NEWS

How can toy licensing recover its sparkle? Part 1

Published on: 6th August 2019

Toy World has collaborated with Informa, the organiser of BLE, on a research piece which explores the current attitudes of toy licensees and retailers towards the licensing category.

We received some very honest feedback from licensees and retailers to the survey we sent out. The full results appeared in the August edition of  Toy World, and over the next few days we’ll be bringing you some of the highlights. In the September’s issue, the follow up piece will look at the biggest challenges that licensees and retailers will face in the coming years, and what licensors could do to improve their partnerships with licensees and retailers.

For now, here is a sense of how the toy community views the state of play in the licensing arena right now. Each chart shows the question we asked and the percentage of respondents, and is accompanied by additional comments from suppliers and opinion from Toy World publisher John Baulch.

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Question 1

The good news is that two-thirds of licensees feel that despite its challenges, licensed toys are as popular as ever with their retail partners. However, one third of licensees are seeing a downturn in retail interest. I suspect that, to some extent, this may be category specific – while some categories are still heavily reliant on licensing, others have shifted emphasis to favour more generic lines.

 

Comments – 

  • Retailers are sticking to evergreens or innovation – anything in between is a hard sell in our secondary category.
  • All licensing is a gamble, especially new properties – launching new IP in the current climate is challenging. But hasn’t it always been like that?

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Question 2

The feedback here is relatively clear cut. Not one licensee believes that every licensor is taking the current retail climate into consideration. One third of respondents believe that at least some of their licensors are playing ball, while an emphatic two thirds feel that ‘few’ (i.e. the minority) are being realistic. The overwhelming evidence suggests therefore that toy licensees perceive that the majority of licensors have not adjusted their thinking despite the evolving economic and retail situation.

Comments – 

  • More and more are getting realistic and understanding the risk to the licensee if a brand bombs in year two and they’re trying to hold them to annualised MGs.
  • Most seem to have become more realistic. It is a shame that a few of them are still so arrogant and do not consider trading conditions.

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Question 3

No great surprise that not a single licensee thinks they are paying too little for a licence, but with only 7% perceiving the costs to be about where they should be, a whopping 93% agree that terms are weighted strongly in favour of the licensor. I suspect this reflects a number of current trading factors, particularly the cost of developing tooling and the demands of retailers.

 

Comments – 

  • Licensees don’t always appreciate the financial pressure that licensors are under, given the investment required to create the content and launch the brand.
  • You always want to help the licensors that are pragmatic. Everybody needs to make money; it’s just about agreeing the fairest possible way for all parties.

 

To read the full article, published in the August issue of Toy World, click here.

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