The Festival of Licensing, Informa Markets’ virtual global licensing conference held October 6-29, 2020, had three regional iterations—covering Europe, Asia, and the Americas—along with the C-level Licensing Leadership Summit. Below we take a look at some of the trends noted at the Summit, followed by coverage of all three regional events.
Licensing Leadership Summit: New Models for a New Era
November 12, 2020: Speakers at the Licensing Leadership Summit—featuring more than 15 hours of presentations—touched on some of the same topics that came up at the regional iterations of the Festival of Licensing throughout October. Four overriding themes were particularly notable at the Summit: the importance of creating an interrelated eco-system encompassing licensing, entertainment, and other facets of a property; the consumer as the driver of decision-making; the need to embrace new business models to ensure flexibility and speed to market; and sustainability.
Licensing as Eco-System
Physical retail, e-commerce, pop-ups, direct-to-consumer sales, user-generated content and print-on-demand, and social commerce all have their place, complementing and informing strategies across every facet of a franchise.
At its best, retail has a symbiotic relationship with all aspects of a property. Robin Sayetta, head of business development at MoMA, explained that the MoMA Design Store is an extension of the museum, bringing the institution’s architectural and design heritage to life. The importance of products as part of the brand’s ecosystem has been underlined during the pandemic. “That was really an a-ha moment in terms of the retail business, and licensing as a part of that,” Sayetta said. The museum could continue to engage with fans globally through its products and retail shops, alongside its digital content, even when the physical experience of the museum itself wasn’t available to them during the lockdown.
Consumers, armed with their mobile phones, have become unique points of sale, according to retail expert Robin Lewis, founder and CEO of The Robin Report. Retailers must become proactive in both the digital and physical space to get in front of those consumers, create a compelling experience to get young shoppers into the store, and personalize and localize at both bricks-and-mortar and ecommerce sites.
United Talent Agency agent Sid Kaufman talked about leveraging digital channels, especially direct-to-consumer, to build licensing programs for influencers. “If we can demonstrate something is performing, a retailer will want it on shelf,” he said. But, he cautioned, “Consumers buy direct. They don’t need Amazon, much less stores.”
Schitt’s Creek is an example of the complementary relationship between direct-to-consumer and fan-driven print-on-demand channels. Christina Lima, vp of global franchise management and creative services at ITV Studios, said the series became a mainstream hit in Season 4. In Season 5, reports started coming in from UGC marketplace Redbubble, as well as Amazon, that people were searching for merchandise and creating their own, signaling it was time for official products.
ITV has a direct-to-consumer website for logoed official merchandise, where it can manage quality and pricing and offer unique in-world items to the fans. The site also gives a “temperature check” on what styles are working and whether the range can be pushed a little further, such as by highlighting more obscure references to the series. Redbubble, on the other hand, gives the fans a voice and allows for creative by-fans-for-fans executions that the company may not have thought of otherwise.
On the entertainment side of things, streaming and traditional content, as well as short- and long-form content, work hand-in-hand to maintain awareness. “What we have to do is bridge the gap between [tentpole] releases of content,” Kaufman said, explaining that breaking up episodes to create short-form content for YouTube is “a bridge between the binges.”
An omnichannel strategy that includes both direct-to-consumer and ecommerce sales of merchandise as well as entertainment in various shapes and sizes on different platforms extends kids’ engagement with a property, according to Philippe Guinaudeau, CEO of Kidz Global. Consumption expands across age cohorts as kids sample different content and formats. “Instead of six months to a year, it can be three years or more,” he said. “That is a game-changer in the digital space.”
Experiential licensing, assuming a hybrid form combining virtual and physical elements, complements merchandise sales. Experiential retail is one way to invite consumers into the universe of a property, as is the case for toys or content, said Maura Regan, president, Licensing International. “You have a better chance of holding onto them if you have multiple entry points into that world.”
Experiential initiatives, traditional licensing, collaboration, brand ambassadorships, influencer marketing, promotional initiatives, social media, advertising, and retail programs all help support each other and the overall program. All of this has long been a goal, of course, but one that has been difficult to reach. The urgency of finding new ways to succeed during the pandemic, and in the changed world that will follow, has created the impetus to quickly break down the siloes that have persisted until now.
The organizational structure at licensee and licensor companies also fosters a cohesive eco-system. James Ngo, executive vp, franchise management, at Legendary Entertainment, noted that his organization is set up to be fan-centric in a number of ways. “Licensing and marketing work cohesively together and report into the same group,” he said. “That hand-in-hand partnership erases the line between which activity is which.”
Consumers in the Driver’s Seat
“We listen to our fans very early on in the lifecycle of the IP to formulate strategies and keep them engaged in a feedback loop,” Ngo said. That attention to the fan/consumer was a running theme of the Summit.
Eric Morse, head of content partnerships and global licensing at Redbubble, noted that user-generated content marketplaces like his allow super fans who do not want logo or key art merchandise to create unique content that appeals to them and, in turn, other fans who go deep on a property. “You need to give them leeway to create a fan experience,” he said. “Fan artists play an increased role in connecting consumers with merchandise.”
The official licensing program for the classic British property Thunderbirds is fairly rigid, with the puppet animation style not lending itself well to offbeat creative executions. “But the fans can make it fresh and be really creative,” said Lima. She noted that loyal fans want to make their own merchandise but are also worried about infringing, so having a UGC site where they can be creative while staying within the boundaries of official merchandise is a relief to them.
Ngo points out that not everything warrants a presence on fan-based sites. “Are fans demanding it? We don’t serve them what they haven’t asked for.” Data makes it easy to identify which are the right properties and when is the right time, he added.
Data-driven decision making was a key thread running through the Summit. Data from social media, streaming platforms, direct-to-consumer ecommerce and social shopping sites, supplemented by traditional viewing, retail sales, and other information, tells licensors and licensees specifically what their consumers want, in real time.
Steve Manners, vp business development for licensing agency WildBrain CPLG and digital network and studio WildBrain Spark!, said the company can look at data to see which storylines, situations, or characters are resonating, and this shapes where it can go with consumer products. “You can pull up designs you know consumers will respond to and then test those ideas through DTC or ecommerce,” he said, adding that data drives decision making on all facets of franchise management. “Licensed products are just one part of the eco-system.”
Jon Gisby, managing director of Wildbrain Spark!, noted that data gives a rich picture of how the consumer is engaging with a brand, as well as competitive brands. Understanding those linkages allows marketers to target messaging carefully using the best content, time, product, and device to reach that consumer and to do so cost-effectively.
“The market has to determine the potential,” agreed Kaufman. Preschool content channel Blippi, represented by UTA since 2018, is one example of the progression from data to licensing. While the channel attracts 1 billion views every 30 days, licensees and retail buyers were skeptical initially.
The first step was to develop a dedicated DTC ecommerce operation, then test with a few licensees on Amazon and retailers’ ecommerce sites, before slowly going to market in key categories, such as toys with Jazwares and publishing with Readerlink. “You go in and get a test order and then build on that test order,” Kaufman said. Based on that path, retailers ultimately committed more heavily and a dozen or so licensees signed on. “You can’t put too much pressure on merchandise. It has to find its own level. Let the consumer tell us.”
Data has become even more important in convincing retailers to take on product during the crisis. “Salespeople are data scientists now,” said Tonya Kirby, vp licensing at Retro Brands. She cites the example of offering a very soft t-shirt but being unable to prove it, since meeting in person and touching the goods are off limits. In that case, data can help make the sale.
Social media is another critical part of the conversation with consumers. “I can’t express how important social is to us,” says Lauren Winarski, senior manager, brand and licensing, at Funko. The company listens to what fans are talking about and engages with them through polls, product introductions, and live Q&As. The company’s Wynonna Earp figure came about due to a strong showing on a social media poll, for example.
Winarski also stressed the need to say thank you to the fans, both through social media—such as highlighting a fan of the week in the company’s blog—and with email communications, exclusive products, and parties. “The consumer is a voice, not just a transaction,” she added. That voice drives Funko’s expansion into new properties and product categories. “You can’t go rogue. Fans have to want it.”
Rick Lowe, cofounder and managing director of apparel and accessories licensee Brands In, said being able to leverage social media for a brand such as Disney is essential for success at retail, drawing customers into the shops. “You have to add meaning above just the product,” he said. Despite the tough retail landscape, product flies off store shelves if backed by an exciting social media campaign, he explained. In turn, creative use of IP, unique design, exclusive products, and other differentiation will make a product “more Tiktokable.”
Social media is one element of a broader need for community around a property. That is often created through physical retail or other live experiential settings, but it is possible even in the COVID era. Fantasy sports, for example, attract a community of both avid and casual sports fans and has done a lot to boost the recognition level of athletes, said Terese Whitehead, senior manager, player services, at the NFL Players Association. “Fantasy is a good entry point, and fans rally around certain players.”
Interactive gaming, which has seen strong growth during the pandemic, increasingly represents another platform for community. “People are looking for ways to connect, and gaming is a unique avenue to solve for that,” said Chris Petrovic, senior vp and head of corporate strategy, M&A, and business development at Zynga. Players can chat in real time while playing, have an asynchronous back-and-forth conversation on their own time, or compete with the names on the leaderboard.
Maxwell Luthy, “evangelist at large” for Trendwatching, cited a trend he called “the Beta-Verse,” which identifies games as a form of self-expression, delight, connection, and meaningful experiences. Playing Fortnite is like having a third living space, in addition to the home and the office. Games increasingly serve as platforms for digital versions of live events, such as the premiere of the Star Wars film Episode IX: The Rise of Skywalker or a Travis Scott concert, both hosted inside Fortnite.
Doing Business in a Brave New World
As was true during the other weeks of the Festival of Licensing, participants naturally discussed how the business has changed during COVID, with an eye toward the post-virus landscape.
Early in the crisis, licensors and licensees had to deal with stores shuttering, unpredictable trucking and shipping, and manufacturing shut down by the disease. They addressed these issues by manufacturing vertically and/or domestically, diversifying their manufacturing base so they could change factories when needed, doing more with less when it came to workers, adjusting to a world in which smaller manufacturing runs are delivered quickly and frequently, and adopting efficiencies from automation to drop shipping. Many of these changes will be permanent.
Technology and manufacturing close to home make short product lead times increasingly possible. Sesame Workshop and its licensees Sourcebooks and Random House were able to create finished books about mask wearing in under three months. “There were times we have not seen before,” said Gabriela Arenas, the Workshop’s vp of licensing, North America.
Winarski spoke about how Funko can go from signing to shelf in nine months. Once the crisis began, the company also decided that presales were the way to go for new product introductions. An image and a render of a collectible figure can go online or on social media quickly and the response tells the company how many to make, allowing it to capitalize on trends with little risk.
The ability to reach fans immediately is critical. Guinaudeau noted that at the beginning of the crisis consumers watched as much entertainment via streaming in a few weeks as they would have in 18 months or two years prior to that. “They discover a brand, love it, finish it, and move on, and they do this very frequently,” he says.
The role of licensing and its use was also top of mind. In general, speakers agreed that licensing is a benefit in a market like this, where brand trust, recognition, and discoverability is so important. But the thought process has changed somewhat:
- Focusing on successes. A number of speakers mentioned the need to continuously monitor what was working (retail channels, properties, products, partners) and redouble efforts there, rather than searching for new opportunities. “We try to look at what we’re good at and stay there and not go too wide,” said Lowe.
- Creativity within boundaries. There is also a focus on taking licenses that work and elevating them through design reinterpretations that differentiate one licensee from another. Lima noted that ITV is more relaxed than in the past, when it had rigid, 300- or 400-page style guides. Now it includes the logos, a few dos and don’ts, and some inspirational graphics and looks to licensees and artists to come up with a fresh take.
- Being ready to “pivot.” Even as they stick with what is working, based on the data, licensing executives noted that they need to be able to change course quickly and be open to new opportunities. Kirby said Retro Brands is looking at properties for collaborations for the first time, because that’s what the consumer wants. “I’ve been working with some brands I never thought would be an asset, because of who we are,” she said. “But I wanted to think outside the box and I did things I didn’t think were possible.”
- Value beyond dollars. As in the other legs of the Festival of Licensing, presenters discussed flexibility in contract terms, a requirement for survival and something that is being granted by licensors. Guarantees and advances, in particular, are becoming negotiable in return for more investment in marketing or product development, or other value.
A License Global survey on the licensing business and COVID-19, which content editor Bibi Wardak revealed at the Summit, found that 32% of companies surveyed are in the process of renegotiating at least one licensing contract, 30% have already renegotiated one or more, and 10% have attempted to renegotiate but without success.
Sustainability as an Imperative
One theme throughout the Festival was the importance of purpose- or mission-driven brands in the eyes of consumers. At the Summit, sustainability was a key focus. Lily Berelovich, president and chief innovation officer at Fashion Snoops, noted that consumers have given up on their governments and are looking for companies to make a difference. “It’s no longer a nice-to-have,” she says.
The goal is to take positive and real steps in the right direction, whether that be through circular consumption (i.e., resale, recycling, rental, and swap marketplaces), materials (organic, lab-grown), print-on-demand technologies to prevent waste, or going digital to eliminate samples and travel. “It’s about long-term goals and walking toward them, not about quick goals,” Berelovich said.
If you change the way clothes are made, using the technology and design you have, you can make it affordable,” said Mart Drake-Knight, owner of sustainable t-shirt company Teemill, which incorporates renewable materials, reuses returned products in the manufacturing of new pieces, and utilizes just-in-time manufacturing. “We’re not asking people to buy less or spend more. We’re designing out waste.”
Sustainability has to be a way of life rather than segregated into a section of sustainable products at retail, explained Rikesh Desai, licensing director, merchandising and gaming, at BBC Studios. “Having a positive impact is better than fear mongering,” he added. Of course consumers have to want sustainable products as well. “That’s where licenses come into it, since they have an inherent affinity or emotional connection, which provides an opportunity to engage.”
Michael Stone, chair and co-founder of Beanstalk, agreed that licensing has an important role to play in underlining the increasingly urgent need for sustainability. “Licensing is a communications tool to deliver a brand’s message,” he said. “We touch lives every day with product.”
FoL Americas: Focus on Speed-to-Market, Innovation, Ecommerce
October 26, 2020: Many of the themes noted in presentations and booth displays during the Americas portion of the Festival of Licensing—at which almost 61% of exhibitors were U.S.-based companies—echoed those that rose to the top in the European and Asian editions of the month-long virtual show. Overall, there seemed to be more of focus on the deal structures and business models that are necessary to help licensors, licensees, and retailers position themselves for success in uncertain times.
Balancing Risk and Innovation
There was conversation around the dual and sometimes conflicting needs of maximizing innovation and minimizing risk. Shane Grogan, senior licensing manager at Diageo, in a panel on the licensing efforts for Bailey’s and Guinness, said COVID has pushed the company to diversify and adapt more quickly than ever. “We look for licensees that challenge themselves and us with innovation,” he said. “Don’t rule anything out unless you’ve tried it. Test and trial, test and trial. Listen to the consumer and be agile enough to act.”
To limit risk, licensees and licensors are looking at how they can innovate within an existing program, such as by exploring incremental categories, channels, or placement at retail. Grogan pointed out that Diageo has produced and sold Guinness glassware in Ireland but had never looked at that category for licensing. It and its agency Beanstalk developed a glassware and bar accessories line with PB Licensing. “The tests are extremely positive,” he said.
Figuring out how to tweak a program in real time involves monitoring which categories and designs are growing, sharing the results with partners on an ongoing basis, expanding what’s working, and tweaking channels or products frequently. Licensees pointed out that IP owners are open to considering new opportunities that they might not have in the past. Sam Ferguson, vice president of global licensing at Jazwares, stressed that constant communication between licensee and licensor—beyond just touching base to relay good or bad news—is key.
A corollary of the emphasis on incremental innovation is the need to get new and on-trend products to market quickly. Speed to market is one of the benefits of the model used by the Sparc Group, the joint venture between Simon Property Group and Authentic Brands Group (ABG). Sparc centrally designs all licensed products for the four brands in its portfolio, Brooks Brothers, Lucky Brand, Aeropostale, and Nautica. “We can react quickly to trends,” said Jarrod Weber, group president, lifestyle, and chief brand officer at ABG. Consistency across licensees is another advantage of the model.
Extreme Concepts and IHL Apparel Group noted in a panel called “What Do Licensees Want?” that a key differentiator for both companies is their ability to get to market quickly. Stephanie DiTirro, senior manager, licensing and merchandise, at Extreme, said her company can go from scratch to store in seven to 10 business days, including customized fabrics and colors. She pointed out that retailers want licensees to react to trends immediately.
Matthew Arevalo, co-founder and chief experience officer at Pinfinity, a new marketer of customized AR-enabled collectible pins, reported that he has seen licensors increasingly anxious to get new product into the market as quickly as possible, even if that means waiving a minimum guarantee. Pinfinity can get from contract to product introduction in 120 days.
Despite the granular focus on assessing performance and opportunities continuously, the pandemic also has presented an opportunity, or even an imperative, to think long term. “Everyone is getting squeezed now,” Weber said. “What are you doing to make sure you stand the test of time?” For ABG, that has meant thinking through every brand and marketing story, he explained, all with a view toward the long term.
Licensees agreed that, in the face of shrinking retail shelf space and other challenges, being at the top of their game is essential, whether that means avoiding errors, being quick to market, or maintaining a laser focus on what is and isn’t working. “When there are less dance partners, you have to be a better dancer,” DiTirro said.
Doubling Down on Ecommerce and Digital Marketing
The increased importance of ecommerce, and how to make the best use of the platform, were central topics at the Festival. “COVID has brought ecommerce three years further forward,” said Ferguson.
Sami Souid, president of IHL, reported that when his company goes into production on a program it typically dedicates certain styles exclusively to ecommerce, something it would not have done three years ago. Ecommerce will ultimately account for the majority of his business, he added. (Ecommerce is expected to represent 14.5% of total U.S. retail sales in 2020, according to eMarketer figures published in September, a big lift from 11.0% in 2019.)
A spike in ecommerce usage has occurred across the globe this year. In Latin America, ecommerce was a relatively untapped platform, but grew significantly during the pandemic, said Sandra Tinajero, commercial specialist, government relations, at the U.S Embassy in Quito, Ecuador. Elias Fasja, president of agency Tycoon Enterprises, who delivered a Licensing International-sponsored session on doing business in Mexico, also cited ecommerce as having serious potential as a channel for licensed products post-COVID, although he noted that it was still a relatively small retail segment in the region.
In addition to being essential for reaching consumers, ecommerce is also attractive to licensors and licensees for the control it gives them. Arevalo said his business is almost exclusively through e-commerce, handled in-house. “We need to own as much of the customer experience ourselves as we can.”
It is increasingly important for ecommerce to fit into a digital ecosystem that also includes the brand website(s), social media, and streaming content. At Diageo, the company has been working to connect the Guinness merchandise store to the brand website and social presence, creating a more holistic and cohesive presence and becoming more relevant to consumers, according to Grogan
The same is true for Bailey’s, said Declan Hassett, senior licensing manager. For that brand, Diageo is creating an immersive experience online that mirrors its real-life experiences. Both online and off, the Bailey’s core product can be featured alongside its branded treats and other licensed products and consumers can be given ideas on how to create an at-home experience with the brand.
Even as ecommerce grows as a driver of retail sales, it is most effective when paired with physical retail, Weber believes. “Ecommerce is not a substitute for bricks and mortar and the mall experience,” he said.
Festival speakers also underlined the importance of social media as a tool for evaluating licensees. Eunnie Hur, licensing director at Just Funky, said a property’s retail and key licensee partners, so important for assessing the strength of a property in the past, now carry equal weight with other elements, such as plans for marketing activations and collaborations and especially social media research.
An example of the use of social media in product development came from Cynthia Modders, CEO of Firefly Brand Management, in a case study about the Bob Ross licensing program. She noted that fans on social media were showing off how they painted their lips, eyelids, and foreheads with recreations of Ross paintings, leading Firefly and the estate to do a deal with Cinema Secrets for a makeup set featuring the colors of Ross’s palette.
Ross is also an example of the power of social media, streaming, and other digital platforms to spur the popularity of a property. Twitch.TV was the catalyst for the brand’s resurgence in 2015, explained Modders, when a marathon of the series attracted 5.6 million viewers, spurring an expansion of streaming exposure that continues today, as well as the creation of licensed products.
The growth of digital platforms as a source of properties available for licensing was obvious throughout the exhibitor booths at the Americas segment of the Festival. Mr. Kate, a leading YouTube home design and DIY influencer brand, was represented by Brandgenuity, while The Hype House, a collective of popular TikTok stars, was on offer at Brand Central, to name just two.
The jury remains out on how well digital properties translate to licensed product sales. The roster of success stories is growing, of course, with examples starting to pile up in the U.S., Europe, Asia, and other regions. But Tinajero pointed out that sales of entertainment-licensed merchandise are down this year across Latin America, a fact that she attributed in part to the lack of theatrical feature films. She noted that streaming does not translate to significant sales at this point.
Restructuring Deals for a New Era
The need to restructure and rethink licensing deals to help licensees succeed, and the willingness of licensors to consider such proposals, was a topic of discussion. Some of the configurations that came up in the panel on what licensees want included:
- Lower or even no minimum guaranteed royalties, typically in return for contractually guaranteed marketing or promotional initiatives, promises of timely product introductions, expansion into untapped channels, or other non-financial contributions. Spreading payment of minimum guarantees over a longer period of time on both new and existing contracts has also become almost standard during the pandemic.
- Terms absolving licensees of the requirement to remit royalties when a key customer doesn’t pay. The failure of Toys ‘R’ Us and others pre-COVID, and especially the precarious position of many key retailers during COVID, puts a priority on this issue. It was noted that licensees can approach licensors about this topic on a case-by-case basis, no matter what the contract says; if a licensor wants merchandise on store shelves and permits the licensee to fulfill an order from a retailer on the verge of bankruptcy, it may be willing to forgo royalty payments in the case that customer fails.
- Removing caps on deductions from net sales and/or allowing uncollected money to be deducted. This is something that licensors have been resisting for the most part so far, but licensees believe it will be allowed in the future as the risks of nonpayment rise, through no fault of the licensee.
- Inserting clauses addressing pandemics into the traditional boilerplate, so the partners do not need to rely on the less-specific force majeure clause.
Ferguson noted that an already established routine of constant communication between the licensor and licensee will make some of the tougher negotiations along these lines go more smoothly. He added that almost every licensor is open to at least discussing elements such as payment term extensions, additional grants of rights, the pursuit of unique opportunities, or nonfinancial solutions to solve problems. “If you don’t ask, you don’t get,” he said.
Trends Mirror Other Territories
A number of the other trends observed in the Americas portion of the Festival of Licensing echoed those seen in the Asia and Europe legs of the event:
- Purpose and positivity. “Brand purpose has become a huge brand imperative,” said Stu Seltzer, president of Seltzer Licensing Group, in a presentation on this topic. He added that purpose-driven brands also do better financially. Companies such as Just Funky are more involved than ever in social responsibility and causes and are looking for ways to leverage those relationships in meaningful ways, beyond a simple donation. Meanwhile, one often-cited purpose for properties these days—from Jill Liberman’s Choose Happy brand at Brand Liaison to DustyKid at the Zolan Licensing Agency—is to lift spirits through positive messages and positioning.
- Millennials and Gen Z. These two demographics have been at the forefront for some time, but licensors and licensees seem to be homing in on them more than ever as successful efforts accumulate. Modders cited Bob Ross waffle makers, toasters, and slow cookers from Uncanny Brands as the result of a desire to serve the brand’s core demo of millennials better. The Joester Loria Group highlighted the Pacifico beer brand’s growing popularity with millennials and Gen Z as a selling point. In fact, Gen Z and millennial consumers are at the center of many of the trends discussed here; as Seltzer noted about brand purpose: “This is about millennials. They buy more if there’s a purpose.”
- Reimagined experiences. There is near universal agreement that experiential licensing is here to stay, despite the current challenges. Diageo’s brands are supported by travel and experiential initiatives, such as the Bailey’s Treat Bar pop-ups around the world. Long-term, Diageo plans to expand that initiative; in the meantime, it is looking to its new licensed glassware and baking chips, mixes, and gift packs to help bring those experiences home.
- Cooking and baking. Speaking of baking, the rise of cooking and baking as themes for licensed properties and as categories for licensed products has been ongoing for some time but has intensified during the pandemic. This area of interest was notable across the virtual booths, from properties such as influencer Yolanda Gampp’s How to Cake It brand at Brand Liaison, to licensed products such as Bonnier’s Saveur Selects kitchen tools and pantry essentials, launched late last spring.
- Vintage and retro themes. Again, this segment has had an ongoing presence at trade shows for years, so much so that vintage has become a perennial design theme rather than a trend. That said, its popularity has peaks and valleys—and it is definitely peaking now. Two examples: Brand Activation Consulting launched a new style guide with vintage artwork under the Hersheys Heritage Collections umbrella, while ViacomCBS touted its Nick Rewind brand, covering properties from millennials’ and Gen Z’s formative years (e.g. Rugrats).
Cannabis-themed properties represented one trend that bubbled up only in the Americas portion of the Festival of Licensing; the Americas have been at the forefront of legalization for adult recreational use. One of the properties under the Valfré art brand was Dave, described as a happy-go-lucky weed leaf. And Firefly was handling rights for the comic book and TV property The Freak Brothers, which is about characters whose lives are centered on weed and other drugs; its licensees to date include Famous Brandz, Hot Properties, Surreal Entertainment, Trevco, and Blackball.
FoL Asia: All Eyes Toward the East
October 20, 2020: The Festival of Licensing’s Asian week, held October 14-15, 2020, was dominated by global exhibitors from outside Asia that are doing or hoping to do more business in this part of the world. In fact, more than four-fifths of the companies exhibiting during the Asian leg of the Festival were from other regions. Most of the Asian-headquartered companies exhibiting—hailing from mainland China, Hong Kong, Japan, South Korea, and Malaysia—were focused on other regions (Europe and/or the Americas), often through subsidiaries in those territories.
U.S., European Licensors Look to Asia
Some of the global companies exhibiting at the Asian portion of the Festival already have a strong business in that market. U.S.-based brand-extension agency LMCA, for example, has an office in China and represents a number of global corporate brands there; the agency says it generates $7.25 billion in annual retail sales of licensed merchandise globally, including several $100 million-plus programs. Perfetti Van Melle, meanwhile, counts Asia as its biggest market globally. It has established programs for Chupa Chups and its other brands in Japan (where it has been involved in licensing for 15 years), as well as China and South Korea.
Banijay Brands announced new deals with Asian partners during the Festival, including Hong Kong-based Toy East and BMW for a die-cast model of Mr. Bean’s Mini; Kin Hsing in Taiwan for Mr. Bean plush; and PT Homeco for MasterChef cookware, tableware, and kitchenware in Indonesia, sold through the online retail store Dusdusan.com. These are the latest of several agreements Banijay has signed in the region recently.
Interest in the Asian market was evident among European Festival exhibitors as well, with two U.K. museums among them, both highlighting recent deals in China. The National Gallery was touting its cosmetics license with Zeesea, with more than 100,000 sets sold to date; a pop-up at the top of the tallest skyscraper in China; and a deal with Ramen Talk for a collection of noodle dishes inspired by famous paintings, launched in August and supported by Tmall. The V&A, meanwhile, was featuring two of its new partnerships, one with Joyye for Alice in Wonderland-inspired ceramics and the other with She’s for a nine-piece gold plate and enamel jewelry and accessories collection based on the designs of Alphonse Mucha.
A Global Outlook for Asian IP Owners
Conversely, the licensors of several Asian-origin IP announced deals to export their properties to the global stage. Chinese online entertainment service iQIYI has partnered with ViacomCBS for its CG-animated preschool TV show Deer Squad, representing the latter’s first property from China. The series has themes of friendship, STEAM, and social-emotional learning. It launched on Nickelodeon in Asia (outside of China), the U.K., and Australia in August and is set to roll out in other markets later in the fourth quarter. Smartplay is the master toy licensee, in partnership with Wow-Wee. Nickelodeon consulted on the show’s development.
In other news that came out during the Festival’s Asian week, CJ ENM has named King Features the North American master licensing agent for Pucca, which had a presence in the show’s Korea Pavilion. Toei Animation of Japan and its North American licensing agent Funimation announced a number of new and renewed licensing agreements for the DragonBall franchise, including with Bioworld, Funko, Great Eastern Entertainment, Just Funky, Primitive Skateboarding, Isaac Morris, and Uncanny Brands. Konami Cross Media NY announced several deals for the Japanese property Yu-Gi-Oh with licensees in France, Germany, and the U.K., including with Butterfly-Effected, Editions Larousse, Pyramid International, and Abysse. Among exhibitors, French agency Sagoo was exhibiting Chhota Bheem/Mighty Little Bheem, one of the top animation-based properties in India, which it represents in Europe.
It should be noted that the leading Asian properties, whether they break out of the Asian market or not, often rank as some of the biggest in the world. These typically come from the worlds of anime/manga, video games, and cute kawaii characters that originated as merchandise designs.
An example of the latter is San-X’s Rilakkuma, which has 500 licensees and has sold $10 billion at retail since 2003 globally. Its entry into Western markets has been more recent. It launched a 13-episode Netflix Original series in 2019 and has been involved in a number of collaborations and experiential activities targeting young adults in the U.S. These include merchandise at the upscale gift shop PIQ in New York’s Hudson Yards, a pop-up café at the Los Angeles location of Tom’s Urban, a macaron collaboration with L.A. bakery Honey & Butter, and a range of merchandise at Urban Outfitters.
While some of the Asian-origin properties exhibited at the Festival were little-known outside of Asia to date, many are well recognized globally. The Korea Pavilion featured YooHoo/Aurora World, Pucca, and Robocar Poli; Tatsunoko Production offered Speed Racer, Samurai Pizza Cats, and Casshan; and Toei had One Piece, Sailor Moon, and Saint Seiya, as well as Dragon Ball.
Japanese anime/manga is not only one of the top Asian property types when it comes to its presence on the global market, but it has been one of the fastest-growing segments in licensing for some time and does not seem to be slowing down. Crunchyroll, a leading distributor and licensor of anime and manga, told attendees of its panel that it has 70 million registered users, 40 million followers on social media, more than 200 licensees, and more than 100 retail partners globally. One of the properties it represents, the Gundam franchise, has generated $20 billion in total retail sales of licensed merchandise since its debut in 1979. A significant percentage of that has been attributable to Bandai’s plastic model kits, which sell 500 million units and $165 million at retail per year.
The populations in some territories in Asia are among the most digitally savvy in the world. Chinese consumers prefer to do nearly everything online, from mobile payments to food orders to education, according to P.C. Xu of Shanghai Sunrise Culture Development Co., a licensing agent representing Mars Wrigley, the National Art Museum of China, and Love Nikki. E-commerce, through sites such as Tmall, JD.com, and Pinduoduo (PDD), has become the top retail channel, more important than hypermarkets or specialty stores, Xu says.
The dominant company in the digital space is Tmall owner Alibaba, which operates a variety of other digital platforms in China, from streaming service YouKu and payment service AliPay to marketplace Taobao; it is also an investor in the social media site Sina Weibo. The company is involved in licensing through its Alifish division. Alifish works with 400 different properties, using AI and big data to match them with the 100,000 international and local brands in the Alibaba ecosystem, according to Alex Tsai, head of partnerships and licensing for Alifish. The final products are sold to the company’s 950 million active consumers on Tmall, and in other channels.
The importance of technology was underlined in a session about Sanrio’s 60th anniversary plans, presented by Linh Forse, senior director of sales and business development, Sanrio Americas. The company has two core markets for its 400 characters. It reaches girls 6-10 through content on YouTube, apps, and social media, with a goal of expanding awareness and developing the characters’ personalities. And it reaches millennial women through co-branded goods, social media, influencers, a community of superfans called Behind the Bow, retail activations, and mother-daughter content such as DIY videos on YouTube.
In 2021, Sanrio will embark on a “three-year digital intensification strategy,” Forse said. That will include content on YouTube and other platforms, such as three- to eight-minute live action clips and one- to three-minute animations; gaming, including plans to enter the esports space next year; social media, where the company attracts 28 million followers; and Sanrio.com, the hub for e-commerce and all things Sanrio. The theme for 2021, which addresses the feelings of isolation and uncertainty that will continue globally into next year, said Forse, is “Connecting Friends Around the World.”
“All we do is based on the exchange of small gifts, friendship, and thinking of others,” she said. “We help shape the trends coming out of Japan.
China and India: Evolving Retail Markets
Both China’s and India’s licensing markets have undergone significant changes, especially in their retail landscapes, as set forth in two sessions organized by Licensing International on doing business in the two countries.
In China, as ecommerce has taken over the top spot in importance for the sale of licensed products, hypermarkets have become less critical, according to Xu. Malls remain popular, but they have turned into entertainment centers and service centers as much as shopping centers these days. The convenience store (CVS) and specialty store channels are growing, with the latter featuring high-quality designer and branded stores.
Another change in China’s licensing landscape is the increased power of Gen Z as consumers of licensed products. Xu reports that members of this group have money, look for high-quality product, and purchase at high levels. “They lead the trends and they are highly influenced by trends,” he said.
The China Toy and Juvenile Products Association’s Licensing Industry Report 2020, highlighted in Tsai’s presentation, confirmed that young adults account for 22% of sales of licensed products, the single biggest market, taking over the number-one spot from the formerly powerful kids’ demographic.
India, meanwhile, has seen a retail explosion, with sales poised to grow 10% year-over-year in 2020 before COVID hit, according to Jiggy George, founder of licensing agency Dream Theatre. That said, getting a licensed product into Indian retail is not easy. There are no global retailers outside of single-brand stores, due to government restrictions on foreign ownership. More importantly, 90% of retail is still unorganized, comprised of small multibrand outlets, standalone specialty stores, and street markets.
On the organized side, hypermarkets are the largest and fastest-growing sector. The specialty store tier consists of grocery, apparel, and book shops, among others. E-commerce is fast-growing and efficient, with Flipkart the top player and Amazon present as well. Traditionally e-commerce in India has been known for steep discounts and low profitability, but that is changing as marketers are emphasizing convenience over price. The country is highly fragmented, with major income disparity, 22 languages and 1,650 dialects, and many religions and castes. “Two things hold the country together,” said George. “Bollywood and cricket.” E-commerce, he adds, is the only way for a property to reach all of India’s consumers through one channel.
Direct-to-retail deals with both online and offline retailers are a good way to enter the market, George reported. But ultimately licensors need a mass distribution strategy that encompasses online, department stores and other organized retail, and even the unorganized stores. The last sector is difficult, but with such a commanding market share, it is unrealistic to ignore it.
FoL Europe: A Positive Outlook, Despite COVID-Related Challenges
October 14, 2020: The European leg of the Festival of Licensing was the most comprehensive of the three, both in the number of exhibitors and in the breadth and depth of educational sessions and brand showcases. The event was timed to what would have been the live version of Brand Licensing Europe and served as its replacement for this year. For the most part, the vibe was positive, although the challenges facing the industry were certainly front-and-center as well.
Seeking Comfort During The Crisis
The continued strength of categories and themes that lend comfort to consumers during stressful times was evident. A number of new deals, recent success stories, and announcements of future plans involved sectors including board games, puzzles, arts and crafts, videogames, health and nutrition, and home/DIY categories. Most of these help consumers pass the long hours at home, while also creating a sense of community, accomplishment, and/or comfort. There seems to be a consensus that these opportunities will remain viable for some time to come. (There was also news of many in-and-out apparel and accessories collaborations, which help maintain awareness at a time when many commercial activities have been on hold.)
As Marianne James, vice president, EMEA Consumer Products, at Hasbro, said during a presentation about the company’s plans, “Big ticket spend is down, but you can create purchases that meet consumer needs in terms of value.”
One example of a comfort category/theme is cooking and baking, which had a notable presence. The U.K. has long been a strong market for licensing programs tied to this subject, and it has also been on the rise for the past several years in other markets, including the U.S. But the crisis has further solidified the trend, as cooking at home has been a key activity for families during the lockdown. That was evident among exhibitors at the virtual show, with properties of note including:
- Digital content. Chefclub, a French digital cooking brand with a global reach, attracts more than 1 billion organic views per month and has 80 million followers for its cooking videos on social media. Also from France, Marmiton is a media brand that includes an online site featuring 70,000 recipes, cooking videos on YouTube, and cookbooks. It is represented by TF1 for licensing.
- Celebrity chefs. Start Licensing represents Nadiya Hussein, who launched her current career as the winner of The Great British Bakeoff and now has a media presence including television (most recently Nadiya Bakes on BBC2), magazines and newspapers, social media, and cookbooks. Her licensees include Bliss for home goods and Wilton Bradley for children’s baking kits. Meanwhile, Claire Fyfe, a former contestant on the U.K. version of MasterChef and an aficionado of interior design, created a line of food-related prints featured on a limited, U.K.-only online collection of MasterChef textiles and storage boxes.
- Competition shows. Banijay Brands launched a licensing effort for its recently refreshed heritage cooking contest Ready Steady Cook, where two teams compete to create dishes in minutes. Banijay Brands’ MasterChef continues strong, with recent deals including an expansion of its branded restaurants into the Americas and a cooking and kitchenware line with Dutch licensee Arovo that debuted in Action stores in the Benelux, Germany, France, and Poland late last year. (Reality and competition shows were a strong property type in general across the European exhibitors’ digital booths.) Meanwhile, Hasbro announced in its brand panel that it was turning the board game Candyland into a competitive baking show on the Food Network.
- Cooking-inspired art and lifestyle brands. The Camden Collection, represented by the Art Ask Agency, is a new 1950s baking-inspired lifestyle brand for the home that includes patterns, phrases, and photography. And Cakes with Faces, represented by agency This Is Iris, is a kawaii-inspired art brand from UK designer Amy Crabtree, which got its start in the world of comic cons and is centered on anthropomorphic baked goods and other foods.
Nostalgia, which over the years has become an evergreen theme in licensing, is seeing a noteworthy spike during COVID-19. Nostalgia at the European portion of the Festival took the form of art imagery (e.g., the Camden example mentioned above), a wide range of classic TV shows and books, and vintage imagery tied to corporate brands. Pink Key Licensing has had success with its Vintage Kellogg’s and Pan Am programs across Europe and is now highlighting vintage artwork for the Colmans mustard and PG Tips tea brands.
The Future of Experiential Licensing
Participants noted the continuing importance of experiential licensing, despite the difficulties in holding live events and uncertainty about what experiential initiatives will look like post-pandemic. Speakers almost universally said they were bullish that experiential licensing is here to stay in some form and that it will remain critical to the licensing business. “[The crisis] has given people a good opportunity to think about where the business can go,” said Matt Proulx, vice president of location-based entertainment at Hasbro. One opportunity, in his view: “Malls are going to be restructuring and emerging as not just shopping locations but entertainment locations.”
Jane Smith, group director, brand licensing at Banijay Brands, in a fireside chat, noted that the ability of licensing in general to engage fans is critical. “Brand licensing is part of the content financing plan now,” she said. “But to me it’s about engagement.”
Many of Banijay’s key properties rely heavily on experiential licensing. MasterChef has restaurants, cruise ships, and a digital cooking school, while Peaky Blinders has inspired a festival, a presence at horse racing events, museum nights, and an escape room. Experiences are particularly important for properties such as Wipeout, a family competition show featuring water-based physical challenges. “Experiential opportunities have made a brand like Wipeout so much more valuable,” Smith said.
Just as experiential licensing maintains fan engagement on a 24/7/365 basis, so too does content, especially streaming and social media, which has become essential for properties of all types. A number of exhibitors and speakers noted how important social media is when it comes to keeping a property top of mind. Some social campaigns are strategically driven; Team GB, the brand for Britain’s Olympic team, launched the #TeamGBGames TikTok workout challenge to keep fans engaged with the team and athletes while waiting for the delayed Tokyo Olympics to start next year. Others take hold virally; Mr. Bean has become a phenomenon on TikTok, Smith reported.
Digital-first content had a big presence among the properties being exhibited. The Valentines, licensed by Millimages, is a series of GIFs starring a ghost and skeleton in love, with 1 billion views on Giphy and stickers on Viber, Tenor, and WeChat, along with a wordless TV series. Rocket Licensing was offering Fuzzballs, a web comic property by Marc Sach that has inspired 115 million downloads of digital stickers and 20,000 products sold worldwide. Moonbug, a network of kids’ YouTube Channels including Cocomelon and Blippi, and Mumsnet, a parenting website, were on exhibit at The Point.1988’s digital booth. IMG announced during the show that it was launching a global licensing effort for the young digital influencer Like Nastya, focusing on apparel, accessories, and dolls. The list goes on.
Streaming, social, and other digital content has a natural affinity with ecommerce, which almost all licensing executives report has been a bright spot for the past six months as global consumers continue to stay away from bricks-and-mortar retail to varying degrees. Several speakers noted that they had taken the time during the crisis, by necessity or design, to improve their ecommerce offerings and operations. “Retail is probably forever changed,” Smith said.
Putting the E in Sports Licensing
“This is one of the most challenging times in sport ever,” said Simon Greswell, managing director of sports specialist agency SGLP, who moderated a panel on sports licensing with Joan Carrera Lopez, senior manager, retail and consumer product licensing, at Formula One, and Tim Ellerton, commercial director of Team GB. They and other sports licensors have been offering content and social media efforts (e.g., training videos and videos of past races) and turning viral moments into print-on-demand merchandise when possible, among other steps, to keep their sport top of mind when live events have not been possible.
Ellerton noted that the lack of live sports has been a challenge, but has not dampened the underlying demand. “There’s a real hunger for sport,” he said. “There will be a massive flock back to sport in some way.”
“We have signed deals during the pandemic, including significant ones,” reported Carrera Lopez. “Licensees are thinking about the future and conversations are happening.”
Sports licensors, particularly European football/soccer clubs, accounted for a significant number of exhibitors. These included not just globally recognized brands such as FC Barcelona, but also regionally licensed clubs such as FC Porto and Olympique de Marseille, the latter with 30 licensees in France and the EU. They are involved in traditional sports-licensing categories as well as fashion collaborations; music licensing agency Global Merchandising Services highlighted an apparel collaboration from late last year between its client Iron Maiden and soccer club West Ham United.
Esports is one strategy that has benefited the sports licensing world during the lockdown, not to mention gaining traction is its own right. “We haven’t dipped into esports-specific merchandise, but it has kept the brand relevant when there has been no racing,” Carrera Lopez said. He noted that drivers playing esports on what would have been race weekends helped show their human side, engaged new customers, and caused bumps in online merchandise sales.
The connection between sports and esports, which has grown exponentially during the lockdown, has also benefited licensors and licensees specializing in gaming. In a panel on “What Do Gamers Want?” Dan Amos, head of esports for licensee Difuzed, which makes apparel tied to 250 gaming and evergreen brands, says esports has opened new retail and etail channels for gaming companies, with esports merchandise sold not only in gaming retail but in sports retail as well.
Among the esports brands and sub-brands being exhibited as part of the Festival’s European segment were the Electronic Sports League (ESL), which claims 50% of the global esports market with 245 million annual viewers and 15 million social media fans, according to its agent, Beanstalk; esports-related sub-brands of sports licensors MotoGP and the NBA U.K. (with its NBA 2K League); and individual esports teams, including G2 Esports, represented by Brandgenuity, which is exhibiting at FoL’s Europe and Americas editions. Several gaming publishers with active licensing programs, including esports components, also exhibited.
Seeing the Bright Side
Consumers are looking for products with a positive vibe, licensing executives report, whether that be a product that gives them feeling of happiness or one that promotes a particular purpose.
Nicholas Loufrani, CEO of Smiley World, said during a keynote that his company has seen year-on-year growth in 2020 to date of 11%. In the last four to five months, the company has had success with several collaborations and signed new partnerships, at least in part due to interest in the brand’s messages of positivity (for adults) and emotional intelligence (for kids). “We’ve been saying the same thing for decades, but now it’s resonating with our partners and consumers,” Loufrani said.
“There is a need for positivity,” agreed Christine Cool, licensing manager at Perfetti Van Melle, in a panel about the Chupa Chups brand. She attributed the sense of fun associated with the property, along with its nostalgic artwork, as reasons for the success of its many fashion and lifestyle collaborations.
Exhibitors championing positive attributes ranged from Cloudco’s Care Bears, with its thematic focuses of Care Out Loud and Kindness Keepers, for 2020 and 2021, respectively, to Lisle Licensing’s new client, humorous art brand Kate Smith Co., whose imagery is meant to be shared as a means of creating happiness and fun.
A number of exhibitors were also promoting cause-related properties or tie-ins. One standout subject in the purposeful licensing space was sustainability, which was on the rise before the pandemic and has stayed at the forefront and perhaps even strengthened since the crisis began.
Some of the many properties with eco-friendly content or themes highlighted included Bavaria Sonor’s Janosch, Studio 100’s Maya the Bee, TF1’s Ushuaïa adventure-travel documentary series, Ink Group’s Zafari, The Point.1988’s River Cottage lifestyle brand, and two electronic auto racing brands, MotoE (a MotoGP sub-brand) and Formula E (represented by TBSA).
Several licensors also highlighted collaborations focused on sustainability, including Magic Light Pictures’ Snail and the Whale with Fat Face, Natural History Museum with Finisterre, and the V&A with People Tree (the latest effort in a relationship that is in its fourth year). MasterChef’s latest cookbook is MasterChef Green, which focuses on vegan/vegetarian cooking and sustainability, the first step in a planned expansion of the brand into the sustainability space.
A hot topic in licensing over the summer was diversity, and this theme also emerged in a small way at the Festival, mostly in the form of subtle themes of acceptance involving fantasy or alien children’s characters. Examples included Studio 100’s 100% Wolf and Ink Group’s Moonzy.
The European week of the Festival of Licensing served as an opportunity for many licensees to announce new collaborations, licensing deals, and other ventures, much like the live version of BLE would.
Examples included The Pokémon Company, an exhibitor in the Europe and Americas weeks of the show, announcing a luxury handbag collection with Longchamp and an apparel collection with Erve Europe/Van de Erve; a collaboration between Julie Dodsworth and Shaun the Sheep, both represented by Start Licensing; a new line of Cadbury chocolates for classic Peter Rabbit, licensed by Penguin Ventures; a just-published quiz book for Peaky Blinders from Hodder & Stoughton; Acamar’s news of a Bing theme park attraction in Italy with Leolandia; Art Ask and Frida Kahlo signing a bag deal with Olympia le Tan; NSPCC debuting Pantasaurus plush at retailer Matalan; and new products in Europe for Dr. Seuss, licensed by Wildbrain CPLG.