bendy and the Ink Machine. I didn’t know, either, folks; year-old horror videogame from TheMeatly Games. Runs on multiple platforms. Watch it (the brand), but don’t wait too long to sign on.

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Off-the-Beaten Path Licensed Brands. Bachman Trains with Ringling Bros. Barnum & Bailey Circus (now certainly a nostalgia brand; how long can it be maintained? Will Feld revive the brand in a new context?) and Norman Rockwell. . . .American Chess picking up Bobby Fischer. . . .Mary Engelbreit card gamesKitchen/home graphic designer and children’s book illustrator Mary Engelbreit will have her own Looney Labs card games later this year.

Collectables. Imperial Toys’ collectable food trucks, coming out fall. Imperial is known for bubbles — and they have a new variant on the flavored bubbles they first introduced a year ago, to be known as Lick-A-Bubble going forward (1.6 million views of the ad on Youtube since mid-January). But food trucks are definitely trending, and for a company as non-trend-rooted as Imperial to come up with nice designs, with side hoods that go up to reveal the kitchens plus movable roofs, this is a nice surprise. The preliminary packaging says 5+ but I see this as a 20-something office fad. Toys aren’t just for kids, you know.

On that note: There has long been a market for upscale collectables for adults, but credit Funko for expanding the category and giving it legs.

New, Neat & With Licensing Potential. Stroller Costumes to entice kids to get in. “Inspired by my son, who refused to get in the stroller. I designed one that looked like a truck. Problem solved,” says inventor/dad-preneur Moses Atkins. Definite potential for licensing. He found interest among licensors, retailers, and manufacturers.

Sago’s Pillow Playsets, which are beautifully detailed with sewn pockets, curtains, and other features. Retailing at $49.95, for upscale toy/gift boutiques and, again, potential for licensed versions. Toronto-based Sago, by the way, launched five years ago offering  wordless apps for kids that have now been downloaded 27 million times and subsequently became an activity toy company.

Roooz Planet is a book with an exceptional array of characters its author/illustrator Rooz Mousaur sees delivering environmental messages.

Glove-A-Bubbles makes an oversized glove that has a pouch for bubble mix and different size holes above the fingers. Empty the bubbles into a dish, dip the upper part of the glove in, and wave your hand to generate multiple sized bubbles. The original art isn’t that interesting, but the concept could definitely work for licensed characters.

Other Views. Writer/consultant/photographer Karen Raugust kicks off her Toy Fair coverage with a look at the role social media influencers such as toy testers, mommy bloggers, comedians, singers and pranksters are playing in the toy industry. LIMA’s Inside Licensing goes behind the press releases, including commentary on poop toys and games, and collectables. The Wall Street Journal explores the toy industry’s efforts to match fast fashion’s speed to market.

Looking for an independent analysis of your existing or potential licensing program? Contact me at ira@iramayer.com.

 

Fearless Forecast 2017:The Need For Speed and Other Challenges/Opportunities

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?”)

challenges-2017
Licensing Challenges 2017
opportunities-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.star-wars-at-target-12-16

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!

Walking Surtex, Stationery, and Home Shows 2016: Design, Product & Packaging Trends

NEW YORK, NY; May 16, 2016—The joy of Surtex, which focuses on art, about half of which is available for licensing, the other half for sale, is its co-location with ICFF, a show for contemporary and avant garde furniture and design, and the National Stationery Show. The three shows crossover with the licensing world on both the design and manufacturing levels, and feature interesting packaging ideas as well. It takes a great deal of walking, but there is a wealth of creativity to be seen and inspiration to be had.

There is also fluidity across the shows in that some exhibitors would be wholly comfortable in different areas — particularly some of the artists found in ICFF and the Stationery Show who might be best served by the Surtex audience of manufacturers and retailers. That’s what makes a 5+ hour walk here fascinating (and I didn’t make it to the downstairs furniture show which in the past has been heavy on upscale living and bedroom offerings, lighting, and the like).

Most interesting finds this year were the first two exhibitors at the far end of the hall on the third level in an area dedicated to emerging designers.

Mike Joyce is an established graphic designer whose Stereotype graphic design agency features a portfolio strong on album art (Katy Perry, Iggy Pop, others) and advertising (Volvo, Visa, etc.).

Swissted Surtex 2016

Mike Joyce and his Swissted posters

His “personal project,” Swissted, started in 2012, combines his “love of Swiss graphic design and punk rock by redesigning old” concert posters into International Typographic Style posters. He takes information such as the band lineup, date, venue, and ticket prices from the originals (which he collects) and creates entirely new designs. He sells museum quality prints on 140 lb. cover stock in multiple sizes from $50 (17”x23.75”) to $150 (36”x50.5”) but is looking to “carry it to the next level” and is open to licensing the work.

Next to Joyce is Airplantman Josh Rosen, who creates vertical garden frames and tabletop “vases” — I hesitate to use the word (he calls them vessels) to house airplants.

The plants are dipped in water for a few hours about once a week. Easy to see the frames or vessels licensed by botanical gardens or other nature-oriented or environmental properties, and certainly sold in those venues. The frames, available 11”x11”, 11”x18”, and 24”x18”, are powder coated aluminum with nylon coated stainless steel cable that holds the plants in place. They retail for up to $135.

Other creative executions:

  • Cardboard six-pack beer carrier with attached greeting card from Beer Greetings. It’s the beer equivalent of the ever-popular wine bag with card on the carrying handle. In this case the card is the side of the package. Retails for $4.95, which is the same as a mid-range greeting card these days. The company has been selling the item direct for about a year and a half and started wholesaling the line about six months ago.
  • Monster Factory has been making licensed Volkswagen children’s play tents for some years (I remember seeing them at Bed Bath & Beyond); now they’ve added a VW van pet carrier, a cooler, picnic blankets, and a pet bowl.

General trends:

  • New coloring books are still pouring forth, despite the fact that the market is reportedly cooling.

    Galison, exhibiting in the Chronicle Books booth, has a recently-released Andy Warhol coloring book with the Warhol Velvet Underground album cover banana on the cover (Galison has a range of Warhol items, including soup cans and a coming Time Capsule kit). Paris-based Omy, distributed in the U.S. by Ameico, has pocket maps, postcard books, fanny packs, pencil cases and other items. Hester & Cook has placemats and placecards. Sourcebooks offers calendars, dream books, and such. The list goes on.

  • Flash drive manufacturer Mimoco, which specializes in licensed drives, says sales of classic Star Wars models have cooled off, though younger fans are still interested in the newer characters.
    Mimoco Star Wars Surtex 2016

    Mimoco Star Wars flash drives

    If Star Wars, its best seller, indexes at 100, the second best-selling line, Marvel, would index at about 75, a sales rep says. The company has confidence that Star Wars has longevity while it expects the Marvel line to drop off over a five to six year period.

About three and a half hours into walking these shows, I was starting to think there were substantially fewer letterpress companies exhibiting than the last few years, and that Brooklyn had lost its cache. Not at all. Minutes later I made it to a dedicated letterpress area in the stationery show—and within about 10 minutes and two or three aisles had come across I Am Here Brooklyn (jewelry), Boundless Brooklyn (DIY paper sculpture kits of water towers, bridges, etc.), Gold Teeth Brooklyn (greeting cards), Umlaut Brooklyn (cards and wine bags), and the representative from French chocolatier Marie Belle, which has a New York store in Soho, immediately informed me (with no prompting) that they now have a store in Brooklyn, too. Not to mention that many of those letterpress firms are located in Brooklyn even if the company names doesn’t shout it out.

On the packaging front, two exhibitors made great use of cork-stoppered glass vials: Japan’s YHM Jewelry, which also has a Brooklyn store but which mostly sells online, uses glass vials about 6” high that have a little greenery at the bottom and eyehooks in the cork from which are suspended necklaces or earrings. It’s a beautiful presentation (and the much of the jewelry is quite nice and very original). Similarly, the aforementioned I Am Here Brooklyn uses much smaller vials for its hammered metal pendants with an initial on them. Again, makes for a nice display concept.

Unto itself Surtex, which is relatively small, isn’t formally a curated show, but it’s always seemed to attract a high quality of exhibitors. Plenty of seasonal art, children’s, florals; many agents, some of which have a certain consistency of taste across the artists they represent, some of which are totally varied in an effort to have something for every retail need; many new artists each year looking to test the waters. Surtex is as good a barometer of what’s available for licensing for textiles and other goods as you’re going to find. The bonus is that the co-located shows might not be as focused on textile-oriented designs, but are full of licensable ideas — from designs to products to packaging.

The shows opened at the Javits Center here yesterday, and run until 6 p.m. today and until 4 p.m. Tuesday.

Next up: I’ll be at Licensing Expo in Las Vegas June 20 (day before the show opens), 21 and 22. I am available to conduct personal tours of the show based on your needs. Two slots remain. For information about the personal tour, please contact me at ira@iramayer.com. I’m also leading a workshop, How to Work With Licensing Agents and Consultants, as part of LIMA’s Licensing University on the 21st. My panelists are an all-star team of Gary Caplan, Gary Caplan Inc.; Carole Postal, CopCorp; and Ilana Wilensky, Jewel Branding. To register for Licensing University, click here.

 

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.

Star Wars at Hudson News in JFK Airport Thanksgiving weekend

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

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

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.

Iconix Battles Its Own Star Wars In More Ways Than One++

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 IMG_1873my 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.

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.

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.

IMG_1763“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?