The Year in Review: 2018
December 18, 2018: Many of the trends with the greatest impact on the licensing business in 2018 reflected broader developments in business and the world at large, from an evolving regulatory landscape to the rise of social movements to changes in retailing and distribution. There were some hot properties and product categories, too. Read on for 15 of the key trends of the year, in no particular order:
1. Toy industry turmoil. The bankruptcy of Toys ‘R’ Us led to the closing of all of its U.S. stores and those in many other territories. In the U.S., retailers from Walmart, Target, and Amazon to Party City, Kroger, and JCPenney—as well as some relaunched toy-retailer nameplates of yore—are fighting for the 15%-20% share of industry sales TRU held, according to analysts. While it is to soon to say at this writing whether these new or re-energized players will be able to fill the void created by TRU’s closing, the new normal, at least for now, is a more fragmented and top-brand-centric landscape.
2. Burgeoning blockchain. Blockchain, a tamper-proof record-keeping technology that enables goods and services to be tracked throughout their lifespan, gained traction this year. In licensing, much of the highest-profile activity has been related to cryptocurrency, especially in the realm of sports licensing, and virtual goods. But the value of blockchain is likely to be more profound, albeit less publicized, in the future, especially as a means of securely recording chain of custody. This will have an impact on everything from food safety to the purity of organic goods to anti-counterfeiting efforts. Big players from Wal-mart to luxury fashion labels have been among those supporting early blockchain initiatives in these areas.
3. Enhanced reality. Strides have been made in the adoption of virtual reality, which immerses the user in a three-dimensional digital world; augmented reality, which overlays digital elements onto real-life scenarios; and mixed reality, which combines real and virtual elements in a sort of AR-VR hybrid. Licensors and licensees have been embracing these technologies, from creating virtual-reality gaming experiences to incorporating ever-more-sophisticated AR elements into educational toys. Also on the technology front: The rise of AI-driven digital assistants such as Amazon’s Alexa, which have forged content deals with a number of properties.
4. #MeToo movement. The licensing business was not immune to the ramifications of the #MeToo movement in 2018, with celebrity licensors Mario Batali, Russell Simmons, and Brett Ratner all seeing their product lines end as a result of their alleged transgressions. In addition, the movement helped further the wave of girl-empowerment properties that had already been getting exponentially stronger over the past several years. That trend had been rooted in fantasy (e.g. superheroes) but moved more into reality in 2018. For instance, books about real feminists and accomplished women (e.g. the STEM Stars biographies of female scientists and astronauts under the licensed Discovery #Mindblown brand) proliferated.
5. Acceptance and inclusiveness. This trend has been emerging over the past few years but gained power in all of its forms in 2018. Licensed products are not just appealing to different demographic groups but are embracing acceptance of all. This is occurring through gender-neutral products, graphic t-shirts featuring phrases of acceptance, collaborations involving transgender celebrities and other properties that in the past were considered too controversial to touch, size-inclusive apparel collections, and diverse doll lines. One example: Ellen DeGeneres’ new brand for Walmart, EV1. As the name suggests, it is meant for everyone, encompassing all sizes and featuring a reasonable price point to not exclude lower-income consumers.
6. The force of Fortnite. This free-to-play title from Epic Games—which levels the playing field for all ages and skill levels—managed to bring in $1 billion in franchise revenue from in-game purchases and other income streams across all platforms in its first year. It permeated pop culture from NFL end zone dances to Halloween costumes to social media chatter and memes, leading it to become a sought-after license. Jazwares (the master toy licensee), Hasbro, Moose Toys, and more introduced a raft of products in the fall. Other hot entertainment properties of the year: Cartoon Network’s Rick and Morty and Disney’s Mickey Mouse, celebrating its 90th birthday.
7. A universe of unicorns. The unicorn trend does not seem to be slowing down despite near-saturation levels, with unicorns continuing to appear in collectible toy lines, books, and TV series, including in conjunction with licensed properties from the NFL to Deadpool. Meanwhile, the landscape diversified with the addition of other horned creatures such as narwhals and llamacorns. Other happy and/or magical themes—e.g., rainbows—also were prominent in toys, entertainment, and product design.
8. Politics and regulation. Factors outside the control of the licensing community and under the control of governments and regulators are likely to have a big impact in the near and long term. They include trade wars between the U.S. and China, as well as other nations; the negotiations leading toward the implementation of Brexit in the U.K.; and the E.U.’s General Data Protection Regulation. Currently, the biggest impact on licensing from most of these developments is uncertainty.
9. High on cannabis and CBD. Canada legalized recreational marijuana in summer 2018 and a growing number of U.S. states have implemented some form of legalization, while marijuana’s non-psychoactive cousin CBD has been a hot health trend. All of these developments have created opportunities for the licensing community. Kevin Smith’s Jay and Silent Bob launched a new brand of marijuana with Chemesis in Canada, for example, while Level Brands licensed Isodiol for a line of CBD-based health and beauty products under the Kathy Ireland Health & Wellness brand.
10. Bountiful beauty. The beauty category remains healthy, especially on the high end, as influencers (Patrick Starrr x MAC) and other celebrities (Chrissy Teigen x Becca) continue to collaborate on premium beauty lines, as do characters from Barbie to Hello Kitty to the Disney Princesses. Meanwhile, retailers from Bloomingdale’s and Macy’s to HyVee and CVS are upgrading their beauty departments, and other retail chains are forming alliances for the same purpose (e.g. Banana Republic x Cos Bar).
11. More options for social shopping. Consumers’ ability to move straight from social media to a purchase of a licensed product has strengthened in 2018 as the big players test or add social shopping functions. Almost half (48%) of consumers say they have purchased a product or service through social media, according to research from SUMO Heavy published this year. Facebook is testing a live video feature for merchants, Instagram is mulling the launch of a new shopping app, and YouTube introduced its Merch Shelf program with Teespring. The latter allows content creators and licensors (of Simon’s Cat and Mr. Bean, for example) to sell merchandise in conjunction with their videos.
12. Bricks and clicks. The melding of bricks-and-mortar and e-commerce shopping continued in 2018, as retailers tried to be available where and when consumers wanted them to be. Amazon and other etailers opened physical stores, subscription meal kit marketers and grocery stores partnered to make the former’s products available on shelf, Fanatics launched in-store boutiques in JCPenney’s physical stores, and companies such as Target and Walmart bolstered their e-commerce plays and integrated online with offline operations.
13. So many sneakers. Limited-edition sneaker collaborations show no signs of abating, with new collaborations released continuously to appeal to collectors and fans. From One Piece (with Skechers) and Black Panther (with New Balance) to Comme des Garçons (with Nike Air) and Travis Scott (with Air Jordan), licensors, retailers, and fans alike seem to have an insatiable desire for new partnerships.
14. Going private. The prevalence of private labels over branded goods waxes and wanes year after year, but store brands were certainly on the upswing in 2018. Target launched eight new private labels, including denim brand Universal Thread and home goods label Made by Design. Amazon continued the proliferation of its private labels with Earth+Eden, Love & Care, and CHALLENGE by GNC. Kroger rolled out its Dip collection of apparel in Fred Meyer and Marketplace locations. While some of the store brands are produced in conjunction with a licensed name, overall they represent another challenge to licensed products trying to secure shelf space at retail.
15. Eye on the environment. Eco-friendly product lines started to gain a significant foothold at retail in 2018, after years of fits and starts. Fashion designers began to reject fur in a big way and create more clothing items from recycled plastics, vintage fabrics, or materials such as mushrooms or eucalyptus. Clothing recycling progams began to spring up and big marketers vowed to use recyclable packaging. In the toy industry, Lego is making bricks from plant-based plastics, showing that the trend is not just focused on niche players any more.
Remember to check in with RaugustReports in 2019 for twice-weekly insights on new trends as they happen.
The Year in Review: 2017
December 19, 2017: A lot happened in licensing in the past year, both positive and negative. Here are 10 trends that made an impact on the business in the last 12 months:
1. The “retail apocalypse.” The first half of the year was brutal when it came to retail chains shuttering large numbers of stores and laying off employees, entering bankruptcy, and going out of business completely, with specialty apparel chains and department stores among those most affected. While IHL Group estimates that 2017 ended up seeing more store openings than closings on balance—with dollar stores and deep discounters among those showing growth—many of the struggling chains are critical to the licensing business. For example, the woes of Toys ‘R’ Us have had negative ramifications on the performance of many of the leading toy companies throughout the year.
2. Mergers and consolidation. Throughout all corners of the business, the big got bigger, with Fanatics buying the collegiate licensing division of agency Fermata, home shopping networks QVC and HSN coming together, the news of a merger between IMG College and Learfield, Amazon purchasing Whole Foods, and most recently, Disney’s announcement of its Twentieth Century Fox acquisition. Meanwhile, companies that came together in 2016 continued their integration, from Activision and King in the interactive gaming space to Universal and Dreamworks in the studio world.
3. Subscription retail and e-tail. Licensors’, licensees’, and retailers’ involvement in all kinds of subscription- and membership-based selling opportunities strengthened in 2017, with meal kits, subscription boxes, social shopping, and all kinds of other iterations being explored. In the subscription box area alone, recent examples run the gamut from JCPenney launching a box for big-and-tall men to actress Sophia Vergara introducing an underwear subscription service.
4. Diversity. Licensing programs and initiatives increasingly focused on specific, underserved demographics such as U.S. Hispanics, Muslims in the U.K. and elsewhere, gay and transgender consumers, or children with special needs. Other efforts are embracing all consumers, whether through product availability—no more ignoring or cordoning off plus-size consumers—or inclusivity in marketing, entertainment, and graphics. Examples range from ASOS’s fashion collaboration with LGBTQ advocacy group GLAAD, to the new Marvel Rising animation franchise, featuring diverse characters and female leads, to New Era’s Hispanic Heritage Collection.
5. New experiences. Experiential licensing and marketing were as hot as ever during 2017, from the proliferation of pop-up shops and cafés across property types, to country singer Tim McGraw’s deal with Snap Fitness for a chain of signature gyms. Some particular areas of interest this year included community virtual-reality experiences for properties such as The Mummy, Ghostbusters, and Justice League, and location-based escape room games for Pokémon, Rubik’s Cube, and Murdoch Mysteries, among others.
6. Influencer-driven cosmetics trends. The cosmetics category continues to be up-and-coming for licensing and collaboration, often centered around a “be yourself” theme. While a wide variety of properties have capitalized on the opportunities in this sector, a driving force has been social media influencers, from K-Beauty experts such as Alicia Yoon, to male makeup artists such as James Charles, to lip artists such as Jasmina Daniel. Their commercial activities typically start with endorsements and brand ambassadorships, later extending into signature collections and sometimes long-term licensing deals.
7. Corporate novelties. A number of corporate licensors, especially in the quick-service restaurant, snack, and coffee shop sectors, created short-term collections of oddball—but popular—products that generated significant publicity and, in many cases, strong sales. (Some items sold at prices in the thousands of dollars.) Taco Bell’s apparel collection at Forever 21, KFC’s “fried chicken couture” (with a refreshed assortment debuting at the end of the year), and Cheetos bronzing cream (a pioneering effort launching in late 2016) all appealed to consumers looking for April Fool’s-level conversation pieces in their closet.
8. Hotter markets. A number of properties and products unexpectedly hit the collective consciousness, generating awareness and commercial opportunities for companies that were ready to take advantage within a very short window. From Ghostbusters sneakers, Austin Powers masks, and McDonald’s Mulan Szechuan sauce—all of which came to the fore through pivotal scenes in entertainment not controlled by the marketers in question—to fidget spinners, these situations are reminders of the need to be ready for anything these days.
9. E-sports. Professional video gaming became more mainstream and gained traction within the licensing business, with leading licensors such as the major leagues sponsoring teams—a potential precursor to more consumer products activity—and pro e-sports players, teams, and leagues all dipping their toes into licensing. Deals remain limited in both frequency and scope, but signs are increasingly pointing toward broader commercial viability.
10. Cannabis. Marijuana and marijuana-related products such as accessories, apparel, and infused foods and beverages grew quickly as a category for licensing, with cannabis brands, chefs, celebrities, and especially musicians continuing to extend their names into the space and High Times and THC among the pot-friendly lifestyle brands signing merchandise deals. Most of the activity was in U.S. states where marijuana is legal, but other countries also have potential; Jay and Silent Bob actors Kevin Smith and Jason Mewes recently paired with Beleave for a marijuana strain available in Canada.
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The Year in Review: 2016
December 20, 2016: Here is RaugustReports’ perspective on some of the key licensing trends of the past year:
1. A sense of belonging. Membership- and subscription-based distribution channels have become important means of selling and promoting licensed products. Star Wars and Kate Spade merchandise is sold through flash sales sites such as Zulily, Gilt Group, and Joss & Main. Warcraft novelties and Christian Siriano fragrances are featured in subscription boxes from Loot Crate to Birchbox. Chefs such as Jamie Oliver and Fabio Viviani, along with other types of properties, are forging deals with meal kit services from Chef’d to Hello Fresh.
2. Smoke signals. While traditional cigarette brands remain taboo for licensing, it looks like that will not hold true for the young and growing cannabis and vaping industries. Brand extension into smoking accessories, edibles, topical lotions, strains of pot, and e-liquids for vaping, not to mention lifestyle licensing into apparel and the like, are all on the rise. Musicians (Snoop Dogg), chefs (Mindy Segal), adult brands (Hustler), and lifestyle brands (THC) are among the properties involved to date.
3. Behold beauty. While the fragrance industry has become saturated with licenses and the number of new deals has declined, other parts of the health and beauty industry have been active in 2016. Properties from the TV series Outlander to designer Isaac Mizrahi have been among the many to inspire agreements for color cosmetics. Men’s grooming is on the rise, with IPs such as Ryan Seacrest and Elvis Presley in the mix. Celebrities who made their name as makeup artists, such as Pat McGrath and André Walker, continue to lend their names to signature beauty products. And HBA brands from Edge Shave Gel to Short & Sassy have recently launched outbound licensing programs.
4. Merchandising moments. Increasingly, licensing initiatives and collaborations are focusing on very specific themes, experiences, or marketing “moments.” These might include a musician’s album (Beyoncé’s Lemonade collection), a common history or geography (Polaris and Red Wing), a phrase (Liverpool football club’s “The Normal One”), or a character from a commercial (Mountain Dew’s Puppybabymonkey), among others. While none of these tactics are new per se, together they have become a go-to strategy for adding interest to, or testing the waters for, a broader licensing program.
5. The “Internet of Things.” Connected products have become almost the norm in many categories. Toys feature artificial intelligence or augmented reality. Fashion labels’ licensed apparel or accessories give the weather report, facilitate communication, and monitor wellness. Appliances, furniture, and décor are positioned as part of the smart home. There are still challenges, ranging from privacy concerns to figuring out how to effectively mine this fast-evolving sector. But connectivity is here to stay and is having a critical impact on many key categories for licensing.
6. Summer of Go. The launch of Pokémon Go, the augmented-reality gaming app that brought monster hunting into the real world, immediately started a craze that extended to malls, hiking trails, and tourist destinations. The retailers that were able to capitalize the most, from a licensing perspective, were those that already had Pokémon merchandise in inventory at the time. While the craze has faded from its peak, many observers expect the rejuvenated Pokémon to remain a strong property across all retail channels this holiday season, and perhaps beyond.
7. Pop-ups. Experiential initiatives are a way of life in licensing these days, and pop-ups have been a particularly common configuration in 2016. Properties from Kanye West and The Weeknd to M&Ms to Powerpuff Girls, Captain America, Smiley, and Thomas & Friends have popped up with shops, cafés, experiences, and destinations. The phenomenon is global.
8. Thinner slices of celebrity. Licensing continues to spread into new nooks and crannies of the celebrity landscape. Manufacturers and retailers are forging collaborations, limited editions, and even traditional licensing deals with trick sports specialists (e.g. Dude Perfect), cosplay artists (Yaya Han), high-profile e-sports players (Johnathan Wendel), transgender models and reality stars (Caitlyn Jenner), social media-driven male makeup artists (Manny Mua), and fantasy football experts (Matthew Berry).
9. Gender equality and identity. More licensing deals, involving properties from Popeye to B.U.M. Apparel, are incorporating unisex fashion items. Target launched a new Cat & Jack brand, meant to appeal to both boys and girls, removed gender-specific signage in the toy aisles, and took steps to make transgender shoppers feel welcome. Girl-centric remakes of films like Ghostbusters, Oceans Eleven, and Splash offer a new perspective, even while generating controversy among some fans of the originals.
10. Smart girls. More properties and products are meant to appeal to and inspire young females with “smart girl” themes. Those focusing on building interest in science and engineering, for example, are gaining traction at retail. Toy-based properties such as Project MC2 and GoldiBlox are signing licensees, while IPs such as Barbie are being featured in science-based activity kits. Meanwhile, high-profile female superhero properties, such as DC Superhero Girls, Miraculous, and Barbie Spy Squad, not only feature strong girl characters but give the girls the same action-adventure-driven powers as the boys’ heroes have always had.
11. Available in all shapes, colors, and sizes. Diversity has long been a topic of conversation but 2016 brought concrete initiatives along these lines at mass retail. Mattel introduced its multicultural, multi-body-type line of Barbie dolls and introduced a fashion doll inspired by plus-size model Ashley Graham. Many of the top children’s entertainment properties highlight a diverse group of main characters, allowing kids to pick a favorite with which they can identify. Fashion and sports brands continue to increase their assortments of plus-size and big-and-tall apparel, and some are starting to sign licenses for ethnic clothing items such as hijabs.
12. The universal language of emojis. From branded emoji sets—and their subsequent outbound licensing activities—to emoji-related brands and character properties available for licensing, to myriad products based on open-source designs, to unlicensed items, emojis commanded a significant amount of awareness and retail shelf space in 2016.
13. Coveted collectibles. Collectible toys such as Shopkins and Num Noms have been top sellers in their core category and have spurred licensing activity. Blind bags and other collectibles, often based on character, video game, and toy properties, outpaced other sectors of the toy and licensed product landscape. Toy-and-collectible hybrids from the likes of Oyo, Bleacher Creatures, and Funko were a growth area within sports licensing and other property sectors.
14. Buy it now. Major League Baseball sent an ecommerce-linked text to fans the moment the Chicago Cubs won the World Series and sold lots of jerseys and other championship merchandise. Clicking on an NFL Players Association-branded emoji in a text message takes the customer to Fanatics’ ecommerce page to view products featuring the same image. Atom Tickets and Disney/Lucasfilm sold merchandise and movie tickets for Rogue One: A Star Wars Story simultaneously. These are just a few of the initiatives creating a stronger connection between product purchasing and daily activities such as texting, social media, and entertainment.
15. Hotels and hospitality. Karl Lagerfeld announced in November that he would launch a chain of hotels, with the first to open in 2018 in Macau. He joins fashion labels such as Armani, Missoni, Versace, and Dior that already have branded hotels around the world, as well as a growing number overseeing room designs in luxury hotel chains. Meanwhile, Edgewell Personal Care signed a license with Hotel Emporium for the latter to develop personal care products for guest rooms featuring the Hawaiian Tropic brand and scent. And CBeebies is among the latest character licensors to launch branded hotels and hotel rooms (at Alton Towers Resort, in this case), among other hospitality tie-ins.
16. Fan-first focus. Companies across consumer products are integrating user-generated content into their merchandise, mining fans’ Instragram and Pinterest accounts for product-development ideas, and relying on fan-focused innovation programs, crowdsourcing, and crowdfunding to gauge fans’ desires. “Maker” themes remain a big part of the toy and stationery landscapes. Handbags, athletic shoes, jerseys, and figurines are customized and personalized through print-on-demand and 3D printing technologies. Although the particulars will evolve, fan-first initiatives are cemented as key components of licensors’ and licensees’ strategies going forward.
It is worth noting that most of these trends, many of which are short-term in nature, are a fit with the longer-term, overriding developments that characterize today’s licensing business. These are detailed in 15 Licensing Super Trends for 2015 and Beyond, published by Raugust Communications last year; click here for more information. And sign up for Raugust Reports to stay on top of current licensing trends as they happen.