Licensing Industry

I can only talk for the toy space but there is, after my visit to my friends at Toy Fair, little doubt that the second and third tier toy manufacturers are in deep trouble. They are facing cost increases from China in the order of 10% to 15% and are unable to pass these on to their largest customers - e.g. Walmart and their ilk. They, in order to get into these stores, already shaved their margins to a minimum and there is no way they can absorb even part of this increase. The reaction from WalMart uptonow was simple - "you have two choices: keep your prices where they are or find somebody else." Either way lies disaster. If they stay and continue to sell at current prices, they go bust. If they drop WalMart, they lose up to half of their business and go bust. Their one way out is to try to sell their company and this is what their focus is right now.

Current trends in fashion are still very much based on 1980's inspired prints, silhouettes and retro imagery. With this in mind, we have launched phase two of the MM/LM classic style guide.

This new creative has been positively received by many licensees and retailers and I believe has helped turn MM/LM into a fashion icon amongst the teenagers, adults and celebrities of today's image conscious society.

Everything these days seems to have some sort of gadgetry, iPod, USB or mobile phone connection. But then on the other end of the scale, traditional wooden toys seem to be gaining favourability in pre-school licensing. So where do we go - techie or traditional? Both I guess!

Great to see the further re-emergence of wooden toys at London and Nurnberg, against a backdrop of increasingly clever interactive toys. When kids animate wooden toys it's a joy to behold.

I have visited 13 big European shows last month and I must say the main thing I have noticed is the predominance of Disney as the greatest kids brand in the world. We all know this of course, but it is amazing to see the number of companies which look like simple subsidiaries of Walt Disney.

On another hand I see more and more great companies leading their field with products not based on licensed properties. These companies invest a lot in product development and design; they are very creative. These are what we can call real 'brands'.

One strong licence I noticed in many categories at Ambiente is Jamie Oliver. I did not know he was so big; this program is managed really well, the products are great.

With Hannah Montana and High School Musical taking the business by storm, there is a lot of focus on the live action genre of licensing.

Plus, 2008 will be the year of consolidation on both the licensor side and on the agents side of the business.

A trend that we have been aware of for some time now, and which I believe will become more acute throughout 2008, is that there is increasing demand for compelling product where the core elements of the franchise must be integral to the merchandise.

This is for all audiences, but particularly tween consumers who are now hugely influential in purchasing decisions. In addition to ensuring we offer quality and value, which are key purchase influencers with parents, it is imperative that the products tie directly to the property.

If looking at our popular tween franchises, High School Musical and Hannah Montana, the signing, dancing and fashion elements really resonate with the tween audience and it is these elements they want the products to utilise.

We are working closely with our licensees across all of our franchises to create such products which not only meet but exceed these expectations.

Using Hannah Montana as an example, there will be a sing-along microphone, electric guitar and an apparel range available to name just a few.

It's interesting that there has been a return to traditional play patterns with Thumb Wrestling Federation achieving enormouse ratings and bearing out the research from last year that staple themes of play would be making a comeback.

There has been a lot of talk about M&A activity throughout the licensing sector but, whilst it remains true that big licensing companies have a considerable weight to lend to big licences, it is also true that more streamlined companies are fleeter of foot and therefore more able to respond to retail and licensee requirements in the reactive world in which we live.

And finally, there is the recurring theme of the necessity for new properties to embrace the multimedia age from the outset and not to simply bolt on a website as a marketing exercise.

Currently I am based in China seeing firsthand the unprecidented cost increases faced by the Toy, Gift and Premium supplier base, its pretty scary for many Chinese factories and Western wholesalers who are seeing there hard fought margins eroded on a weekly/ monthly basis.Not for many years have so many negative factors emerged at the same time and the worst of it is, that there does not seem to be a clear end to the rising costs in sight.
As with all swings towards the negative there is always an antidotal swing back towards the black, i believe one component of such an antidote is the Trend towards Innovation of Licensed product. More and more Licensors are approaching me to take on a new License, but deliver it with more imagination,more thought, less haste and more care, quality ranges can be developed without having to spend too much more then the less ambitious same old same old product we see year in year out in the Licensing industry.
With this in mind i would also love to see a trend where Chinese Factories and Licensees work more coherently with each other, working as partners creates a leaner supply chain, risk can be shared as can distribution, in these tough times ahead buying a license, being inovative and standing out from the crowd are important traits for survival but none will be more important than forming a team with your chosen supplier.

Having children myself I feel it is a tad disappointing to find there is not too many new and creative childrens characters out in the market.
We have tried to create something new and was certainly inspired to find a 'fresh look' for Superbike Sam & Friends for the 3+ market place. After the fantastic response at Brand Licensing in Oct we are overwhelmed by the positive comments and look forward to moving forward with our project. Thank you Licia @ BLE!!