Licensed toys have increasingly become a vital part of the traditional toy market, with licensed toys expected to grow by 14% from 2017 to 2020 reaching USD26 billion in sales. This growth is far above non-licensed products, and three core regions, North America, Western Europe, and Asia Pacific, are expected to make up the vast majority of sales and growth for this period. While there will be numerous factors behind this growth for the three regions, smartphone proliferation as well as the growing popularity of multigenerational licenses in North America and Western Europe and local licenses in Asia Pacific are expected to be the core reasons these regions will see the highest levels of licensed toy growth.
Source: Euromonitor International
Multigenerational licenses broaden the market
Multigenerational licenses which have been around for decades, such as Teenage Mutant Ninja Turtles or Transformers, are increasingly popular in North America and Western Europe and are furthering their licensed toy growth potential. These licenses were the childhood favourites of many of today’s parents and allow them to share some of their favourite characters with their children. In addition, multigenerational licenses can offer a nostalgic appeal directly to childless adults who are willing to buy higher priced figurines or playsets that they can display within their home and give toymakers an extra demographic to market toward. As millennials in North America and Western Europe are delaying having children, this childless demographic will become an increasingly important area of traditional toy growth.
Local licenses growing importance in Asia Pacific
Within Asia Pacific, local licenses, such as Anpanman in Japan or Turning Mecard in South Korea, are becoming gradually more important and are adding new opportunities for licensed toy growth. These licenses distribute their media content and associated toy products primarily in their country of origin and normally contain some sort of cultural connection to their home country, such as Chota Bheem in India which is based on a famous Indian epic. These local licenses offer an additional layer of toy sales opportunity in the region on top of major global licenses like Star Wars or Marvel. In addition, under the right conditions local licenses can eventually gain global influence, like Pokémon and Beyblade achieved.
Smartphones expand access to these licenses
In each of the three core regions for licensed toys, household access to smartphones will become increasingly commonplace and further the impact of local and multigenerational licenses. Nearly 80% of households are expected to possess a smartphone in Western Europe and North America by 2020, with Asia Pacific seeing a 56% possession rate. And by 2020 the three regions are each expected to have an average of three mobile internet subscriptions per household. Taken together this will increase child access to media, allowing them to consume movies, television, and mobile video games featuring their favourite licensed characters at nearly any time of the day. This increased exposure to licensed characters will lead to deeper connections with licensed characters than ever before, making the multigenerational licenses in Western Europe and North America or local licenses in Asia Pacific even more impactful and drive further licensed toy demand.