HOT TOPIC: Industry challenges in 2008

As the licensing business starts to look ahead to the New Year, Samantha Loveday asks a selection of execs what they think the biggest challenges facing the market will be, and how they?ll be looking to get round them?
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“The biggest challenge for licensing in 2008 is the lack of good quality children’s television content. Ultimately, the licensing industry is most akin to the fashion industry – it requires innovation and freshness to drive the market. This is a perennial issue for the industry rather than something specific to 2008. The ability for independent production companies to deliver this freshness is being eroded currently due to poor advertising revenues negatively impacting broadcaster production budgets. Thankfully for Galleon, Skunk Fu is driving strong ratings in the UK and the US and demonstrates that a fresh concept can cut through to the consumer, which in turn is leading to strong licensing interest.”
Len Dunne, MD, Galleon

“I think routes to market is the biggest challenge. Currently, a brand’s success is largely determined by the retail industry’s enthusiasm for it. But many retailers prefer not to invest in licences or licensed product because it tends to decrease margins, so their focus is generally on own label or in-house brands. Brand owners and licensees need to find different routes to market for all but the highest profile branded product. The internet must offer a great opportunity here. I’m really looking forward to reading case studies about brands which have strong niche appeal and great products using digital marketing to engage their audience and make good profits.”
Claire Potter, MD, Metrostar

“For licensors, embrace the growth of new media and interactive. Not only from the basic standpoint, but how to utilise and harness the power of the internet and interactive to grow licensing and merchandising programmes. They must be more proactive in using new media avenues to grow characters, not just invest in traditional methods.”
Simon Kay, Business Development Director, AT New Media

“The increased number of companies attempting to produce licensed properties through movies, television, books and the web has left the market cluttered with properties that never really get off the ground. More players trying to get a slice of the pie has further confused the retailers and broadcasters, and created an even more challenging environment. There are still many successful properties and players in licensing and the business will continue to thrive. However, every year it becomes more difficult to negotiate through the sea of clutter to create strong meaningful brands that will stand the test of time.”
Mark Northwood, VP Merchandise Licensing, Nelvana

“With many retailers working on over 65 per cent margins and on a sale-or-return basis the risks involved in taking the big or short-term licences are becoming seriously inhibitive. Retailers want to stock increasing amounts of licensed products because of their selling power and consumer draw, so the licensing industry needs to put in extra effort and provide programmes which enable licensees to make a profit. At Coolabi, we’re focusing on long-term brands which are not dependant on one form of media exposure.”
Janet Woodward, Head of Licensing, Coolabi

“Retail continues to be a challenge and, as licensors, we need to make sure that we are delivering on product that they want to carry. We need to deliver a retail statement, not an item business. We can do this by working on product ranges that not only entertain, but embrace the brand values and essence of the character, while at the same time provide good value. At Marvel, we are holding licensee product development workshops where we classify products as good, better and best, therefore working with our licensees on creating the right coordinated product ranges for the right retail channels.”
Gustavo Antonioni, Head of UK Licensing, Marvel

“One of the key challenges is convincing retailers to commit to new brands, in addition to the ‘safe’ evergreen ranges they offer. Also, with so many ways now to consumer programming – multi channel pay TV, mobile downloads, video on demand, etc – the significance of terrestrial TV should hopefully become less important to licensing partners and retailers. The childhood obesity issue is an ongoing concern, so it’s important to offer healthy food/drink in addition to treats in any licensed product range.”
Mel Beer, Head of Licensing, Granada Ventures

“Super brands are taking precedence in the market. No doubt that the Warners and Disneys of the world are ruling the shelves more and more as they are able to produce a much more coordinated programme for their licensees. Agents needs to start thinking of themselves as brand owners and just brand loaners. Licensors are changing the way they work with agents. They are cutting agents out of representation of certain categories, reducing commissions and their willingness to a more open-book policy is becoming harder and harder to come by. While their decisions will give them more money in the short run, the long-term success of these properties is compromised as there is no longer local coordination of all elements of the brand program, often at times leading to unhappy retailers.”
Morten Geschwendtner, Kidz Entertainment

“The ever changing demands and trends among new generations are creating challenges for the licensing business but also opportunities. It is essential that both licensees and licensors continue to find new and innovative ways to effectively reach their target consumers. They need to be able to adapt a brand quickly with the right licensing deals to keep up with ever changing interests and crazes among the target market.”
Bernd Conrad, Head of Licensing & Merchandising, TV-Loonland

“Whilst ‘fewer kids are watching more programmes’, kids are consuming media in greater quantities than ever before and addressing that challenge by providing cross-platform solutions is an excellent way of gaining cut-through. The plethora of brands on the market with an associated licensing programme is also a major threat to the chances of breaking through, but again content is king and providing something of either a higher quality or something different will always make a property stand out from the crowd, however large it is.”
Rob Corney, Bulldog Licensing

“For me the biggest challenge for licensing is to continue developing as a business that is professional and striving to maintain high standards. Collectively we need to ensure that we develop products that are credible and reflect the values of the brands that are being used. From a rights selling point of view it is essential that retailers and licensees continue to recognise that there is distinct value in licences that they use. One way of doing this is investing in product development and by all parties collaborating to develop product in a proactive fashion.”
Ian Downes, MD, Start Licensing

“From an industry point of view I think that challenges are balanced with opportunities – some markets are very crowded which encourages extra creativity. Entertainment properties continue to dominate the landscape and the challenge there is making people believe that a balanced portfolio could be better or as good for them in the longer term. The gap continues to grow between the larger licensing agencies and the smaller independents, which presents some real challenges in terms of brand exposure, but again makes you think smarter about the advertising and marketing budget and resources that you have to work with.”
Denise Deane, MD, Brand Champions

“Finding the next big TV hit and developing an exciting programme for a new property is every licensing player’s dream, but also one of the biggest challenges. Food licensing will definitely become a more sensitive area and the licensing industry will need to fully adapt to the new regulations in 2008.”
Richard Woolf, Director of International Licensing, JCP

“I think we face the same issues we have been facing for the last few years. Firstly, costs of basic materials (with the oil price rising this means that creation of the products and delivering them will become more expensive). Recent increases in interest rates mean that consumers have less free cash in the short-term. More people shopping online will offer both opportunities and challenges to retailers, while a crowded marketplace means stand out will have to be creative or expensive.”
Graham Saltmarsh, Licensing Director, Cartoon Network

“One of the main challenges will be to make more European manufacturers develop products under licence. Most licences are held by a limited group of major companies in each country. For that reason the level of creativity, quality and originality of licensed products we see in the European marketplace is rather low compared to the US and Japan. Although there are more art-based brands and fashion brands under licence than ten years ago, the market is still very much dominated by TV driven properties. I hope to see more design-based properties in future and a better platform to exchange them.”
Nicolas Loufrani, CEO, Smileyworld

“New regulations in marketing to kids in the food arena means we have to become more creative. There is also a danger of saturation as licensing is a crowded market; only the best properties have a chance of success. Finally, the UK retail market could go soft and we need to be aware of this and manage expectations.”
Lisa Shapiro, MD, TLC Entertainment

“It is a very cluttered and crowded market, particularly in pre-school. There is a difficulty in establishing positive and constructive dialogue with key retailers and ever increasing pressures on driving retail price points down and maintaining innovative and creative product.”
Sean Clarke, Head of Marketing and Licensing, Aardman



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