The Year in Review: 2020
January 18, 2021: As we all know, the year 2020 brought fundamental changes to the licensing business, primarily driven by the pandemic, but also by social justice issues, political upheaval, and ongoing trends in retail, technology, and consumer behavior. In most cases, the happenings of the year furthered trends that were already ongoing, but at an exponentially faster pace.
In RaugustReports and elsewhere, we continue to regularly cover the nuances of how the pandemic and other societal and consumer products trends are affecting the licensing business. We want to take a moment here to recap 20 of the most notable product, property, and retail trends of 2020:
1. Safety first. Face coverings—unheard of as a licensing opportunity in most markets until 2020—were the category of the year, with masks at the forefront but related products such as face shields also present. Existing products that could be used to cover eyes and nose, such as gaiters and balaclavas, also saw a spike in sales, while designers incorporated masks and shields into hoodies and other clothing. Licensed IP also found its way into a number of other safety-related categories, such as disinfecting wipes, hand sanitizer, disinfecting storage boxes, self-distancing kits, and more. And, on the retail side, new means of getting products into consumers’ hands, notably curbside pickup and delivery, took off as a means to keep customers and employees safe.
2. Taking care of each other. Marketers turned their product development, sales strategies, and marketing messages toward raising funds, offering emotional support, and filling needs for consumers. Marketing initiatives (and products) offered thanks and financial support to frontline workers. Retailers built promotions around sidewalk chalk and craft supplies to assist consumers in creating and sharing their messages of thanks and support. IP owners such as Sesame Workshop, licensees, and many others offered resources to help children learn to wear masks and wash their hands, not to mention deal with their fears and other emotions. Brands helped mark important milestones and traditions in consumers’ lives that were impacted by the lockdown, such as creating virtual graduations and summer camps.
3. Focus on diversity, equity, and inclusion. In the midst of the pandemic came the killing of George Floyd at the hands of the police and the protests that followed, intensifying the discussion on racial and ethnic equality and inclusion. Marketers took several steps to be part of the conversation: changing offensive logos and product names, expanding the range of colors available in their product lines (from crayons to cosmetics to ballet shoes), severing ties with celebrities making racist comments (past and present), and looking at diversity and inclusion within their own organizations. Retailers also sought out more black-owned businesses as suppliers.
4. Experiential crisis. When the global lockdowns began—in mid-March in the U.S.—the increasingly important experiential licensing and promotions market disappeared. Live sports, theatrical plays, movie-going, restaurants, museums, theme parks, comic-cons, and more all stopped, with a big impact on the licensing business. While some have started back up again in fits and starts—and deals for future experiences are again being forged—their previous crowd-filled status will likely take some time to recover. Marketers experimented with different techniques to take up the slack, including gift boxes, virtual experiences, and small socially distanced gatherings for a select few. Unique licensed products and memorabilia have also filled some of the void as a way to engage fans. When big events come back, it seems likely many of these elements will also remain as part of a hybrid strategy.
5. Turning point for e-commerce. For some time, e-commerce’s share of retail sales of licensed products has been growing fast, but nothing like the pace of 2020. Marketers increased their presence and sophistication in targeting consumers via DTC websites, third-party e-commerce channels, marketplaces, social shopping platforms, subscription boxes, and more, while implementing an omnichannel strategy to accommodate bricks-and-mortar and nontraditional outlets alongside online sales. Meanwhile, physical retail was suffering through bankruptcies, permanent store shutterings, and temporary lockdowns.
6. Full stream ahead. Digital entertainment platforms of all types got a big boost from stay-at-home consumers, who killed time by streaming TV shows (new and old), competing in video games online with friends, playing casual games on their phones, and watching e-sports and other competitions in lieu of live pro sports. All of this created opportunities (sometimes short-lived) for manufacturers to tie in with related IP (The Office, the stars of Tiger King, Animal Crossing, Among Us) and for owners of those properties to extend their brands. Meanwhile, the move to streaming caused big challenges for licensors that work with film properties; streaming has not yet proven viable for movie licensing or for revenue-generation in general in this segment.
7. Hunger for leisure time activities. In addition to streaming and other online entertainment pursuits, consumers sought out activities to fill the extra time on their hands. This lifted a number of categories, including puzzles and games for all ages, outdoor and other toys, children’s coloring and activity books (and children’s books in general), crafts and hobbies for all ages, musical instruments, and gadgets and ingredients for cooking and baking, among others.
8. Help for home schoolers. Educational products were in demand as consumers first sought materials such as workbooks and leveled readers that would keep their students up to speed when schools were closed, to books and educational toys to support the transition to remote learning (which is still ongoing in many areas). Meanwhile, on the adult side, online courses—including licensed examples—took off as consumers decided to learn something new during their down time, whether for personal fulfillment or for career training in a period of furloughs and layoffs.
9. Nesting out of necessity. The stay-at-home orders and the prohibition of all but very small, socially distanced gatherings led consumers to want to improve their surroundings at home. They completed small DIY projects indoors, improved their gardens and patios, and acquired home décor that made them happy and freshened the look of their home without too much investment. They also made purchases to facilitate the transition to at-home learning and work, including office furniture and supplies, electronics, and décor.
10. Wellness to the fore. The virus reminded consumers of the need to improve their overall health as a way to boost immunity and ward off the disease, and they had time to focus on fitness and healthy cooking. They bought exercise equipment and participated in online yoga courses, acquired sporting goods and outdoor gear, and looked for immunity-boosting foods like kombucha, supplements, and fresh produce. They also sought out ways to reduce anxiety and sleep better, from meditation apps to yoga equipment to CBD.
11. Lending comfort. While it is true that consumers were focused on wellness in 2020, they also balanced that by embracing treats that made them feel better during tough times, driving sales of sugary cereals, decadent desserts, and salty snacks. Marketers and consumers also doubled down on nostalgia. Streaming of older TV shows helped drive this trend to a degree, but a lot of the focus on retro properties was simply due to consumers’ search for familiar friends (whether characters, brands, or other types of properties) that gave comfort by reminding them of better times.
12. Athleisure and only athleisure. Apparel, accessories, and footwear represented a hard-hit segment. Working at home and having social lives curtailed were not conducive to buying new clothing, which further hurt brands and retailers that had already been struggling. Exceptions included athleisure items (hoodies, yoga pants) and sleep/lounge wear. Both gained strength as consumers sought comfort and something to put on while exercising at home. Some retailers reported relative strength for other niches, such as nice tops to make the upper half of consumers’ bodies look presentable while on Zoom calls for work and pleasure.
13. Beauty not forgotten. The NPD Group estimated the beauty industry declined 25% in the U.S. in the first half of the year—the smallest drop of any country—as staying home and wearing masks reduced the need for cosmetics and fragrances. (Mexico experienced the worst performance globally, with a decrease of 42%). That said, there were some bright spots during the year, notably skincare, an already growing segment that became more important in the age of “maskne.” And the role of licensed IP remained strong in the beauty space, despite the challenges, with properties from characters to celebrities closing deal after deal, especially for limited collaborations.
14. Back to boxes. Most of the key developments of 2020 reflected the trends that were already ongoing before the crisis, albeit at a sped-up pace. But one business model, namely subscription boxes and meal kits, saw a turnaround. Although some individual companies had been doing well pre-pandemic, this form of distribution in general faces challenges in finding the right pricing strategies and retaining customers long-term. The lockdown put new life into the segment, as boxes-by-mail represented a safe way for non-cooking-experienced consumers to create tasty meals, provided crafty new ways to pass the time each month, gave marketers a way to engage fans, and filled holes in consumers’ lives (e.g., prom-in-a-box). Will the resurgence continue after the pandemic wanes?
15. Partnership as prerequisite. “Partnership” is a core tenet of licensing and collaboration, but it sometimes is more lip service than reality. During the pandemic, true partnership became critical for licensees, licensors, retailers, and other collaborators as a matter of survival. That meant renegotiating contracts to find more balance, collaborating to identify and quickly implement new opportunities, maintain continuous contact to monitor day-to-day changes and tweak tactics on the fly, and so on.
16. Sustainability turns real. When the pandemic hit, many observers thought it would put a hold on the sustainability initiatives that had been proliferating in recent years. But the opposite was true. Factors driving this movement ranged from a growing awareness that climate change may help fuel the spread of viruses such as COVID-19 to an increasing desire by consumers to purchase from companies whose beliefs and actions are in alignment with theirs. In 2020, companies overall moved away from one-off initiatives that are as much about publicity as results and toward a more strategic process of real, continuous, step-by-step change built into all aspects of their business.
17. Seasonless strategies. Several brands, especially in the fashion industry, abandoned the tradition of three to four distinct seasons per year, opting instead for periodic merchandise drops. They transitioned from wide assortments and waste to narrow, well-curated ranges and from in-and-out, trend-driven pieces to long-lasting classics. The trend, which had been discussed for years but took a small, concrete step forward in 2020, is propelled by consumer demands as well as financial considerations on the part of the marketers.
18. Brand rebirths. Mergers and bankruptcies led to the closure of consumer product brands and retail nameplates in 2020, particularly in the first half of the year, as many already-struggling companies were not able to survive the disruption of COVID-19. But many, from Pier One to Modell’s, were scooped up by IP investors and brand managers, and several were reborn almost immediately as online-only operations. This strategy will not work for all brands, but those with strong consumer engagement and loyalty, a well-defined positioning, and an identifiable niche may be able to thrive in e-commerce where they could not in the physical world.
19. A just-in-time, data-driven outlook. More and more, marketers are keeping tabs on their businesses on a daily basis, supported by a continuous stream of diverse data points from social media, e-commerce, and other sources. They are diversifying their supply chains, and sometimes taking control of them, to reduce lead times and prevent disruptions. Licensees, licensors, and retailers are working together closely to quickly capitalize on new opportunities—products, channels, content and design themes, marketing messages—and to immediately abandon anything that is not working.
20. Licensing as ecosystem. Along with “pivot” and “acceleration,” the term “ecosystem” has become ubiquitous in the pandemic era. Marketers are increasingly taking steps to ensure that their entire business is one interrelated entity rather than a loose affiliation of siloed components. Direct-to-consumer websites complement third-party distribution, buy-now initiatives, and marketplaces; streaming entertainment, traditional media, and experiences each have their own strengths and objectives as part of a greater whole; licensing, collaboration, and promotion work hand-in-hand for the good of the property. Like many of the trends here, this has long been a goal and a process, but it has certainly stepped closer to reality in 2020.
Many of these developments are positive and/or necessary. But it should be remembered that, overall, 2020 was a challenging year. A number of the trials facing the licensing business are expected to continue for a while: high unemployment, economic uncertainty, political and social upheaval, the unpredictable nature of the virus even with vaccines on the way, struggles for many individual retailers, manufacturers, and property owners, and more. The bulk of the trends outlined here are also likely to outlast the pandemic in some form and become part of the “next normal,” whatever that may look like in these uncertain times. It will be interesting to see what 2021 brings.
The Year in Review: 2019
December 17, 2019: Many of the notable licensing trends of the past year have been percolating for some time, but seemed to reach a turning point in the past 12 months. As was the case in 2018—but to a greater degree this year—several of the most top-of-mind issues are not licensing trends at all, per se, but rather broad topics that touch all corners of consumer products and business in general, with licensing not immune. Some of the trends discussed here are continuations of developments from previous years, while others are new to the list. And, while a few will certainly come and go quickly, many seem to be about fundamental, long-term change.
Here are 19 of the top trends affecting the licensing business in 2019, in no particular order:
1. Politics and social movements. Social unrest from Hong Kong to Paris, domestic issues such as gun violence in the U.S., trade wars involving the U.S. and China, and the uncertainty surrounding Brexit—all had as much impact on licensing as any other trend this year. Uniqlo saw sales plummet in South Korea, due to a dispute between the Japanese and Korean governments, while gun licensors saw leading sporting goods chains stop carrying their merchandise after a mass shooting, to name two examples. The licensing community found itself dealing with the ramifications from events that were often beyond its control.
2. Circular fashion. Sustainability in all its forms became the norm, from making products out of recycled or alternative eco-friendly materials to creating recycling programs for branded goods. The year also saw a spike in collaborations involving clothing rental services (e.g. Derek Lam creating a collection with Rent the Runway); resale programs (Burberry and Stella McCartney pairing with The RealReal); and upcycling (Hyundai Motor’s collection with Zero + Maria Cornejo). Significantly, these circular fashion techniques run counter to the core goal of the licensing business: selling new merchandise.
3. Inclusivity in all forms. Licensors, licensees, and retailers have been making efforts to embrace all consumers, and that trend intensified this year. This trend is not just about addressing and including all ethnicities, but all ages, sizes, political views, religious beliefs, physical and neurological needs, and economic strata, both through product design and messaging. Examples include Hana Taijima’s Uniqlo collection of apparel for Muslim women and others who want modest clothing; Brooke Shields’ fashionable apparel for women aged 50-plus with QVC; Target’s adaptive Halloween costumes (none licensed yet); conservative pundit Tomi Lahren’s range of gun owner-friendly athleisurewear with Alexo Athletica; and retailer Express’s collaboration with OUT Magazine for a collection of gender-neutral and gender-fluid accessories and apparel.
4. Evolution of subscription e-commerce. While some segments within this tier struggled, such as meal kits and pop culture boxes, there were areas of strength, including styling services and targeted efforts such as vegan, kids’, and plus-size offerings. Meanwhile, subscription businesses of all types tweaked their models to provide more flexibility, give consumers more control, add more distribution points, and expand into new customer segments. Despite the challenges, licensors, licensees, and other marketers continue to launch new initiatives, including Build-a-Box with CultureFly, Esquire with Sprezza Box, Tasty with LG, and Betty Boop with Ipsy.
5. Social commerce and shoppable content. The link between social and traditional media and consumer product purchases solidified in 2019 as the major social media platforms added more sophisticated buy-it-now features, e-commerce companies improved their community and social attributes, and brands launched their own social commerce platforms. By the end of the year, Tik Tok was testing shoppable links, Instagram was curating shoppable holiday collections, Foot Locker and Asics were teaming up on a shoppable anime series, and Adidas was selling sneakers through Snapchat.
6. Corporate brands as pop culture. The trend for corporate trademarks, especially from the world of food, beverage, and especially restaurant brands, to extend into lifestyle products and experiences became even stronger in 2019 than in the past few years. From lifestyle merchandise shops and catalogs to pop-up hotels and cafés, brands from Dunkin and Taco Bell to White Castle, Chick-fil-a, and Hot Dog on a Stick were all part of the pop culture conversation, leading to increased awareness and sometimes even upticks in sales.
7. Self care. The concept of taking time to foster a positive mental, physical, and emotional state to ensure better performance at work and at home gained mainstream acceptance in 2019, and licensed and collaborative consumer products followed. Properties such as Women’s Health, Zoella Lifestyle, and Goop joined retailers such as Lululemon and Ikea in supporting this trend whole-heartedly. Licensing opportunities in this space encompass candles, comfortable apparel, meditation gear, gifts and home décor, health and beauty products, and more.
8. Plant-based alternatives. Plant-based proteins made their way into the produce department, quick-service restaurant menus, and even the meat aisle, targeting vegans who occasionally want to eat something approaching meat and meat eaters who occasionally want to cut back on animal products. Licensors started taking their first steps into plant-based products as well. Oprah’s O brand with Kraft Heinz, Tom Brady’s TB 12, and Tapatio with iWon Oganics are among the properties testing meat and dairy substitutes made from alternatives such as cauliflower, pea protein, and brown rice flour. Meanwhile, celebrities such as Kate Upton and Beyoncé are lending their names to vegan meal kits.
9. The mainstreaming of e-sports. E-sports have been on the licensing community’s radar for quite some time. But 2019 marked the year mainstream sports licensees finally saw enough potential to commit to this segment. Manufacturers normally associated with pro sports leagues and clubs, such as Puma, Fila, Outerstuff, and Nike, which paired with e-sports organizations Cloud9, Counter Logic Gaming, Misfits Gaming, and Furia, respectively, were among the examples. At the same time, retailers and etailers from Foot Locker to Fanatics also made significant inroads into the pro video gaming segment.
10. CBD: opportunity and uncertainty. After the Farm Bill passed in 2018, the licensing community’s attention turned from marijuana to CBD, some forms of which have many of the health and wellness benefits that marijuana purportedly has, without producing a high. While there are still areas of illegality (and some grey areas), a number of licensors associated themselves with CBD in segments including sports (Rob Gronkowski, USA Triathlon), pet products (Willie Nelson, Martha Stewart), and skincare (Amber Rose), as well as general wellness and products for specific conditions. Meanwhile, marijuana is still an attractive opportunity to many IP owners, with Drake a recent example. It should be noted that there have not been many studies done on the effectiveness or health concerns that might be tied to CBD or any form of cannabis, and as-yet-undiscovered risks could reverse the progress in this segment. This is what happened with vaping in 2019.
11. Experiences, not products. Retailers continued to move toward the experiential end of the spectrum, and in some cases away from product sales altogether. The newly relaunched Toys ‘R’ Us is primarily experiential, with Target fulfilling any in-store orders via e-commerce. Nordstrom expanded its Local stores, which offer a variety of services and amenities, but no merchandise. In other cases, products are still for sale, but the experiential elements take center stage. Such is the case for John Lewis and Waitrose’s new experiential concept store in Southampton, U.K., which has “experiential playgrounds” at the center of each floor, or Lululemon’s new experiential store at Mall of America, where a small selection of products serve as a complement to the main orders of business, such as yoga classes and coffee drinking.
12. Immersive hospitality. Examples of branded hotels continued to proliferate, with Cartoon Network, Yuengling, Karl Lagerfeld, and the St. Louis Cardinals all announcing or opening new travel destinations. A more high-profile trend during the year was the rise of licensed IP-connected pop-ups including hotel rooms (Lisa Frank with Hotels.com); full hotels (Taco Bell, Nutella); and vacation rental homes (Booking.com’s Addams Family mansion and Airbnb’s Barbie Malibu Dreamhouse). These are about as immersive an experience as you can have for a few days.
13. Betting on sports. A U.S. court case in 2018 resulted in states other than Las Vegas being able to legalize sports betting. As more and more states do so—11 as of October 2019—sports leagues and teams have dipped their toes into this new market by creating partnerships to provide play-by-play data for use in betting, launch official team or league-branded betting platforms, or develop sports-betting games. Potential exists in some global territories as well, as not only the U.S. pro leagues but soccer clubs, mixed martial arts entities, and golf tournaments, among others, are taking advantage of opportunities at home and abroad.
14. Retail apocalypse redux. Many retailers continued to struggle in 2019, showing poor results, shutting stores, declaring bankruptcy, and/or closing completely. This is a phenomenon in the U.S., the U.K., and many other territories. In November, arts and crafts chain A.C. Moore became one of the latest to add its name to the list of chains that have disappeared. Many observers believe the challenges will continue into 2020 as a number of retailers important to the licensing community seem to be at a crossroads.
15. Licensee consolidation. Mergers and acquisitions have been a hallmark of the licensing business of late, with retailers, licensors, and licensees all affected. Licensed manufacturers were at the center of much of the action in 2019, from Delta Galil purchasing The Bogart Group in the apparel industry to Masterpieces acquiring Fanpans and Baby Fanatic in the sports licensee space. The toy industry, which is dealing with the loss of Toys ‘R’ Us, the threat of tariffs, and competition with phones, tablets, and streaming, has been one hotbed of activity. Recent deals include Jazwares taking over Wicked Cool, Simba Dickie purchasing Jada Toys, and Cartamundi acquiring U.S. Playing Card.
16. Consumer as creator. User-generated content, innovation platforms, crowdfunding, and a general mining of social media activity have all become essential to product development and marketing. Manifestations of this trend in 2019 ranged from Lego acquiring an online fan site, BrickLink, to Alpha Toys creating SpongeBob collectible figures inspired by fan memes. A twist that has formalized the process this year is the forging of data-driven licensing agreements in which social media usage, searches, ticket sales, and other consumer data are utilized to predict trends and inform licensed product development. Such partnerships include Puma with Amazon, the Major League Soccer Players Association/REP Worldwide with Breaking T, and lifestyle publication PopSugar with Kohl’s.
17. Music licensing rocks on. Music licensing, always a key element of the landscape, seemed to have a particularly high profile in 2019, as musicians look to merchandising as a cornerstone of their business model these days and as new techniques make testing products for emerging, niche, or vintage acts less risky. To illustrate, in 2019 we saw high-end designer collaborations (The XX x Raf Simons); pop-up shops (The Beatles in New York City for the holidays); the publication of board books (Running Press’ Baby Kiss: A Book About Colors); and notable licensing deals (Sony’s Thread Shop taking over all of the fragmented licensing activities associated with the Jimi Hendrix estate).
18. The power of pop-ups. Pop-ups—shops, cafés, hotels, bars, and myriad other forms—fit well with the licensing zeitgeist, being immersive, temporary, awareness- and often revenue-generating, and having enough unique elements (sometimes of the in-world variety) to stand out from the crowd. Glossier launched fragrance pop-ups at Nordstrom, a Harry Potter pop-up bar appeared for the holidays in Chicago, Gucci Pin pop-up boutiques hit markets where Gucci does not yet have a permanent presence, a Friendsgiving-themed pop-up store and experience honored the 25th anniversary of Friends in Boston, Elle Décor turned the Plaza Hotel’s Rose Club into a pop-up café, and Schitt’s Creek’s Rose Apothecary became temporarily real. The list goes on.
19. Battle of the babies. While no single hot entertainment property rose to the top as a driver of licensed merchandise in 2019, two that certainly captured the attention of the world were Baby Shark, which hit number 32 on the Billboard Hot 100 in the U.S. in January 2019, and Baby Yoda, the breakout character of the new Disney+ Star Wars spin-off The Mandalorian. Merchandise available for the former is relatively limited outside of books and toys in the U.S. to date, while the toy line for the latter will not hit store shelves until May. For the holiday season, hopes are high for Frozen 2 merchandise, which is plentiful, after a successful release in theaters.
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.