Outside the Box

Changes in consumer viewing habits are forcing those in the licensing-and-merchandising industry to adapt and overcome.

When the bastion of American toy sales, Toys “R” Us, vanished from the U.S. retail landscape last year, the kids’ licensing-and-merchandising business braced for the worst. Clamoring against Disney to score precious shelf space was challenging enough. Now there was even less available. And just as e-commerce has put the squeeze on brick-and-mortar retailers, the rise in on-demand viewing has upended all the traditional models for building a viable kids’ brand.

These days, rather than daily appointment viewing, it’s far more likely that a child is binge-watching a show that they’ve chosen from a curated selection on a streamer. And with changes in viewing habits come the inevitable shifts in the ways consumers interact with the products associated with their favorite shows and movies.

MOVING FASTER
“The key is to innovate, to work hard and also to adapt to changing viewing and buying habits as well as new marketing channels,” says Valentina La Macchia, Mondo TV’s licensing director. In response to these changes, Mondo—which manages the kids’ animated property MeteoHeroesas well as the non-broadcast IP Feisty Pets, among others—has thrown its hat in the digital space, representing a web series, House of Talent, for the first time. The show follows as a crew of 20 influencers, who have a combined half a billion monthly impressions, come together in the real world to live together. It has over 260 10-minute episodes that 8- to 14-year-olds can watch, engage and even interact with. “And they can do this on any web-enabled device, because, let’s face it, that’s what they’re used to: entertainment on the move is a teen and tween lifestyle choice and we mean to reflect that,” La Macchia says.

Rob Spindley, senior VP of commercial development for the U.S. and EMEA at One Animation, the Singapore-based content producer behind the Oddbodsproperty—which has amassed over 10 billion views on YouTube—agrees that L&M schemes need to shift drastically to meet consumers’ needs.

“Traditionally, buyers were primarily focused on looking at the free-to-air broadcast figures—that was the key focal point of the retail and licensing sector,” he says. “If you had a prime broadcast slot, that’s where the buying decisions were generated from. Brand support as consumers transition to alternative platforms to view content has created a big disturbance to that previous methodology. A strong online presence is now also key.”

He continues, “We’re seeing brand emergence and decline moving faster than it ever moved previously. YouTube and digital channels can elevate brands from zero to hero and back again in a heartbeat, as kids have consumed everything they want to consume and they’ve moved on to the next thing.”

Spindley points to the “playground chatter” afforded to shows in the past, which saw kids watching an episode of a show each week and then talking to their friends at school about it, creating a slow buzz and feeding a long-term appetite for the show. In today’s viewing world, Spindley observes, “Children can sit down and they can just watch an entire series [in one sitting]—which is great for the brand for that very short period of time, but the consumer then is moving on to something new.”

For this reason and many others, it’s harder now than ever to get onto retailers’ shelves. Jennifer Coleman, VP of licensing and marketing at Konami Cross Media NY, which manages the Yu-Gi-Oh! brand, points to Fortnite as a prime example of how much money and time it takes for new and untested IP to reach shelves. It took years for a game that has become a cultural phenomenon to get into stores. “In order to secure that shelf space, you have to show that you’ve got that proven audience in there,” she says. “You have to show that you have the eyeballs, show that you have the engagement. And once you can prove that, it’s much easier to get on the shelf. So it’s a substantial investment in marketing, content development and production. There are high barriers to entry.”

Mondo TV’s La Macchia agrees with Coleman: “Licensees prefer to wait for identifiable demand—that’s not ideal for a broadcast business that thrives on new ideas.”

PAIRING OLD AND NEW
Thankfully, Coleman says, Konami’s Yu-Gi-Oh! property, as well as its classic gaming IPs Frogger, Bomberman and Contra, have the brand recognition that gives them that foot in the door. Konami’s legacy brands stand somewhat immune to the fickleness of consumer interest, delivering much-needed stability, Coleman says.

Genius Brands International is in a similar situation when it comes to its known IP, says Lloyd Mintz, senior VP and head of worldwide consumer products. Of Llama Llama, a Netflix original, Mintz says, “We have one advantage that most of the other shows that might suffer from binge-watching don’t have, which is we also have a ten-year-old-plus best-selling book series. There are over 25 million books in print. There are about half a dozen new titles every year, including a featured hardcover title. Those usually shoot to the top of the best-seller list. Because they are hardcover, they get a lot of attention. I think with some shows, people do binge-watch and then move on. But when you’re a book series, you do benefit because you’re part of the bedtime reading routine. You get into that rotation of books that constantly get read. That’s one thing that helps us compared to others who may not have that publishing heritage.”

Coleman says that Konami is expanding its online Yu-Gi-Oh! store and working more with streaming platforms. “That’s been one way for us to try to make sure our content is still finding its way into the hands of our fans and continuing to keep that audience engagement,” she says.

Mintz outlines a similar strategy that Genius is taking by focusing on the online market. “We just started a Llama LlamaYouTube channel,” he says. “We’re not only reacting to the market, but we’re picking up on best practices from other properties that have gone before us and what’s worked for them and what hasn’t. We know that YouTube helps elevate that engagement.”

Mintz adds that it is crucial to time L&M rollouts carefully to allow the brand to build recognition in the market. “We’ve seen too many properties that have been in too much of a rush to get product out there. I don’t know if anybody can point to one that has followed that strategy and been successful. If people don’t really know and ultimately love the property, then the product is not going to sell.” 

EXPERIENCING CHANGE
So how do companies get their products on shelves in a world where e-commerce reigns supreme? “How do you keep [customers] coming in the doors when you can’t beat the Amazon price? What else can you offer?” Konami’s Coleman asks.

Experiential retail might be the answer. It’s a space that the L&M sector has begun to look toward as the future of what will keep buyers leaving their houses to spend money on products that they could likely purchase online, often for less. “To get products to retail is still a must—but getting consumers to retail is no longer about just putting product on shelves,” says La Macchia. “It’s about ensuring a memorable in-store experience for their consumers. Given the strong competition from e-commerce, it’s very important to be able to add value to the shopping experience, with events, meet-and-greets and the chance for kids to interact with their favorite characters.”

For the YooHoo brand, based on the Aurora World plush toys and now encompassing the preschool series YooHoo to the Rescue, Mondo TV has secured a customized shopping area in various Mondadori locations across Italy. “We’re also planning four in-store events in the megastores, featuring YooHoocostume characters along with an engaging format to get kids and families to experience a unique interaction with the brand,” she says. There are also Feisty Pets-themed shopping mall events across Italy.

KEEPING UP
Unique buying experiences come in many shapes and sizes. “A prime example might be a birthday cake, for instance,” says One Animation’s Spindley. Using an app, a consumer can scan the packaging, “and the Oddbods emerge on-screen and ‘Happy Birthday’ plays. Added-value interactions like this provide additional layers and deeper brand engagement to the consumer experience.”

“Look at the Trolls experience that DreamWorks has built in New York,” Konami’s Coleman offers. “You’re not just going in there to purchase—though of course monetization is going to be a part of it. It’s more about interacting with the brand so that you’re getting a 360-degree experience—from green-screen opportunities to characters there to a play space. That seems to be a direction that retail is headed in, and I think that even in Toys “R” Us announcing that they were going to be coming back, they mentioned some experiential retail opportunities.”

Mondo TV has also dipped into the world of immersive retail, launching a new AR app for its animated property Robot Trains that allows kids to interact with the characters from the show in real time. “Retailers, too, have the opportunity to demonstrate the innovative immersive technology in-store, encouraging kids to scan products or use an exclusive graphic marker to activate special content and become part of the Robot Trainsworld,” La Macchia says. “This adds value to the retail experience.”

For anime and gaming IPs, Konami’s Coleman says many experiential retail opportunities center around good old-fashioned human interaction. “In addition to normal brick-and-mortar, there are a lot of [fan conventions] and the expos, so those are a growing opportunity for us,” she notes. Pointing to retailer FYE’s pop-up shop at this year’s San Diego Comic-Con, she says that customers are “going in to interact with whatever that brand or that IP is that’s surrounding that pop-up shop opportunity. Even the retailers are catching on to that and realizing that these are different opportunities where they can certainly monetize and capture new audiences and revenues.”

For brands to stay competitive, they have to undertake multifaceted L&M schemes, ensuring their products are offered across every category and in every space that consumers might look. One Animation’s Spindley says the company always aims to launch campaigns that “engage our entire ecosystem. All of the messaging we produce is aligned and cohesive, delivering a consistent message across multiple touchpoints and media for maximum consumer recognition.”

Giulia Bertè, licensing and brand manager at the Italian production-and-distribution group Showlab, agrees, saying that launching a brand requires a comprehensive approach to its licensing and merchandising. “We always try to create a project that involves all the commercial elements,” Bertè says. “We want to build a brand in all aspects. So when we start to work on a project, we always think about how many commercial spheres can be involved. We don’t want to just offer a new property to the market; we want to make it a big, big project.”

Adapting to fast-changing consumer buying and viewing habits, exploring innovative partnerships and keeping an eye toward the experiential retail space are key to brand relevancy in today’s market. “There will be many L&M opportunities that will see the business grow now and in the future,” La Macchia says. “What matters is to be ready for them.”