As I explore in our new global briefing, Global Licensing Trends in Traditional Toys and Games, licensing is one of the key parameters affecting toys sales globally. More than half of the top 10 most heavily licensed traditional toys and games markets are in Asia Pacific, and in almost all these markets the proportion of 0-14 year-olds in the total population was below 20% in 2012, suggesting that the grown-up population also has a say in which licensed toys are purchased. As toy brands penetrate into other industries beyond toys and games at a faster pace, there are certainly great opportunities as well as risks. The only question is how to locate them.
Licensing is an extremely important area driving sales and new product launches within toys
The penetration of licensed toys in overall toy sales continued to increase across the majority of countries in 2011. With their entertainment media backing, licensed toys often carry a higher price tag than their non-licensed counterparts, allowing higher margins for manufacturers.
In almost all of these markets the proportion of 0-14 year-olds in the overall population was below 20% in 2012, suggesting that the grown-up population also has a say in which licensed toys are purchased. Although less than one third of traditional toys and games are licensed, Japan is the largest licensed toys market in the region, accounting for more than half the region’s sales in actual terms.
The US is the birthplace of many international licences and is the biggest licensed toys market globally
Through the influence of its Hollywood blockbuster movies, the US has a huge impact on global toy licensing trends. However, highly anticipated releases such as Transformers 3, Cars 2, Captain America and Thor failed to lift toy sales in 2011, due partly to dwindling movie attendances.
Western Europe is the second largest licensed toy region in the world
In the UK, the market became even more dependent on licensing during the recent recession, at which time cinema takings and DVD rentals were higher than ever. This has given the toy industry more opportunity for expansion into licensing, as well as increased marketing opportunities, at a time when new product development has slowed.
In Eastern Europe only one fifth of toys are licensed
Licensing penetration within traditional toys and games in Eastern Europe remains very low. In Russia, the largest licensed toys market in actual terms in the region, the market has seen rapid growth of 15-20% year-on-year and key manufacturers and retailers are increasingly seeking ways to collaborate with the biggest foreign and local licensors.
Toy brands are increasingly expanding beyond toys via licensing
While children influence decisions on toys, their influence on groceries and household items is much lower. Targeting the right category and demographic, and having brands consumers can relate to are crucial elements of a successful brand licensing concept.