Each issue of Raugust Communications’ monthly e-newsletter features Datapoint (a recent research finding from Raugust Communications); a Licensing Topic of the Month; and news about the company and its books and reports on licensing. Below are the Datapoint archives.
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Datapoint: October 2019
Global Licensing Agency Commissions, 2018
Agency compensation structures have changed significantly over time as the business of licensing has evolved and agencies have adapted by taking on new tasks and trying new business models. That said, commissions remain at the core of agency payment for most practitioners, except for firms that have converted completely to business practices outside of traditional licensing representation.
The average commission has declined over time. Up until about 2000 or so, 35%-40% was considered the typical commission rate (with variations due to differences in property or category specialties and other factors). As of 2018, 70.3% of agencies report that their commissions, on average, fall into the 25% to 34% range, according to Raugust Communications’ The Licensing Agency Benchmarking Report.
The most common range is 30% to 34%, with 43.2% of agencies reporting average commissions in this range, followed by the 25% to 29% range, reported by 27.1% of agencies, and the 35% to 39% range, with a still-significant 17.3% reporting commissions at this level. The average is 31.5%.
A number of factors affect the commission rate, of course, including the sector of licensing in which the agent specializes; any other elements of compensation, such as retainers or fees for services, that are part of the total package; whether there are layers of agents (master and sub-agents) involved; the tasks with which the agency is charged; and the relative negotiating power of the agent and client; among others.
Datapoint: September 2019
Predictions of Toy Success at Retail, Holiday 2019
An analysis of key U.S. and U.K. retailers’ annual lists of top toy predictions for the upcoming holiday season suggests that toys tied to licensed properties will have a good showing as usual. Fully 44.5% of all the toys mentioned across the lists have some connection to licensing. Almost a quarter (23.0%) are traditional licensed toys, based on a property not owned by the toy company. Another 21.5% are proprietary (non-licensed) toys that feature a property supported by a toy company-managed licensing effort (e.g. Transformers). These are not licensed per se, but are perceived by customers as such. The remaining 55.5% of the predicted top toys of the season have nothing to do with licensing.
Previous Raugust Communications research for the year 2018 showed non-licensed toys having a 55.2% share of industry retail sales overall and toys associated with a license (toy company-owned or from outside the industry) accounting for 44.8%. This is consistent with the results for this year’s predicted top toys.
A key difference, however, is the relative share of toy company-owned properties backed by licensing, as compared to outside licenses, on the holidays lists. Proprietary toy brands backed by licensing accounted for a 14.7% share of the toy industry overall in 2018, much less than the 21.5% they account for in this year’s top toy predictions. Toys tied to non-toy-industry licenses accounted for 30.1% of total industry sales overall last year, versus only 23.0% of this year’s top toys. These numbers suggest that toy company-owned IP currently have an outsized impact on driving the most popular toys.
When looking at individual brand and property types, MGA Entertainment’s unboxing-inspired brands (e.g., L.O.L. Surprise, Poopsie Slime Surprise, and Poopsie Rainbow Surprise) are dominant, accounting for approximately 8.5% of total slots (licensed and non). Lego also has a significant presence, both with its proprietary brands and its licensed co-brands.
The Disney/Pixar/Marvel/Lucasfilm family, not surprisingly, has a strong showing, accounting for 8% of total slots. Toys tied to preschool-specific properties such as Paw Patrol, PJ Masks, Peppa Pig, Sesame Street, Thomas & Friends, and Baby Shark (excluding preschool toys tied to all-ages properties), collectively account for 8.5% of the total. And non-character-based licenses, such as Mensa for Kids, NASCAR, RealTree, Animal Planet, and the like, collectively account for a small but significant 3.5% of the total. Other properties and brands of note on the lists include Barbie, Fortnite, and Harry Potter.
This research measures the lists that have been published to date, including those from Target, Walmart, Amazon, John Lewis, Argos, and Smyths. Some retailers that traditionally produce similar lists have not yet done so at the time of this writing. Each list has a different methodology to come up with their top toy picks, and the total number on each list varies from 10 to 100. The total sample size is relatively small. For all of these reasons, this data should be viewed as a rough guide to what retailers think will happen in the toy industry this holiday season. It should be noted that, in past seasons, the top toy lists have tended to be accurate predictors of which products will rise to the top.
Datapoint: August 2019
Plus- and Extended-Size Apparel Deals by Property Type
Licensing deals and especially collaborations involving plus-size and extended-size apparel ranges for women are heavily driven by celebrities, according to new research from Raugust Communications. According to this data, 60.4% of total licensing and collaboration agreements involving this sector over the past three years have centered on some sort of celebrity tie-in.
That percentage was split fairly evenly between personalities positioned as experts in plus-size or “curve” fashion, including curve models and bloggers promoting a body-positive lifestyle (28.3% of the total), and other types of celebrities such as actresses and musicians (32.1%). Many of the latter moonlight as designers.
Fashion designers and labels, meanwhile, are also becoming increasingly active in this segment, accounting for 34.0% of the total. Other property types, including entertainment properties, sports entities, and corporate brands, are also present, but their activity, representing only 5.7% of total deals, is dwarfed by that of celebrities and designers.
Our research also shows that partners for licensed and collaborative apparel deals focused on the plus-size and extended-size market are typically retailers or e-tailers, with 71.2% falling into this category; the remaining 28.8% involve manufacturers as licensees. Retailers and e-tailers specializing in the plus-size market (e.g., Lane Bryant or Torrid on the primarily bricks-and-mortar side and Eloquii or Dia & Co. on the primarily e-commerce side), dominate. They represent 44.3% of total deals and 62.2% of deals involving retailers and e-tailers. Mainstream retailers and e-tailers, meanwhile, account for 26.9% of total deals and 37.8% of deals involving retailers and e-tailers.
As time has gone on, the trend is for licensing deals and collaborations to encompass an “extended-size” apparel range—meaning that the products include both plus sizes and very small sizes that are traditionally also difficult for shoppers to find, as part of a whole range of sizing—versus plus-size only. From 2017-2019, slightly more deals have been identified as extended-size, with 52.3% falling into this group, than plus-size (47.7%). Deals in the past year or so have heavily leaned toward the former, while older deals in the period traditionally skewed toward the latter.
Datapoint: July 2019
Licensing-Related Lawsuits, by Type of Suit
Lawsuits are a fact of life in the licensing business, with recent examples ranging from Adidas and the Spanish Football Association battling over the legality of Spain’s early termination of their uniform contract, to Jay-Z suing Iconix for fraud in not delivering the services promised when it took over the Roc Nation brand and being dishonest about its financial status.
A Raugust Communications analysis of licensing-related lawsuits occurring over the past 10 years shows that by far the most common reason licensing practitioners end up in court is trademark infringement, which accounts for nearly half (48.2%) of all lawsuits involving licensors, licensees, and/or agents. While most of these matters involve a licensor (or occasionally a licensee) and a third party, it can also occur within the bounds of an existing licensing agreement.
The second most common type of dispute, accounting for 12.5% of all lawsuits, consists of grant-of-rights violations, typically taking the form of a licensor accusing a licensee of going out of agreed-upon bounds on pricing, distribution channel, or products allowed under the scope of the deal.
Other common disputes include arguments over who owns a trademark at the center of a licensing deal (10.7%), disputes about the payment of royalties or other fees (8.9%); lack of quality control on the part of either the licensor through negligence on approvals or the licensee through shoddy manufacturing (5.4%); and lack of marketing or other support, typically from the licensor (4.5%).
Almost a tenth of lawsuits (9.8%) are brought due to other types of disputes outside of these six major categories, such as antitrust issues, fraud, class-action matters involving consumer complaints, and more.
Datapoint: June 2019
Retail Sales Driven by Licensing Agencies, by Sales Level
More than three-quarters (78.5%) of licensing agencies worldwide are responsible for retail sales of licensed goods totaling less than $50 million each, across all of their clients, according to new data from Raugust Communications’ just-published study, The Licensing Agency Benchmarking Report. That compares to just 2.3% of agencies worldwide that drive $1 billion or more in retail sales of licensed goods tied to their clients’ IP.
That said, this is a top-heavy business, with the 2.3% of agencies driving $1 billion-plus each in retail sales collectively accounting for a huge proportion—59.8%, or $61.5 billion—of the $102.9 billion in total retail sales of licensed goods worldwide facilitated by agencies.
Agencies driving less than $50 million in total retail sales, meanwhile, account for only 3.9% of the total retail sales of licensed goods flowing through agencies. (Note that there is a wide variation in retail sales levels attributable to individual agencies within each retail sales tier.)
Read more about The Licensing Agency Benchmarking Report here. The description includes a link to the full executive summary, including research methodology, and a link to purchase a PDF edition of the report.
Datapoint: May 2019
Licensing-Related Crowdfunding Campaigns, by Property Type
More than half (51.2%) of licensing-related crowdfunding initiatives in 2018 were tied to properties in the “geek culture” realm, according to newly updated Raugust Communications research. This sector is comprised of properties from the world of sci-fi and fantasy entertainment, comic books and comic-based film and TV, manga/anime, and videogames and videogame-based entertainment.
Other types of entertainment and publishing properties represent the second biggest segment, accounting for 17.5% of campaigns; the remainder of initiatives are tied to a diverse roster of non-entertainment-related property types.
Three factors account for the dominance of geek-culture properties. First, marketers of products based on these licenses (e.g., card, board, and tabletop games) tend to use crowdfunding as an ongoing strategy for marketing and product development, meaning they oversee a significant number of campaigns.
Second, these companies tend to hold licensing rights before launching a campaign. Crowdfunders that would be categorized in other segments, conversely, may be offering a product with inbound licensing potential but do not have those rights at the time of the campaign. Or they may be funding an entertainment vehicle that is likely to be licensed if it becomes a hit, but has no such activity planned to date. Their efforts are therefore not categorized as licensing-related for the purpose of this research.
Finally, and most importantly, properties arising from geek-culture entertainment and publishing remain a good fit with the demographics of crowdfunding, as users of both—while slowly diversifying—still tend to skew toward young adult men.
Datapoint: April 2019
Impact of Controversy and Scandal on Licensing
The college cheating scandal currently in the news, which has brought an end to the licensing and endorsement career of influencer Olivia Jade, at least for now, is a reminder of the risks associated with celebrity licensing. Still, according to new research by Raugust Communications, more than a third (36.7%) of controversies or scandals involving celebrities with licensing programs have had no impact on the celebrity’s commercial activities. The research measures incidents occurring over the past 10 years.
That said, in 29.9% of cases, a scandal is off-putting enough to consumers that it leads to the end of a celebrity’s licensing efforts. In another 21.8% of cases, the scandal causes significant harm to the program, although some consumers remain loyal enough to keep it going at a reduced level. Finally, in nearly 10% of cases, the licensing effort is significantly harmed in the short term, but recovers to a degree once time has erased the memory of the infraction or the celebrity shows remorse and/or changes his or her behavior.
A number of factors play into all of this. The type and frequency of the infraction makes a difference, as does the age and loyalty level of the fan base and the “edginess” factor associated with the celebrity. If the controversy is tied to the celebrity’s core accomplishments (e.g. an athlete’s steroid use), the impact can be greater than something that involves the personal life. And factors outside the scandal itself can play a role, with the controversy sometimes serving as a catalyst but not the only reason for the decline of a licensing program.
It should be noted that this research involves a relatively small (although fast growing) sample size, compared to the greater world of celebrity licensing. In addition, the research represents a snapshot of a moment in time, since the status of scandal-impacted licensing programs can change as the months and years go by. Finally, while the research focuses on celebrity licensing programs, where controversy is common, the results may have relevance for corporate trademarks and other property types that find themselves dealing with scandalous behavior as well.
Datapoint: March 2019
Distribution Strategies for Licensed Product Launches
Just 42.4% of licensed and collaborative product lines launch through traditional wholesale/omnichannel distribution strategies (e.g., with licensees selling through retailers and etailers of all types) globally, according to Raugust Communications estimates. The figures measure current or planned distribution for physical products under licensing and collaboration deals signed in 2018.
The remaining 57.6% of deals have distribution upon launch that is limited in some way. The highest proportion of this group (17.6% of the total) launch or plan to launch though one retailer exclusively, while 15.2% debut through e-commerce only (including exclusives and deals encompassing multiple online retailers), 10.9% through a select group of retailers, 7.9% through the licensor’s and/or licensee’s own stores only, and 4.2% through home shopping.
Of course, distribution strategies evolve over time. These figures measure the stated approach upon launch only, and once a licensed product line is established, a traditional wholesale strategy becomes more likely. The numbers also vary by property type and category. Corporate brand extension programs are more likely to have a traditional distribution strategy at launch, for example, while lifestyle programs tied to celebrities would be more likely to skew toward exclusives. The percentages also vary from country to county, depending on the nature of retailing in each.
Datapoint: February 2019
Market Share, Licensed vs. Non-Licensed Toys
The share of retail sales of toys attributable to licensed products fell 11%, from 30.1% in 2016 to 26.8% in 2018, according to new research from Raugust Communications.
Meanwhile, the percentage of toys supported by a licensing program but not licensed, because the toy maker is also the owner of the intellectual property (as is the case for Mattel’s Transformers, Hasbro’s Barbie, and a large and expanding universe of others), grew 19% over the same period, from a 14.7% share of industry sales in 2016 to 17.5% in 2018. Toy companies from Funko! to Funrise are creating more and more IP, and some of these properties (L.O.L. Surprise, Shopkins, Paw Patrol) have dominated the sales charts. For the two largest players, Mattel and Hasbro, the growth (or loss) trajectory of owned brands was more positive than that of their licensed products by a significant margin in 2018.
The share of non-licensed toys—for the purposes of this analysis, products that are neither based on a license nor supported by a licensing program managed by the toy company—was relatively flat over the period, rising less than 1%.
Traditionally, licensed products’ share of toy industry sales have been estimated at approximately 45%. The 26.8% share found in this analysis is a big drop from that benchmark. However, when the percentage of licensed toys is combined with the percentage of toys based on toy company IP but supported by a licensing program—a sector that was relatively small a decade or so ago—the two together account for almost 45% of the market.
Thus the importance of media and entertainment-driven toys has stayed relatively stable over the years. The real change is that ownership of the media and entertainment IP has moved from outside licensors to the toy companies themselves.
Datapoint: January 2019
Licensed Eyewear Sales, by Property Type
Close to three-quarters (74.6%) of the licensed portion of the eyewear industry (e.g., licensed eyeglass frames and sunglasses) is attributable to brands associated with clothing designers, according to new research from Raugust Communications.
The second largest sector, accounting for 10.3% of retail sales of licensed eyewear, consists of luxury/lifestyle labels, with many having roots in the worlds of accessories, jewelry, and cosmetics. Active, outdoors, and sports-related properties (e.g. Nike, O’Neill, or Champion) account for 5.5% of licensed sales, and corporate brands (Harley Davidson or Caterpillar) for 4.0%. Celebrities (in a somewhat surprising result) and character/entertainment properties drive only 2.7% and 2.2%, respectively, of licensed eyewear sales.
Total retail sales of eyewear globally are estimated at about $130 billion to $140 billion, depending on who is measuring. Of that, between $13 billion and $18 billion, again depending on the researcher, is thought to be attributable to luxury frames and sunglasses. This is the industry sector where most of the licensing occurs, and it is experiencing sales growth that is outpacing increases for the industry as a whole.
Some of the licensing deals or launches of licensed eyewear lines that occurred in 2018 included Montblanc with Kering, Reese Witherspoon’s Draper James brand with Altair, DKNY with Marchon, Rebecca Minkoff and Missoni with Safilo, Robert Graham with Nouveau Eyewear, and Victoria’s Secret and Pink with Marcolin. Recent renewals have included Tiffany with Luxottica, Bebe with Altair, Guess? with Marcolin, and Havaianas with Safilo.
Licensing deals in the eyewear space tend to be long, often in the seven- to 10-year range.
Datapoint: December 2018
Celebrity Licensing Programs, by Branding Strategy
As celebrities look to their licensing, collaboration, and other product-focused initiatives as a way to generate long-term revenue, more are marketing their products under a brand name as opposed to their own name, opting for brand longevity over in-the-moment fame.
That said, 70.9% of celebrities’ signature product programs remain associated with their own names, signatures, and/or likenesses, according to new Raugust Communications research. That compares to 15.1% of celebrity initiatives that are marketed under a brand name that does not include their personal name (e.g. Reese Witherspoon’s Draper James or Ree Drummond’s Pioneer Woman). Brands such as these are positioned to stand alone and capture customers who do not know the celebrities for whatever made them famous in the first place, as well as attracting core fans who are aware of the celebrity backing.
Another up-and-coming technique is to create a name for a product line that is a hybrid of a brand name and the celebrity’s own name. This strategy, illustrated by initiatives such as CALIA by Carrie Underwood or Melissa McCarthy Seven7, accounts for 8.5% of celebrities’ licensing efforts. It allows the celebrity to capitalize on current fame while creating a brand that may be able to live on its own in the future.
A growing number of celebrities (5.5% in 2018) use multiple branding strategies for their product extensions. One notable example: Gwen Stefani, who has marketed fashion and lifestyle products under brand names including Harajuku Lovers, L.A.M.B., and DWP; under hybrid labels including gx by Gwen Stefani; and, a few times, under her own name alone.
These numbers include celebrity-based signature product programs of all types, whether achieved through licensing, collaboration, an element of an endorsement deal, or a proprietary business.
Datapoint: November 2018
Preschool Properties by Age
The sweet spot for preschool properties in 2018 is four-year-olds. Almost three-quarters (74.5%) of properties focused on preschoolers include four-year-olds among their core age range, according to newly updated research from Raugust Communications.
That said, the share of preschool properties that include four-year-olds among their target customers in 2018 has decreased slightly since this research was last conducted in 2016. At that time, four-year-olds were included in 76.7% of properties. The shares of all other age cohorts, meanwhile, increased over the same period, with three-year-olds rising the most. The latter were included in 64.1% of all preschool properties in 2018, versus 61.2% in 2016.
The growth in the relative shares of preschool properties targeting children older and younger than four is due to two trends. At the upper end of the age range, more properties continue to include four- and even three-year-olds along with school-age children as part of their core markets, which stretches more “preschool” properties up into the age 5 and age 5+ cohorts. Conversely, at the lower end of the age range, more properties are focusing on sweet spots that encompass very narrow age groups of younger preschoolers, as opposed to trying to appeal to the whole preschool spectrum. That trend has helped reduce four-year-olds’ share as well as increasing the shares for younger age cohorts.
The numbers reflect the age positioning stated by the licensors of the properties measured; some likely end up attracting fans above and below the stated core age range.
Datapoint: October 2018
Capsule Collections by Scope
Fashion/lifestyle capsule collections involving licensed properties are most likely to be very limited in scope, featuring less than 20 core pieces—each in multiple sizes and often multiple colorways—with 69.5% of capsules falling into this category. Close to four in 10 (39.6%) of capsules encompass less than 10 pieces, while 29.9% feature anywhere from 10 to 19, according to new research from Raugust Communications.
That said, the scope of capsule collections varies widely, ranging from one to more than 100 pieces. And, although the greatest proportion of capsules fall into the zero- to nine-piece range, the average number across all capsules is 18.3 pieces, thanks to some larger assortments that skew the mean upward.
The numbers include any capsule collection in the apparel, accessories, and/or footwear category in which at least one of the partners is an owner of a licensed property of any type. One-offs are included, as are capsules that are part of broader licensing agreements, DTRs, promotional partnerships, or a series of collaborations.
Datapoint: September 2018
Meal Kits by Property Type
More than 40% of retail sales of meal kits connected to licensed properties in the U.S. are associated with chefs, according to new research from Raugust Communications, which pegs total retail sales of meal kits tied to licensed properties at $51.2 million in 2017. The figures include kits that are tied to any licensed property, no matter the structure of the deal.
Celebrities other than chefs account for the second largest category, with 22.7% of retail sales, followed by food/diet brands (18.2%), media brands (11.4%), sports/fitness properties (4.5%), and other types of properties, including entertainment/character (2.3%).
While still representing a tiny segment (just 1% of meal kits overall), retail sales of meal kits connected to licensed properties jumped 200% in 2017 from just $25.5 million in 2016, Raugust Communications estimates, thanks to rising sales of meal kits in general and the entry of more properties into the category.
The licensing-related segment of the business promises to increase again in 2018, despite the many challenges and changing business models facing the meal kit industry overall this year. As the segment struggles, more players are turning to licensed properties to help them attract customers, and more licensed properties are testing the category as a means of generating awareness, assessing their brand strength in the food category, engaging their fans, and potentially generating revenue.
Datapoint: August 2018
Celebrity Licensing, by Type of Celebrity
Musicians are the most active type of celebrity/estate when it comes to maintaining licensing programs, with 19.2% of current celebrity licensing efforts tied to this sector, according to new Raugust Communications research. Second comes actors and actresses with 16.0% of all celebrity licensing programs, followed by athletes with 11.2%, chefs with 9.2%, and models with 5.5%.
Rounding out the list of top segments are pure reality stars, who have achieved fame primarily through reality TV (4.8%); lifestyle, style, and beauty experts, driven largely by influencers such as beauty and style bloggers (4.7%); TV presenters, hosts, and newscasters (3.9%); comedians and “slice of life” influencers who are famous simply for creating videos and making observations about their lives (3.6%); makeup artists and stylists (3.2%); celebrity interior designers and DIY experts (3.0%); and fitness/wellness experts (2.5%). Many of these segments are heavily weighted with influencers.
“Other” types of celebrities collectively account for a significant 13.3% of properties. This is a diverse group consisting of everything from cosplayers, coaches, and costume designers, to gamers (e.g., e-sports celebrities and “let’s play” video creators), to business people and authors, to burlesque artists and dancers, among many more.
It should be noted that this analysis includes properties often considered part of other property types, as long as their celebrity extends beyond the traditional licensing norms of that segment. For example, the chart includes musicians, typically considered part of the “music” segment, if their licensing and collaboration activities extend beyond traditional music merchandising (e.g., into lifestyle apparel programs or home goods) and/or if their celebrity extends beyond their core expertise (e.g., they appear on a reality or competition show or have written books on cooking). The same is true of athletes (typically included as part of sports licensing), fashion designers (fashion), and so on.
Many celebrities these days are involved in a diverse range of activities, such as actresses who are also models, musicians, reality stars, designers, and/or entrepreneurs. In this analysis, they are included in the segment where they originally gained enough fame to launch a licensing program and/or the segment that primarily drives their licensing activity.
Datapoint: July 2018
An analysis of food-to-food licensing deals currently in effect shows that candy brands are the most active sector when it comes to outbound licensing into other food segments, accounting for 22.6% of all deals in this space, according to Raugust Communications research. Following candy are fruit, vegetable, and juice brands, collectively driving 19.3% of all deals currently in place, alcoholic beverages, driving 16.3%, and sauces, spices, condiments, and dressings, driving 14.2%. Note that each of these sectors is dominated by brands associated with distinctive flavor profiles. All told, 14 different product categories found in the grocery store aisles boast a significant number of brands involved in outbound food-to-food licensing.
On the inbound licensing side, the category of ice cream and frozen novelties is the most likely to acquire rights to other food brands, accounting for 14.7% of current food-to-food licensing deals. Since licensing in this category is about giving consumers more choices, new items tend to cycle in and out quickly and/or represent just one component of a broad spectrum of licensed flavors—thus, more deals are required. Beyond iced treats, meanwhile, the landscape is very diverse, with 10 different categories accounting for between 4% and 8% of current deals and “other,” representing an additional nine categories, collectively driving 37% of deals.
A closer look at the most common pairings of property and product within food-to-food licensing shows that candy brands paired with ice cream and frozen novelties, not surprisingly given the results above, represent one of the two most active matches, accounting for 6.6% of total deals. Equally common are condiments, hot sauces, and spices paired with savory snacks (e.g., popcorn, nuts, or jerky), also with 6.6%. Another notable finding is that 12.3% of deals overall involve licensors and licensees that operate in the same category; in other words, the licensed product is closely adjacent to the core brand. Examples include fruit and vegetable brands licensed into other fruit and vegetable categories (the top example), as well as dairy-to-dairy and beverage-to-beverage deals (alcoholic and non-alcholic), among others.
It should be noted that this analysis includes only food-to-food licensing deals and excludes restaurants, chefs, and other property types that are licensed into the food category.
Datapoint: June 2018
Current Pet Product Deals, by Property Type
The entertainment/character sector is the most active property type when it comes to deal-making in the pet products industry. Of licensed pet product deals for which merchandise is currently available at retail or online, 29.3% are tied to entertainment/character properties. Examples range from the Disney/Marvel/Star Wars family to pet and animal characters such as Grumpy Cat and Garfield.
The second largest segment, as measured by the number of deals, is corporate trademarks and brands, not far behind with 26.0% of active deals. These tend to be broader in product scope and/or more clearly differentiated than character deals, which are likely to be more on the novelty end of the spectrum. Examples from the varied corporate landscape range from pet food brands (Purina Pet Gear) to brands offering some sort of characteristic that stands out in the marketplace (e.g., Energizer LED pet collars, Goodyear car accessories, or Burt’s Bees natural pet care).
The celebrity sector, with properties ranging from Bret Michaels and Miranda Lambert to Ellen DeGeneres, ranks third with 11.4% of active deals. The rest of the market, with a collective share of 33.3%, is fragmented, with five property types accounting for a market share of between 3.3% and 7.3% respectively.
The total pet products market in 2017 reached $69.51 billion, according to the American Pet Products Association, with $15.11 billion of that attributable to supplies and over-the-counter medicine. (The majority of licensing deals fall into the supplies category.) Estimated spend in 2018 is forecast at $72.13 billion total, with $15.51 billion in supplies and OTC meds.
Datapoint: May 2018
Fragrance Sales by Property Type
More than two-thirds (68.4%) of retail sales of personal fragrances in the U.S. are licensed, according to new research from Raugust Communications. Fashion labels dominate the market, accounting for 59.0% of the total and 86.3% of the licensed portion. This is due not only to the sheer quantity of fashion labels that have fragrance licenses, but also to the fact that they drive many of the bestselling scents.
Brands with origins in the beauty market, such as non-licensed Estée Lauder or Lancôme products, account for 31.6% of total industry retail sales.
Celebrities comprise the second-largest licensed property type, far behind fashion labels with 5.3% of the total and 7.7% of the licensed portion. This segment—which continues to include strong-performing scents tied to the likes of Sarah Jessica Parker, Jennifer Lopez, Jessica Simpson, Paris Hilton, Rihanna, Beyoncé, Elizabeth Taylor, and others—has become significantly less important in recent years.
This drop is due to a number of factors, including the decline of the “masstige” fragrance channel (where most celebrity fragrances live), overcrowding in the celebrity sector, the fact that many celebrity scents are more novelty than classic, consumers’ fickle tastes when it comes to celebrities, and fashion labels stealing share from celebrities in both the prestige and mass channels.
“Other,” which accounts for 4.1% of the total and 5.9% of the licensed segment, includes everything from novelty scents tied to sports or entertainment properties to branded fragrances connected to the likes of Ford Mustang or Stetson. The top-selling slice of this sector is luxury labels, particularly from the world of jewelry, with examples including Tiffany, Bulgari, and Van Cleef & Arpels.
Euromonitor International pegs the total U.S. fragrance market at close to $8 billion. It should be noted that researchers vary widely in their estimates of fragrance sales, both in the U.S. and globally.
Datapoint: April 2018
Licensing Agency Specialization
On a global basis, nearly four in 10 (39.4%) of licensing agencies specialize in just one property type, according to new research by Raugust Communications.
This unexpectedly high percentage is due primarily to two factors: 1) The large number of agencies representing art and artists, especially in North America and Europe, and 2) the large number of agencies specializing in entertainment/character licensing only, which tend to be located in markets outside of North America, particularly in less developed territories.
Almost as high a percentage, 38.5%, of agencies have a relatively narrow focus, concentrating on two to three property types. The remaining 22% of agencies globally—by far the smallest percentage—handle a wider range of four or more property types. These are likely to be larger and/or longer-established companies that have diversified over time.
Datapoint: March 2018
Magazine Brand Licensing Deals by Content Type and Category
Among magazines with outbound brand licensing programs, the beauty/fashion segment has been the most active in forging deals over the two-year period from March 2016 to March 2018, according to new research from Raugust Communications. That sector accounted for 18.8% of the magazine brand licensing agreements completed, worldwide, during the period.
Other active sectors include cooking/food (17.9% of deals), home/garden (13.7%), health/fitness/outdoors (13.5%) and men’s (12.5%). These sectors include a large number of titles doing deals and/or titles that are very active in deal-making. The fact that 23.6% of deals fall into the “other” category (incorporating eight additional segments, from sports to parenting) shows the diversity of the landscape.
An analysis of magazine brand licensing deals by product category, meanwhile, shows how important experiential and content licensing is for this property type, with 24.1% of deals falling into this segment. (These include only licensing deals and not in-house produced content or experiences.) The diversity of the business is again clear as well, with 29% of deals falling into “other,” reflecting 10 additional categories beyond the five key categories shown.
The numbers also reflect the targeted nature of magazine licensing. When content and experiential licensing are removed from the category mix, the home-related and food/beverage product categories collectively account for approximately 38% of deals done, not too far from the nearly 32% of deals attributable to magazines whose content falls into the cooking/food and home/garden sectors. A similar correlation exists for the beauty/fashion content segment and the apparel/accessories footwear category, which account for 18.8% and 22.2% (excluding experiential/content), respectively.
The figures in these charts show the number of deals and do not necessarily mirror the percentages of retail sales attributable to each segment. Global retail sales of licensed products tied to magazine brands totaled $5.1 billion in 2017, according to Raugust Communications estimates.
Datapoint: February 2018
Licensed Toy Sales by Gender
In 2017, 39.2% of retail sales of licensed toys were tied to boy-skewing properties, while 37.2% were tied to girl-skewing properties, according to Raugust Communications research. The remaining 23.3% are estimated to be gender-neutral.Total retail sales of licensed preschool toys totaled $6.18 billion in the U.S. in 2017, Raugust Communications estimates.
Both the gender-neutral and the girl-skewing portions of the total have been on the rise in recent years. The increase in the former is largely due to the efforts of licensors, licensees, and entertainment creators to not succumb to gender stereotypes. The growth in the latter is due primarily to the strength of girl-skewing preschool licenses in recent years.
Datapoint: January 2018
Licensed Lifestyle Collaborations by Strategy
When lifestyle collaborations first came on the scene as a licensing tactic, they tended to be one-and-done efforts. The number of collaborations has grown exponentially since then, leading licensors and their partners to be more strategic. In fact, while one-offs remain the most common single approach when it comes to licensed lifestyle collaborations, they account for less than half (48.6%) of collaborations overall, according to Raugust Communications research.
In the other 51.4% of cases, the collaboration is part of a broader strategy. The most common (13.5% of the total) is when a specific initiative is part of what was intended upfront as a series of collaborations. The second most frequent (12.8%) comprises collaborations that are part of a program involving multiple collaborators over time, such as a fast-fashion or artist collaboration series. Another 9.9% are those intended as one-offs but which transitioned into a series due to early success. Rounding out the collaborative strategies are initiatives that become or are part of a long-term licensing agreement (7.8%) and those that occur as part of a broader marketing or endorsement relationship (7.4%).
The numbers focus on lifestyle collaborations that involve apparel, accessories, and footwear; home goods; and/or cosmetics and that feature at least one licensed property (cutting across property types). Other collaborators may include retailers, manufacturers, and/or other licensors.
Datapoint: December 2017
Experiential Initiatives by Type
Pop-up shops and cafés were the most-utilized type of licensing-related experiential initiative in 2017 on a global basis, according to new research from Raugust Communications. They accounted for 20.5% of the experiential deals announced during the year to support licensed properties. Ranking second were live theater and performances (encompassing everything from Broadway, regional, and touring theatrical shows to promotional mall-performance tours), with a share of 18.6%.
On the other end of the spectrum, the experiential initiatives that were the least utilized during the year were, for the most part, those that are longer term and require a greater investment. They include permanent retail outlets (5.6%), restaurants and cafés (6.8%), theme parks and theme park attractions (9.3%), and location-based entertainment and activities (e.g. branded go-kart tracks or arcades, with 9.9%). Travel-related examples were also on the lower end of usage, accounting for 8.1% of announced deals.
The figures—which include experiential ventures of any financial configuration, whether a promotional effort backed by the licensor, a straight licensing deal with a producer, or another type of partnership—also show the diversity of the landscape, with eight different sectors measured and none dominant.
Datapoint: November 2017
Celebrity Licensing Deals by Distribution Strategy
An estimated 28% of licensing deals tied to celebrities’ names and brands in 2017, to date, have involved exclusive distribution through a traditional retailer (either via direct-to-retail agreements or exclusive distribution partnerships with a single retail chain and its e-commerce operations), according to new research by Raugust Communications.
Another 10% of the deals called for product lines to be exclusive to an e-commerce-only platform and 4.4% exclusive to a home shopping network (with distribution via both television and e-commerce).
Collectively, that means a significant portion (42.4%) of licensing deals involving celebrities in 2017 included some sort an exclusive distribution strategy. That said, more than half (56.6%) of all celebrity licensing deals over the same period remained non-exclusive in their distribution plans, with merchandise set to be sold across multiple retailers.
This last segment includes product lines launched exclusively at one retailer for a short period before going wide, as well as those distributed widely from the start, while the retailer-, etailer-, and home shopping-exclusive segments incorporate merchandise lines that remain exclusive to the respective channel over the life of the current deal. Naturally, distribution strategies often change if the products remain on the market beyond the current agreement.
Datapoint: October 2017
Retail Sales of Licensed Educational Products for Kids
Retail sales of licensed educational products for children totaled $669.7 million in 2016, according to newly updated research conducted by Raugust Communications. By far the bulk of that, 84.7%, is attributable to traditional toys, with print publishing accounting for 8.1% and interactive products (apps and interactive gaming) for 6.4% of retail sales. The remaining 1.2% comes from products outside these three major categories.
While both licensed merchandise and educational products, separately, represent significant portions of the children’s product market, the intersection between licensing and education commands just a small slice of the total landscape. For example, licensed educational products represented just 2.7% of the $20.36 billion toy industry and 1.2% of the $4.47 billion children’s book industry in 2016. (The totals come from the NPD Group/Toy Industry Association and the Association of American Publishers, respectively.)
The Raugust Communications figures measure educational products using a relatively narrow definition. For example, a role-play toy could in many cases be considered educational, since it teaches life skills through play. But these figures include only toys that have a connection to specific PreK-12 subjects, such as National Geographic Science Kits from Thames & Kosmos or the Disney Princess Magical Learning Laptop from VTech.
Similarly, any book could be considered educational by encouraging reading, but these figures reflect only educational books that teach specific curriculum topics, such as Workman’s Star Wars leveled workbooks; Scholastic’s Assassin’s Creed: A Walk Through History, which teaches about the historical periods portrayed in the game; or Sesame Street: Elmo’s Word Book, a vocabulary book in English and Spanish from Readerlink’s Studio Fun imprint.
Despite the small retail sales levels for licensed educational kids products to date, interest and activity is growing (albeit slowly) as both educational product marketers and licensors see the benefits of marrying learning concepts and popular properties. That said, these products face some strong challenges, especially when it comes to parental and retailer perceptions about whether a licensed product can really serve as a tool to help children learn.
Datapoint: September 2017
Kids’ TV: Streaming-only Versus Traditional Distribution
More than 35% of current children’s episodic TV properties with active licensing programs in the U.S. are distributed through streaming channels alone, according to Raugust Communications research. That means streaming-only properties’ share has grown from 0% to more than a third in less than five years. The remaining 64.4% of licensed kids’ TV properties are primarily distributed on traditional TV channels, from the likes of PBS Kids, Nickelodeon, and Disney Jr. to more niche channels on cable, satellite, or terrestrial television. The traditional TV properties may have secondary streaming exposure as well.
Of course, a chart of retail sales figures would show a very different story. Most top-selling TV-based licensed properties—from classics such as Sesame Street to newer phenomena such as Paw Patrol—are still supported by traditional television. Most of the properties on the streaming-only side still have just one or a handful of licensees, often centered on the publishing category and/or a limited range of toys.
It should be noted that this chart offers a snapshot of a moment in a quickly changing landscape. Properties that do not achieve adequate ratings on traditional television often transition to streaming-only properties, while properties that become hits on Hulu, Netflix, Amazon, YouTube, or other streaming channels are often able to make a jump to a traditional TV network.
These figures reflect properties for children that are currently in production in episodic TV form, including both franchise-based and originals, with distribution and at least one licensee signed in the U.S. They do not measure secondary distribution of older programs. The numbers encompass both U.S.-made properties and international properties, as long as they are able to be viewed in the U.S. and have at least one U.S. licensee.
Datapoint: August 2017
Subscription Box Activity by Property Type
Character/entertainment properties (primarily of the “geek-and-gamer” sort), celebrities, and publishing brands (mainly magazine titles) are the three most active licensed property types when it comes to associating their names with subscription boxes, according to Raugust Communications research. They account for 29.2%, 21.2%, and 20.4%, respectively—or fully 70.8% collectively—of all boxes tied to an individual license.
These figures measure only boxes that are identified with a single licensed property as a brand name (e.g., Culturefly’s Pusheen Box or Loot Crate’s Firefly Cargo Crate), as opposed to having licensed products included in a box marketed under the supplier’s brand (e.g., a Jessica Simpson item contained, along with other merchandise, in a monthly KidBox).
The data reflects the industry in 2016. This year has seen continued growth in the subscription box business overall, and an increase in licensing activity in the sector, with more diversification in the property types that are associated with boxes. Meanwhile, there has been some consolidation in the more crowded segments of the industry, including the geek-and-gamer area, where character licensing is centered, and the lifestyle segment, where magazine brand and celebrity involvement are strong. As one example, traditional and social media outlets are reporting this summer that one of the leading geek-and-gamer players, Fan Blocks, seems to have suspended operations (at least temporarily).
These developments suggest that licensing sectors outside the big 3—including sports and corporate brands, among others—will see a boost in their relative shares in 2017.
Datapoint: July 2017
Toys: Licensed Versus Generic
Licensed products accounted for 30.1% of total retail sales of licensed toys in the U.S. in 2016, according to Raugust Communications estimates. That translates to $6.1 billion of the nearly $20.4 billion in total sales that year, as measured by the Toy Industry Association.
Another 14.7% of toy sales were tied to properties owned by the toy company making the product. This would include items such as Spin Master’s Paw Patrol or Hasbro’s Transformers toys. These appear to consumers to be licensed, since they are connected to a TV show or film, but they are actually not, because they are produced by the licensor and not an outside partner.
Historically, a general rule of thumb has been that about 45% of toys in the U.S. were licensed, with that number rising and falling annually depending on what properties were hot and who was doing the measuring. At first glance, it seems from the estimates discussed here that the licensed portion of the market has fallen precipitously.
However, if you take the licensed share and combine it with the share connected to toy company-owned IP that is supported by outbound licensing, the two together account for 44.8% of industry sales, very close to the historical average of 45% for licensed toys. The shift reflects the increasing propensity for toy companies to back their proprietary brands with entertainment vehicles and a full licensing effort and to place as much importance on these brands as on their licensed products.
While licensing is obviously very important in the toy industry, it should be noted that over half of industry-wide sales (55.2%) are attributable to purely non-licensed toys; in other words, those that are neither based on an outside licensed property nor backed by a toy company-managed licensing program.
Datapoint: June 2017
Licensing by Type of Deal
Traditional, long-term licensing agreements continue to dominate the business, as measured by the number of deals forged across property types and product categories. In fact, close to 66.6% of all licensing contracts signed from January 2015 to March 2017 can be categorized as traditional (two years or longer and involving a physical product), according to Raugust Communications estimates.
About a third of deals over that period, on the other hand, either fall into the category of non-product deals (experiential, content, promotional) or short-term lifestyle collaborations. These two segments accounted for 20.3% and 13.1% of all agreements, respectively, during this approximately two-year timeframe.
A few observations about the numbers: First, the percentage of traditional licensing deals would have been much more significant 10 years ago, when neither collaborations nor experiential licensing were as commonplace as they are today. Second, the chart analyzes the number of deals and not retail sales; a depiction of the latter would most likely show a greater percentage attributable to traditional licensing agreements. And third, it should be noted that the boundaries between each segment can be fuzzy in some cases, depending on the nature of the deal.