Travels To Toyland

June 2008

When Miley Cyrus, the teen star of Disney Channel’s Hannah Montana, appeared in controversial photos in Vanity Fair magazine, it wasn’t just a young starlet’s career at stake. Nor was it just the fate of a kids’ live-action TV series. The hit show, in addition to being at the top of the ratings for the tween demo, has spun into a billion-dollar franchise with numerous retail categories, from home furnishings to games, DVDs, accessories and, this year, the Hannah Montana and Miley Cyrus: Best of Both Worlds Concert feature, which has taken in more than $60 million in gross ticket receipts.

Hannah Montana is proof that with the right show, and the right licensing program, there is still a lot of money to be made in the kids’ space. But it’s not without its challenges. “There are so many programs vying for that retail shelf space,” says Joy Tashjian, whose firm, JTMG, handles merchandising on a broad selection of properties, from NBC’s Deal or No Deal and American Gladiators to Shaftesbury’s live-action tween hit Life with Derek to the Breakthrough Animation series Captain Flamingo and Miss BG.

The key, Tashjian says, is well-managed licensing programs, and that is as much about timing as it is about selecting the right product categories. In a competitive market, she says, “It’s going to take a little bit longer to reach your demographic and then get them to feel so attached to the show that they want to own the products.” Plus, she adds, “There are so many opportunities for a given manufacturer and a retailer that unless you can offer them almost immediate awareness, it’s very difficult for them to justify purchasing a license early. Why not wait and prove that your trademark is worth the dollars and cents of development?”

The gap between a show launching on a broadcaster and the beginning of a retail program can run anywhere from six months to two years, as brand owners wait for a series to develop a following. That time lag can be cut considerably, however, if a show is based on a property that already has some awareness in the market. Indeed, having some level of brand recognition is considered a significant advantage for many rights owners. “Classic brands are huge,” says Eric Karp, the executive VP of licensing and merchandising at Chorion, home to the Mr. Men and Little Miss and Noddy brands and, since its acquisition of The Copyrights Group, Beatrix Potter, Paddington Bear and a stable of others. “People are embracing brands that they had experience with in their youth,” Karp continues. “We’re really the beneficiaries of this.”

Among the well-established brands that Chorion will be presenting at Licensing Show is The Mr. Men Show, with a new animated series currently airing on Cartoon Network in the U.S., Five in the U.K. and France 5. “In all the countries where the show has launched, the ratings are great, toy manufacturers are enthusiastic, the global home-video partner is enthusiastic,” Karp says. Retail products based on the TV series will target kids aged 3 to 10, Karp says, versus the older-skewing apparel and other products on the market, based on the original Mr. Men books.

Chorion has also begun working on the rollout strategy for Olivia, which launches in 2009 on Nick Jr., TF1, Five and ABC Australia, and is based on Ian Falconer’s popular children’s books of the same name. “We’re looking at the long-lead licenses for Olivia: master toy, home video, possibly master apparel,” Karp notes. “The difference between a traditional Nick show and Olivia is, ours is based on a classic picture-book property, so we have the flexibility to launch product a lot sooner than we would if it were an unknown property that we were launching.”

Classic Media, an Entertainment Rights (ER) company, is also showcasing a host of properties that have well-established reputations in the market. On the slate for Licensing Show is ER’s Postman Pat: Special Delivery Service, which is slated to launch on CBeebies in the fall, with merchandise, including toys from Character Options, due to hit shelves in 2009. “We’ll also have a whole new live theater show rolling out,” says Nicole Blake, the senior VP of marketing for North America at the company.

Also on the planner is celebrating the 15th anniversary of Big Idea’s VeggieTales, airing in the U.S. on NBC’s Saturday morning block, qubo. “It’s the number one brand in the faith-based kids’ market,” Blake notes. Part of the birthday celebrations include a limited-edition special DVD release of the first ever VeggieTales home-entertainment special, Where’s God When I’m S-Scared? alongside new toys, publishing and a live tour. Also celebrating a landmark birthday is Casper, who is turning 60 before the 2009 worldwide release of the new CGI TV series Casper’s Scare School, which has been licensed into more than 80 territories. The character is getting “a fresh look” in honor of his 60th, Blake says.

Adness Entertainment, meanwhile, is looking to capitalize on the cult awareness of the Japanese series Kamen Rider. The company is currently producing a new version based on the franchise, Kamen Rider Dragon Knight, for the international market. While Adness has not yet announced a U.S. broadcast partner, it has a master toy license in place with Bandai. Action figures and other toy lines will be among the products due to hit the market in 2009, says Takeshi Okajima, the director of licensing for the U.S. and Latin America at Adness.

THE GAME IS ON

With Kamen Rider Dragon Knight targeted at boys aged 6 to 14, scoring a video-game licensee is crucial, Okajima notes, particularly given the current challenges of the trading-card game market in the U.S. “Traditionally if you had toys, trading cards, a video game and apparel, that’s almost 85 percent of your merchandising revenue,” he says. Today, however, “there’s more weight on the video games and trading cards are getting weaker by the year.”

Recognizing the changes in the market, 4Kids Entertainment moved early to merge trading cards with new technologies, setting up TC Digital Games. The venture’s first project was a game for the 4Kids TV series Chaotic, which will have 66 completed episodes by the fall, with 26 of those to air on 4Kids’ new Saturday morning block on The CW.

“The biggest category of success for 4Kids in general [and for Chaotic] has been the trading cards,” says Carlin West, the executive VP of product acquisitions and development at 4Kids, citing the success of the games for both Pokémon —which 4Kids first brought to the U.S.—and Yu-Gi-Oh! “What Chaotic did so brilliantly was add a technology component to an everyday play pattern that kids were familiar with. You play a virtual version of the trading-card game online, for free, once you have purchased the cards.”

In addition to scoring partners in video games and collectible figures on Chaotic at Licensing Show, West will also be in discussions to license brands that TC Digital Games can use to build new online trading-card games.

Trading cards have also been integral to the programs developed for VIZ Media properties like Bleach and Naruto. A priority for the company this year is Blue Dragon, based on the Xbox 360 game of the same name, which launched on Cartoon Network in the U.S. earlier this year. Rollouts across Europe—including in Germany, Spain, Italy, France and the U.K.—are slated for later this year. “This is a huge launch,” says Pascal Bonnet, the European director of licensing at Paris-based VIZ Media Europe. “It’s a major property, designed by Akira Toriyama and coming from the video game. We have a very strong interest in Europe from the major players—the toy companies, collectible companies, quick-service restaurants, promotional partners and agencies.”

Bonnet is looking to lock up a food-promotions deal as well as a tie-in with a fast-food restaurant, and is on the hunt for licensees for apparel, stickers and small toys, with Bandai on board as the master toy partner.

While boy-targeted shows are certainly huge business for VIZ, the company is seeing interest in anime targeted at girls and is currently showcasing the new series Kilari. “We’re going to be launching it in France, Spain and Italy, where historically kids and parents have been very open to Japanese animation for girls,” Bonnet notes. “We’re pretty confident we’ll be able to find TV stations in those three countries and also licensing partners. ”The categories he’s focusing on for Kilari include trading cards, stickers, publishing and fashion accessories, targeting girls aged 4 to 8.

The retail sector for young girls is big business when it comes to entertainment-based brands. Anita Frazier, an analyst at the NPD Group, which collects data on the licensing sector, notes, “The NPD Group’s recent Kids Share of Wallet report asked kids to note their favorite brands and characters across a number of different product categories, and some of the properties that received the most frequent mentions include Hannah Montana, SpongeBob SquarePants, Disney Princesses, Barbie, Bratz and Dora the Explorer.”

ENDURING CHARACTERS

Adness, whose Kamen Rider Dragon Knight is heavily skewed toward boys, is looking to get into the girls’ retail market with Crack & Bonky, a character brand that originated in Mexico. Adness has taken on the North American and Asian licensing rights to the new kids’ and teen brand, about two friends from another dimension called Limbo. Adness notes that while a TV series is not on the planner, short Flash-animated clips will be available for Crack & Bonky, to be streamed online or on mobile phones. Okajima aims to secure licensees that will roll out products mainly for girls aged 6 to 11.

Tween girls are also a focus for Life with Derek, the Shaftesbury Films series whose licensing and merchandising program is handled by JTMG. It airs on the Disney Channel in the U.S. and has sold to numerous markets. Lead categories for this year, Tashjian says, are publishing, electronics and apparel. “And then for ’09 we’re working on stationery products and back to school.”

Whether it’s products for boys or girls, rights owners are increasingly finding that kids are getting older, younger. “Kids are growing out of toys much quicker,” says 4Kids’ West. “They’re also growing out of licensed products much quicker. The licensing industry is going through a shift as kids want to be cooler younger.”

It’s no wonder, then, the volume of activity at that younger end of the spectrum. BBC Worldwide, for example, is using Licensing Show to build North American awareness of the new Ragdoll preschool series In the Night Garden, which has become the biggest license in the toy and game market in the U.K. Hasbro, the global toy partner, is rolling out a range of products, including the Toy of the Year-winning plush Blanket Time Igglepiggle, mini soft toys, puzzles and games. “In the Night Garden is one of the top-rated shows in Canada” on Treehouse TV, notes Susanna Pollack, the senior VP of TV sales, co-productions and children’s at BBC Worldwide Americas. “We are actively in discussions with a number of licensing partners in Canada and are expecting it to mirror the scale it had in the U.K.”

BBC Worldwide also has new products for the perennially popular Teletubbies, as well as plush toys, from Kids Preferred, for Charlie and Lola, which has been a hit on Playhouse Disney in the U.S.

Scholastic Media, meanwhile, continues to release products around Clifford the Big Red Dog, which has been licensed into more than 110 countries. Scholastic Media has built upon its relationship with Fisher-Price to offer more family-friendly educational products in 2008 with a new Clifford the Big Red Dog software title for the “Cool School” Learning System. Other key launches include three new products from Mattel and two new huggable plush toys from master toy licensee JAKKS Pacific. There are also new books and DVDs, an educational music CD and a promotional partnership with Hansen Beverage Company, the makers of the popular kid-sized Junior Juice brand, in the U.S. Internationally, the key categories include DVDs, toys, apparel and electronics, with the priority markets being France, Germany, Spain, Japan and Latin America.

Nickelodeon & Viacom Consumer Products, meanwhile, is showcasing its new Nick Jr. series Ni Hao, Kai-Lan, as well as further merchandise for the preschool hits Dora the Explorer, Go, Diego, Go!, The Wonder Pets! and The Backyardigans.

While Tashjian at JTMG represents a smattering of younger properties, including Breakthrough’s Miss BG, she is also exploring retail products for kids based on network prime-time shows, citing the success of series like American Idol, Deal or No Deal and American Gladiators with younger viewers. “The co-viewing, family hour [at 8 p.m.]—you convert that into dollars for merchandising and it’s a very compelling story.” Action figures, role-play toys and Halloween costumes are on the cards for American Gladiators, says Tashjian, while jewelry and cosmetics for young women are being explored for Deal or No Deal.

Ultimately, Tashjian says, a licensing strategy for a brand, regardless of the target demo, is like “an orchestra or a ballet. Every element needs to align right on time, and if everything is there—the product is shipped on time, the film is out, the TV show is on at the right time, you’ve got the right broadcasters, you’ve got innovative product, you’ve got the retailer supporting you and you’ve got great ratings—that’s always a great feeling.”