The impact of the global Covid-19 pandemic has accelerated the changes we were already experiencing in the licensing business, the greatest of course is the adoption of digital. Today’s kids are digital natives, making them natural online shoppers and influencers on their parents’ purchasing. Fundamentally for marketers and retailers of kids’ products, understanding how they engage with and consume media will lead to greater product sales.
For the children’s licensing business, entertainment in all forms remains the greatest driver. Focusing on the most impactful channels driving kids’ content is a critical factor in your success. With so many channels of distribution, kids are consuming content through a wide variety of mostly digital media. While the business of licensing kids’ media properties remains the same, it is simply how and where kids are consuming that media that is changing, along with some of the companies that own the IP.
According to Market Research firm Statista, the estimated number of paid SVOD users worldwide as of June 2021 topped one billion subscribers with SVOD subscription revenue projected to reach US$71 billion in 2021.
Top Performers in SVOD
Netflix remains the leader in SVOD with the greatest audience numbers globally outside of China. Netflix still depends heavily on third party programming so much of the licensing is controlled by 3rd Party IP owners. A major drawback to Netflix is their lack of transparency in sharing viewer data, a critical factor for licensees and retailers. Netflix is aggressively adding kids content entertainment and has recently launched a connected ecommerce storefront that sells licensed products from its programming.
Amazon’s planned acquisition of MGM Studios, just announced, provides it with a treasure trove of more than 4,000 films and 17,000 hours of TV programming as it continues to develop its own original content and license film and TV programming from non-competitive, third-party entertainment providers. Amazon’s position as the dominant ecommerce platform makes it a very tough competitor when it comes to selling licensed merchandise.
By far the most successful of the SVOD launches in 2020 was Disney+, with a rich library of licensable content including all Disney animated and live action films and TV, Marvel, Pixar, Star Wars, ABC and National Geographic. In fact, Disney+ has built just shy of 100 million subscribers, beating its own four-year target in 14 months. The quality of the Disney+ content combined with their herculean growth and outright ownership of the IP, makes Disney a definitive winner when it comes to content and commerce in the streaming wars. Their megahit “The Mandalorian” featuring “The Child” Baby Yoda has created huge success in licensed consumer products and was a big winner in the recent TOTY Awards for 2020 given out by the Toy Association.
Another recently announced mega merger is Warner Media and Discovery, the combined company will solidify its position as an entertainment behemoth in the streaming wars. The company plans to spend $20 billion per year on new content, coupled with a rich existing portfolio of animation, lifestyle, comedy, drama, reality, and franchise properties. From a kid’s perspective, the studio has the Warner Bros library of films, Looney Tunes franchise of classic and new cartoons, Cartoon Network franchises and so much more. Couple this with Discovery Kids and Food Network
While YouTube is a different business model from premium SVOD. It is an AVOD (Ad-based Video on Demand) which makes it free to view with ads, it has however continued to see significant growth. Kids content on YouTube increased 79% in 2020 over 2019 according to Tubular Labs. YouTube has over 2 billion users worldwide. YouTube as a platform has been a top performer for kids channels building several successful breakout children’s licensed properties like Ryan’s World, JoJo Siwa, Blippi, Cocomelon, Little Baby Bum and Galina Pintadina to name a few. All content on YouTube is provided by 3rd parties, and unlike Netflix, viewer data is readily available, making it easy for licensees and retailers to understand performance.
A category that has been steadily growing for 40 years, video game IP for licensed consumer products became a driving force in kids’ product licensing during the pandemic. While licensed games like Pokémon Go, Marvel’s Spiderman, Star Wars, Lego, and many more are bestsellers; core gaming IP derives from these bestselling games: Animal Crossing, Minecraft, Fortnite, Overwatch, Just Dance, Roblox, Five Nights at Freddy’s, Rocket League, Mario Kart and Fall Guys. Expansion of licensed products for these properties has outpaced many other forms of traditional kids licensing and will continue to see exponential growth opportunities given the dedication and hours of time spent playing.
Fortunately, most major licensees and retailers who follow pop culture trends were tuned into the mainstream appeal of videogames. Working in unity as the pandemic spread, retailers and licensees pivoted to taking on more videogame licenses including interesting takes on nostalgic licensed videogames- Sonic, Donkey Kong, Pokémon, Super Mario Kart, The Legend of Zelda, even Pac Man, Space Invaders, and the Atari brand. Nostalgia sells during uncertain times!
The pandemic’s effect on entertainment at retail
For those of us in the licensing business, Hollywood franchise films and their attendant spinoffs had always been the lead driver of licensed entertainment products. From toys and apparel to electronics, home goods, accessories, food, and beverage…you name the category, Hollywood franchises led the way in entertainment licenses, driving greater sales of products. In March 2020, the world changed. Movie theatres shuttered and the industry faced a year with little to no box office releases and revenue. While many of the studios pivoted to streaming platforms, the franchise film licensing infrastructure, so dependent on brick-and-mortar mass merchant retail as promotional partners, simply shut off. However, as 2022 approaches, Hollywood’s theatrical release schedule is roaring back with mega blockbuster hits that will drive box-office revenue to new heights in 2022.
What to expect in 2022
With significant progress in vaccination in the U.S. and Europe, 2022 is poised to see significant increases in consumers seeking experiential out of home experiences after many months of lockdowns. Combine this with a backlog of Hollywood franchised films that will see theatrical releases in 2022 and movie licensed properties will be significant drivers of consumer products at retail in 2022.
Film franchise highlights for 2022
Hollywood will overdeliver in 2022 with a plethora of franchised entertainment feature films! In any other year, there would be a risk that so many franchise film releases in the same year would cause franchise fatique among moviegoers. But given the consumers’ pent-up demand for out-of-home experiences, there will be some mega merchandise hits in 2022. Let’s take a look at the lineup.
- Doctor Strange in the Multiverse of Madness
- Thor: Love and Thunder
- Black Panther 2
- Antman and the Wasp: Quantumania
- Captain Marvel 2 with a tie into their hit Disney + franchise Wandavision.
- Turning Red and Lightyear a prequel to the Toy Story films
- Chip & Dale: Rescue Rangers based on Disney classic animated characters which will launch a new Disney+
- Disney Indiana Jones 5
- Avatar 2 - much anticipated film in the making for the last 15 years.
- Transformers: Rise of the Beasts - the seventh iteration features Optimus Prime, Bumble Bee and characters from Beast Wars, the Transformers animated film from 1990.
- Spiderman into the Spider verse 2
After many fits and starts, several years ago Warner Bros DC Comics division made a major commitment to create an Extended Universe of films like Marvel’s Cinematic Universe. 2022 will feature three major franchises:
- The Flash
- Aquaman 2 as well as several new ones
- Black Adam, starring Dwayne Johnson as Shazam’s nemesis
- DC Super Pets an animated film featuring Superman’s Dog teamed with a Superpowered Cat
Warner Bros also delights Harry Potter fans around the world:
- Fantastic Beasts and Where to Find Them 3
- Jurassic World: Dominion
- Minions: The Rise of Gru
- New animated film The Bad Guys from DreamWorks Animation based on bestselling Children’s Book
- Sesame Street: The Movie
- Sonic The Hedgehog 2—Sonic the Hedgehog from Sega, which is currently celebrating its 30th Anniversary
- Super Mario Bros.: The Movie
How to choose?
For retailers with limited shelf space, 2022 proves to be an embarrassment of riches. How then to choose which films merchandise program to carry? While there are no guarantees that one movie property will outperform another, look at how much the Studio is spending on marketing promotion. Also, how has this franchised performed in past iterations with product sales. Finally, is the film tied in with the Studios streaming video channel in such a way that it will drive greater product sales after the theatrical run?
The retail/theatrical partnership
With a return to brick-and-mortar retail shopping, retail tie ins and instore merchandising will return with instore promotions, end caps and licensed consumer products on store shelves that will help drive consumers to theatres and sell licensed merchandise. Since the advent of franchise films, entertainment marketers have worked with retailers to develop experiential retail, entertainment properties that drive consumers in store.
An example of experiential retail
The Avengers S.T.A.T.I.O.N. is an immersive exhibit that has toured the world since the first Avengers film. It has appeared in key retail areas such as New York Seoul Paris , Beijing, London and Las Vegas, and always pulls in huge crowds. Based on the global box-office film franchise, Marvel’s The Avengers, the store features real life movie props and interactive displays.
There are Marvel branded items for sale, but the goal of the project is not to shift T-shirts and mugs. It is about delivering an in-person experience to fans and bringing the brand to life. Another example of a media company that developed an experiential retailer is CAMP.
Launched in 2018, CAMP is like a “please touch” museum, play date and shopping trip all rolled into one. Consumers who live in New York, Connecticut or Texas can visit one of the five CAMP retail stores in person. CAMP was launched by digital media company Buzzfeed, seeking to create physical experiences for its urban/suburban millennial audience and their kids.
Each CAMP store is comprised of four experiences, or camps, all located behind a “secret door” in the main retail store space.
Base Camp is a traditional camp experience of exploration and discovery of nature, arts & crafts, sports, theatre, story time and more. Travel Camp invites shoppers to have a tea party in London, visit the Great Barrier Reef, go on a digital African safari, or walk across a hanging bridge in the forests of Costa Rica—all while shopping.
The Toy Lab Camp provides opportunities to test and shop for today’s most popular toys—brands like Little Tykes, Melissa & Doug, LEGO and much more. Cooking Camp encourages kids to touch and experiment with the whole food experience, from farm to table.
Small and boutique retail
Smaller retailers seeking to take advantage of entertainment based licensed products but with limited shelf space and limited marketing budgets may want to focus their product assortment on four seasonal tentpole films per year working with product licensees to provide in store promotional tools. Choosing popular film properties with TV/video/book franchises provides product sales throughout each quarter keeping customers need for pop culture-based products satisfied while also creating more excitement in store with promotional movie tie ins.
Wrapping it all up
Whether you are a boutique toy and hobby store or a chain of stores, the plethora of Hollywood franchised hits being released in 2022 offers retailers tremendous promise for increased sales of these entertainment products. The ability for retail to tap into the marketing clout of a multibillion-dollar franchise drives greater sales growth for your stores while at the same time pleasing your customers’ needs for pop culture entertainment.