On 21-23 June 2016, the Licensing Industry Merchandisers’ Association held its annual Licensing Expo. Euromonitor International was in attendance and observed some of the trends that will affect licensing in future. While major tent pole films will continue to play an outsized role in the licensing industry, other players like video game intellectual properties (IPs) and local licences will see growing interest. As such, between 2015 and 2020, Euromonitor International expects licensed toy growth to greatly outpace that of non-licensed toys, growing by 27% to reach US$26.2 billion by 2020.
At the show, there was an abundance of major films being promoted, as well as the traditional toys and games licensed off of them. Major 2016 big budget productions like Ghostbusters, The Secret Life of Pets, and Trolls were all on display for their respective IP owners, all of them clearly hoping that a successful film will translate into merchandise sales, with toy products largely focused on dolls and accessories, action figures, plush, and dress-up and role play.
These films were joined by numerous popular cartoon shows, such as Teenage Mutant Ninja Turtles and Adventure Time. The focus went further than IPs slated to have an impact in 2016, as upcoming properties like the Wonder Woman and Transformers films were also showcased. Many licensors have recognised that there will be increased competition for consumer attention in the next few years with the glut of films slated for release, such as numerous DC and Marvel franchise films as well as a new Star Wars film every year.
Local licences still important
Throughout the show, local licences were prominently on display and indicated that many were seeking to retain their relevance in their home market as well as take advantage of opportunities abroad. Local licences like Masha and Bear of Russia or Monica’s Gang of Brazil were being displayed with opportunities for companies within that local market to license products off of the IP. More than that, however, many of these licences were looking to enter other markets, as they believe they now have an audience in more places. This is largely due to the high amount of migration occurring in many markets, growing the number of foreign born citizens within the population. These foreign citizens are still connected to their local licences and, due to widespread global access to the internet, are able to continue to consume media content. This has presented an opportunity for some retailers and manufacturers to sell to a niche portion of the population that desires products they used to be able to buy in their country of origin for the licences they grew up enjoying.
Video games eye expansions
Video games also had a major presence at the show. Many companies focused on showcasing the numerous ways their popular franchise games could be licensed, with traditional toys and games a common product. The PlayStation 4 and Xbox One collectively sold 27.2 million units in 2015, and with this large and growing base of current generation static consoles video game software companies now have a wide audience and increasingly popular intellectual properties. With the addition of companies like Funko, which specialises in small, stylized toy figurines of numerous licensed properties, video game software developers have much to gain from entering the traditional toy market.
Overall, it is clear that licensing will play a major role in traditional toy sales over the course of the next few years. Large global licences, like Star Wars, will still play a dominate role and continue to see strong growth. At the same time the overall dynamic growth of the licensed toy industry will allow other smaller players, like local licences or video game IPs, to thrive in the market. Their entry, however, means competition will likely heat up in the years to come.