TVKIDS
As the retail industry changes with the times, new opportunities are opening up in the licensing and merchandising business.
Much was made last year of the liquidation of Toys“R”Us, the ultimate purveyor of toys. There were fears that its bankruptcy not only underscored a singular company’s financial woes, but perhaps foretold unavoidable ails for an entire industry. But those fears may have been unfounded, or at the very least, premature.
Despite a 2-percent decrease in toy-industry sales in 2018, as reported by the NPD Group, the Toys“R”Us liquidation was possibly indicative of an isolated problem: an outmoded business model for a soon-to-be bygone era. Once the industry adapts to make up for its absence, it seems reasonable to believe that more growth lies ahead.
As broadcasters launch streaming apps and media megabrands like WarnerMedia and Disney unveil SVOD and AVOD platforms, they’re acknowledging a pivot in how viewers want to consume television. So too, kids’ media brands and merchandisers must acknowledge a pivot in how consumers want to buy toys and other branded merchandise for the children in their lives.
“Amazon and Walmart have to top your list each and every time,” says Jennifer Coleman, Konami Cross Media NY’s VP of licensing and marketing, about the routes brands are taking to bring their products to retail in light of the closures of many brick-and-mortar toy sellers. What’s more is that Konami, which recently rebranded from 4K Media and manages the Yu-Gi-Oh! brand, in addition to Contra, Frogger and Bomberman, is meeting the buyers where they are—on the internet. “We’ve had our own small Yu-Gi-Oh! shop online.”
Natasha Gross, SUNRIGHTS’ director of licensing and merchandising, also sees the rising importance of having a strong presence in the online sphere to reach consumers directly and with more flexibility.
“Brands could feature select products and attract niche consumers, but this area is still challenging because you need to attract your audience and build awareness,” says Gross. One solution is to take Konami’s route of creating an online shop. “Many manufacturers, and even brands, are creating their own e-commerce platforms that are very targeted toward a particular buyer, but it will take time to grow these sites.”
ONLINE SHOPPERS
In Italy, where Mondo TV is based, the retail industry has yet to dramatically shift away from brick-and-mortar, though that doesn’t mean that the company is turning a blind eye to online retail’s encroaching prevalence in the region.
“We still do a lot of business through traditional retail, shops, stores and kiosks,” says Valentina La Macchia, Mondo TV’s licensing director. “It’s true that online trading is making inroads into these markets, and we are factoring this change into our planning. However, we are wary of overcommitting to any one retail approach when the retail market remains fairly diverse.”
Ian Shipley, the head of licensing at Monster Entertainment—whose The Day Henry Met…? property has inspired a series of books—is not entirely immune to the internet’s many charms, but he maintains the belief that brick-and-mortar still serves a fundamental function in the L&M business.
“Without the brick-and-mortar retailers, brands and properties lose out massively on the exposure in-store and the ability to present a range of products and undertake brand promotions. Suppliers also miss out on the impulse purchases generated in-store,” he says, adding, “Grandparents and other relatives looking for a present would often buy if they could see a range was popular; they don’t get this with online retailers in the same way.”
Shipley has an idea of one category in particular for which Amazon could help brands develop products that frequent toy buyers like grandparents might be keen to buy. He thinks that a key opportunity in the coming years for the L&M business could be “for a major [retailer] like Amazon to get in on the print-on-demand model and become more innovative with the products that can be personalized. There are many people doing print-on-demand, but at the moment, they just do not have the reach to generate long-term high revenue for IP owners.”
“Every segment of the L&M business is getting more personalized and consumer-oriented,” observes Valeria Korotina, FUN Union’s international marketing director. She explains that the company is constantly researching and studying its target audience. “Which social networks they are using; which platforms they watch. We can adapt our content by analyzing which episodes are more popular and by attending to audiences’ comments. It’s not enough now just to produce content; you have to be in a dialogue with your audience.”
In keeping with the theme of looking toward what’s next rather than at what is, Konami’s Coleman suggests that Kickstarter might become a vital platform for even established brands in the merchandising industry. She’s witnessed companies “using it as a promotional tool to drive awareness, to create buzz and really to sort of seed it within that category, within that fan group that you’re targeting, that target market.”
STANDING OUT
While conventional wisdom might dictate that a brand as storied and established as Konami’s Yu-Gi-Oh!, with its sprawling franchise of series, wouldn’t need to consider avenues like Kickstarter, Coleman would beg to differ. From her point of view, the assumption that established IP has a firm leg up on the competition profoundly misunderstands the retail game, which requires continuous effort to stay ahead.
“You have to work hard, you have to be creative, you have to be innovative, you have to make sure that you are on trend—not only with the products that you’re putting out here, but also with the style guides that you’re developing for your partners to work with,” says Coleman, suggesting that these musts hold true for all brands. “I think you have to look hard and everything has to be aligned, and it has to be a concentrated effort across numerous departments across an organization to really find success in this competitive landscape.”
Monster Entertainment’s Shipley, meanwhile, sees how difficult it can be to crack through the BPA-free plastic ceiling of the industry.
“I am saddened when I continually see the major household-name franchises and nothing else—great for these brands, but they are blocking new IP from breaking through as retailers play it safe,” he says. “If they only have three SKUs of lunch boxes, they will play it safe and go with a mainstream franchise.”
SUNRIGHTS will be representing the well-known Beyblade IP across all non-toy categories at Licensing Expo, as well as some select ancillary novelty toy products, as master toys are the brand’s key driver. “We have an entire demographic that is nostalgic for Beyblade who are older, and we are marketing to our original fan base,” says Gross.
If nostalgia isn’t in a brand’s corner, it’s feasible to break into the competitive field and stand out from the crowd through quality and originality, according to Mondo TV’s La Macchia.
“We try to make sure the positioning of our brand is something that we have done differently from every other channel. The Robot Trains app is an obvious example,” La Macchia says, referring to the augmented reality app that’s both free to download and available through product purchases.
FUN Union has responded to the competitive market by seeking out the right partners. KingBee in China produced its BabyRiki toys, which launched six months ago with more than 70 SKUs in more than 120 stores. The company is also finding new ways to work with retailers on IP.
While partnerships are central to the licensing business, SUNRIGHTS’ Gross points out that when it comes to categories and timing, strategizing is as important as ever.
“The days of signing up hundreds of licensees globally in anticipation of launching a brand are no longer the reality, and partners across the board are more conservative to align with retail interest and economic change,” she says.
With Avengers: Endgame ushering in the end of the most recent great age of the superhero flick—and its corresponding stronghold on collectible toys—Konami’s Coleman sees an opportunity in the gaping hole that the megabrand will leave in its wake, one that can be filled by smaller brands, particularly ones tied in to the gaming industry.
“I’m excited about what the future holds for some of these game entities, and that as a new medium for content development and putting that out there in the marketplace. I’m a little happy that superheroes are kind of on the downturn so that other things can try to find their place in the category,” says Coleman, adding, “I like seeing the continued growth of Crunchyroll for our anime sector,” referring to the streaming platform whose success underpins what’s changed on the content side of the industry, and which goes a long way to forecasting what lies ahead in L&M.
Mondo TV’s La Macchia, too, acknowledges streaming’s potential, as well as that of online media at large, though not without a caveat echoing one of Coleman’s concerns. “The growth in viewing platforms and online media is helping to democratize brand exposure and reach highly targeted, licensee-relevant audiences,” she says. “This is a major opportunity—if it can be properly managed.”
