Beware of the virtual world licensing gold rush

ToyNews contributor and industry expert/consultant Steve Reece talks about the ups and downs of the growing market.
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When you get a gold rush, you generally get two types of people as a result: winners and losers.

Some of the winners are lucky, some are clever. Some of the losers are unlucky, some the opposite of clever.

Currently we have a situation where the success of online virtual world physical (i.e. real world) merchandise at retail has created another potential gold rush. One can almost hear the cry of “There’s gold in them thar hills.”

But beware, because as with all gold rushes, there are winning and losing formulae.

The 'me too' approach sometimes works, but as casualties of past tech driven gold rushes can tell you, it only works if you learn from the mistakes others make.

Here’s some hard nosed nitty gritty realities you need to be aware of before you go charging around signing up licences willy nilly:

1. The type of media is not the point. Just because it’s an online virtual world, and a few brands driven by that media have worked doesn’t mean anything using the same media will be equally successful.

2. Small under sized brands don’t move merchandise in large quantity – enough said.

3. Large brands with a massive following drive large volumes of merchandise through retail – how can you be sure the brand is of a size to drive your product sales?

Look for the metrics like number of registered users, active monthly users and more. if the following is small, it won’t cut it unless you are only looking for a small niche opportunity.

4. Anyone can create a graph with an exponential upward curve – seriously, anyone can project massive future growth, and in this particular area, it is not uncommon to get massive exponential growth. 

But don’t rely on it, don’t buy in just because an as yet fictional sales curve on a Powerpoint shows you massive ‘potential’. What is the current reality, and why should anyone believe the curve will actually happen?

5. Beware the crash & cynicism that follows – as with all new areas, some things will work and some won’t. 

Some brands will adapt very well to real world merchandise sales, some won’t. The challenge is to anticipate what is to come. Something, somewhere is going to fail at some point, leaving retail and suppliers with an inventory hangover and lost faith. 

Just prepare for that, and the way to do that is by being aware of the other points above, because in the end substance counts. Some under cooked Brands will end up on shelves way before they should, just don’t let it be you who gets an expensive nosebleed.

6. What level of integration can you secure – in this area, the massive benefit versus other forms of media is the potential for merchandise integration into the product. 

TV & Movies are highly regulated and full of non commercial souls who don’t care how many boxes you shift. That isn’t the case with this area. The split between commercial and creative functions doesn’t exist. 

And if you show a character in an online virtual world wearing a particular T-shirt, and users like that character and the T-shirt, then they are ‘encouraged’ to buy, or simply just see it in the shops with no further prompting, they are clearly massively more likely to purchase. Don’t sign up for an online virtual world brand licence without a clear commitment to integration.

About the author

Steve Reece is from Virtual World Licensing. This is a brand and licensing consultancy focused on helping online virtual world brands create licensing roadmaps and programs.

If you’re a brand owner who wants to find out more about how the firm can help you, or a potential licensee looking for online virtual world brands which have the ‘right stuff’ please get in touch.



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