I Want That!

TV Kids surveys some leading content rights owners about building kids’ brands in a crowded and fragmented marketplace.

Americans spent almost $20 billion on toys last year, a nearly 7-percent increase on how much they shelled out in 2014. The key driver for that boost? Content. Whether movies, TV shows, apps or YouTube channels, content-based properties continue to propel the market.

The list of last year’s top-selling traditional toy items, compiled by NPD Group, reflects an interesting new development in the licensing space, at least as far as TV rights owners are concerned. The biggest seller wasn’t something inspired by PAW Patrol or Teenage Mutant Ninja Turtles (although both are in the top ten), or even the mega franchise Star Wars (also on the list). It was a set of collectibles for Shopkins, a brand that just hit the market in 2014; as of January of this year, more than 240 million characters had been sold worldwide. There’s no Shopkins film or TV series (yet?)—but there are videos, lots of them, on YouTube and fan sites, and they had logged more than 900 million views as of this January.

The good news is, in an ultra-crowded and competitive market, it is still possible to come out of nowhere with a brand and set off a buying frenzy. Less comforting? The market is shifting dramatically, and changes in kids’ consumption habits and the media landscape could present a whole new set of opportunities, or woes, for the industry.

“Consumers still demand great stories and when they find one they like they will consume it ferociously—the rise in binge-watching is a testament to this,” observes Rick Glankler, the president and general manager of FremantleMedia Kids & Family (FMK). “But with so much platform fragmentation and content saturation, the stories have to be really good and highly original if they are going to stand out and drive deeper brand engagement, which is what drives successful consumer-products programs. In addition, the plethora of blockbuster theatrical releases that have become sustainable franchises has further saturated an already congested market and, with their massive investment, eaten into an area that was traditionally dominated by broadcast—even in preschool. This broad choice is great for consumers, but continues to pose massive challenges for IP owners and licensors competing to reach kid audiences.”

As Glankler notes, engagement is the key word—if a child doesn’t feel an attachment to your characters, they won’t be interested in urging Mom and Dad to buy the toys, apparel and more. Television (or OTT) success is just stage one, however, in building a long-term brand. And retailers are looking for a lot more than strong viewing figures when they’re determining what to put on their shelves.

“While still critically important, ratings are no longer the single most important driver for securing shelf space,” Glankler says. “Retailers are looking to see how brands engage with kids off- and on-screen and are relying more and more on IP owners and licensors to invest heavily in marketing their brands.”

Cristiana Buzzelli, the senior VP of licensing and acquisitions at Italy’s Rainbow, has a similar perspective. “The scenario for girls’ IP is very competitive, so good broadcasting is crucial but no longer enough to ensure the success of the franchise. You need to appeal to the audience and hit them with strong identification power that can really tie kids to the brand in a unique way. Then, product-wise, the creative assets to be provided to licensees have to be great.”

For the veteran brand Miffy, which originated in children’s books by Dutch author Dick Bruna more than 60 years ago, the key has been keeping the product line fresh. “We’ve had licensees for 50, 60 years—some have been with us the entire time, which is amazing!” says Marja Kerkhof, the managing director of Miffy’s brand-owner, Mercis. “Also, there are always new parties to work with, especially in apparel. We are primarily a preschool character, but we have a big program with Uniqlo for tween and teen t-shirts.”

Mercis has product lines built around the original 2D images of the little rabbit, as well as a style guide for the 3D Miffy from the new series, Miffy’s Adventures Big and Small.

“We make a trend book every year and we keep it updated,” Kerkhof says. “Also, we have projects that are very different. In some countries we have programs with athletics clubs for young kids to exercise. We have art projects. We have exhibitions in museums. There are always new initiatives.”

SKEWING THE SKUS 
The key for brand owners is having a diverse mix of products. Cyber Group Studios, for example, has already amassed some 50 licensees for its flagship preschool brand Zou, which is broadcast in 150 territories.

Alexandra Algard, the international licensing and marketing director at the Paris-based company, says that books and DVDs have been the strongest performers so far. “In France, we have a huge partnership with Larousse for books,” she says. “We have also developed a program in Italy with key publishers.” In the U.S., meanwhile, the company partnered with fast-food outlet Chick-fil-A on a promotion where Zou books were featured as part of kids’ meals.

With a third season currently in production, Zou is a well-established property, although Algard notes that the brand’s market awareness is not at the same level in every territory. “For example, we’re just starting to launch a licensing program in the U.K. and in Spain.”

Zorro the Chronicles, meanwhile, is just beginning its global rollout following its international launch at MIPJunior 2015. Partners on board include Hachette for publishing in France and French-speaking countries and Swatch for a Flik Flak watch. Discussions with toy licensees are under way.

At Licensing Expo, Rainbow will be focusing on its new animated series Regal Academy, aimed at girls 4 to 7, and the live-action kids’ and tween show Maggie & Bianca Fashion Friends.

Buzzelli says that “Regal Academy is a very toyetic show, where great storytelling is developed alongside appealing play patterns based on role-play concepts, collectability (thanks to the main and secondary characters) and different outfits for the characters.” Key categories include toys, back to school, stationery, gifts, fashion accessories and publishing. Giochi Preziosi has signed a pan-European master toy deal.

“Maggie & Bianca Fashion Friends is driven by two of the most appealing elements for the audience: music and fashion,” Buzzelli continues. “Simba, which is already the European master toy partner, is exploiting the great potential of the show with a product line based on arts and crafts, musical toys, role play [and] fashion accessories.”

For FMK, three shows will take center stage at Licensing Expo: Kate & Mim-Mim, Danger Mouse and Tree Fu Tom. For Kate & Mim-Mim, FMK has toys, publishing, digital and apparel covered in the U.S. “We are looking at signing additional secondary categories, including bedding and bath, seasonal, activity and party goods,” Glankler says. Danger Mouse toys rolled out in the brand’s launch market of the U.K. this spring. Other key categories will be launching this fall. For Tree Fu Tom, meanwhile, toys are on shelves in Australia and are rolling out in the U.K. and other markets this year.

CLASSIC COMEBACK 
DHX Brands’s main focus for Licensing Expo is the new Teletubbies. “The original was an absolute phenomenon for L&M,” states Tom Roe, the commercial director at DHX Brands. “The characters are very appealing—cuddly, bright and colorful—and resonate strongly with a young preschool audience. So when DHX Media acquired Teletubbies, it was decided our focus for the new series would always be about not losing their core appeal: it’s evolution rather than revolution, updating them and modernizing them for a 21st century audience. ”

Initial merchandise results have been strong so far in the U.K., and Roe is keen to replicate that success in other markets, particularly in the U.S., where the company is working with CPLG North America. Partnerships have already been signed with Spin Master for toys, VTech for interactive electronic toys and Hybrid for apparel, “as well as stacks of other best-in-class licensees,” Roe says. “We’re still working on other categories, up to and during the Licensing Expo, and there are very few we won’t look at for Teletubbies, given the wide appeal.”

Roe says that for DHX, building Teletubbies as a “long-term proposition” is paramount. “Teletubbies is a unique property in that it’s new but it also has a heritage. As a result, the opportunity is there to accelerate the time frame if we choose. Normally we’d like to get the broadcast launch, building the popularity and awareness first. We have a new audience, so it’s about making sure we introduce the property to a new generation and really seed it well, making sure people pick up on it and fall in love with it, and then we launch toys. Going too quickly in terms of launching products and categories after broadcast is definitely a way to increase the risk of having a shorter-term piece of business overall.”

Developing a mutually beneficial relationship with retailers —especially the big ones—is crucial. “They’re going to make a significant difference to the awareness and revenue performance” of your property, Roe says. “One of the major frustrations for a lot of retailers is that they’re going into a competitor’s store and seeing pretty much exactly the same product being offered.” The key, he explains, is “coming up with tailor-made solutions for these retailers, rather than simply offering the same or similar solutions to everyone.”

FMK’s Glankler notes the development of opportunities outside of the big-box retailers. “The independent toy chains in the U.K. continue to grow year on year and are becoming an essential part of the retail mix,” he says. “Retailers are also becoming more savvy about the need to drive footfall by offering more immersive in-store retail experiences, which provide great opportunities for us with character costume tours and similar initiatives that help expand brand engagement.”

Another expanding area is the digital space, where e-books, games and apps are providing a wealth of opportunities. “For our preschool properties, the world of apps and mobile games is huge,” DHX’s Roe notes.

DIGITAL DOMAIN 
FMK’s Glankler says that “online is the single most important destination for moms to find out more about the content their kids love, and kids are the first to adopt new technology. Once we have that digital engagement in place, and it’s still early days for some of our brands, we can then look at ways to drive commercial revenue. In terms of commercial revenue, apps are a key focus area, but platforms like YouTube also provide us with an opportunity to seed our own content and to generate revenue.”

Of course, the games and apps landscape is crowded, so gaining awareness for your properties can be a significant challenge.

“We launched Zou in the digital market and made an app and two e-books,” Cyber Group’s Algard says. “We supported the launch with a lot of marketing aspects. We partnered with broadcasters in order to promote the app. We made a lot of deals with distributors. It’s a challenge to be on the top of that market, but we succeeded.”

Mercis, too, found innovative ways to promote its digital assets. “There are various ways to present them and incorporate them, for example in preschool activities with kindergartens,” Kerkhof says.

For DHX’s Roe, “It comes down to consumer feedback: people look at the ratings. If you come out with a quality product and it gets picked up early and you start to get those ratings, then it can snowball. It’s the consumer-driven endorsement that really helps.”