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27 Jun 2002
Entertainment the driver for US licensing businesses
- report from Licensing 2002 International, New York


Entertainment a dominant category.

The single most profitable licensing sector over 2001 was cause-related licensing, which jumped 5.5% to US$38 million. Such licensing includes non-profit museum and charity licenses - these and all other types were present at Licensing 2002 International, the industry's top annual trade show, which closed a three-day conference and exhibition at the Jarvis Center in New York.

Despite unsettling economic and political news, attendance was up by 16% at the show. More than 18,000 attendees from 72 countries representing licensors, manufacturers and retailers scoured the show's 5,000 properties, looking for the next Spider-Man, Pokemon or Barbie.

The show was a reflection of the commercial success that is the licensing business, now generating more than US$96 billion in the US and US$177 billion in retail sales worldwide. Blockbuster properties along with 130 newcomers were among the 400 exhibits at this year's event.

Favoured figures make the best licensed goods.

The licensing industry continues to be dominated by entertainment, corporate, fashion and sports categories, according to the most recent study sponsored by the International Licensing Industry Merchandisers' Association (LIMA). These four sectors accounted for 93.5% of the US$5.6 billion generated in royalty income in 2001, according to the study, conducted jointly by the Yale School of Management and the Harvard Business School.

By all accounts, entertainment will still drive the licensing business, as studios release new films. Coming for Holiday 2002: Treasure Planet (Disney); Fat Albert (Fox); Pokemon and Pinocchio (Miramax); Lord of the Rings (The Two Towers) (New Line Cinema); Harry Potter and the Chamber of Secrets (Warner Bros.).

And for 2003: Winnie the Pooh (Disney); Cat in the Hat, Sinbad (Dreamworks); Bulletproof Monk (MGM); Lord of the Rings (New Line Cinema); Charlie's Angles 2 (Sony) and The Hulk (Universal Studios).

Major licensing characters for promotion.

A classic example of how entertainment licensed works is the new Scooby-Doo movie based on the vintage cartoon TV series, and featuring a talking dog. The movie was released on 14th June, and registered as the biggest June opener in history, with a total of US$56.4 million in weekend sales.

Tied to the movie opening was the launch of a special promotion by Mervyn's department store on 2nd June, featuring its Cartoon Network Shop. The promotion through 264 stores in 14 states featured Scooby-Doo merchandise, including an assortment of children's apparel, backpacks, bedding and Scooby-Doo toys and accessories.

Also included in the promotion is merchandise featuring The Powerpuff Girls, as well as many of the Cartoon Network's other favourite characters.

The LIMA report disclosed that total licensed revenues declined by 4.4% compared to 2000, it also revealed that art licensing increased 4.2% to US$147 million dollars while cause-related licensing took top position for generating profits.

Entertainment category rebounds.

"During these economic times, when most related industries have experience some business decline, a small decrease in licensing revenues was not unexpected. A closer look at the study, however, shows that business held up very well in most categories during last year's difficult economic period, the industry remains strong, and is increasingly regarded by many companies as an important and powerful tool in their marketing mix," said Charles Riotto, LIMA president.

"While entertainment experienced a slight dip in 2001, we're already seeing signs of a turnaround this year with the immediate success of the Spider-Man and Star Wars franchises. Early reports are also pointing toward strong growth in the brands and sports categories," he added.

The LIMA study found that entertainment character licensing continues to be the strongest overall category in the licensing business, maintaining a 44% share of the market. The trademarks/brands category is next in line at 17%, followed by fashion at 16%.

Royalty revenues by property type
(Figures in US$ millions)

Category
2000
2001
% Change
Entertainment
2,588
2,484
-4.0%
Trademarks/Brands
982
963
-1.9%
Fashion
980
911
-7.0%
Sports
721
707
-1.9%
Collegiate
182
175
-3.8%
Art
141
147
+4.2%
Music
138
117
-15.0%
Publishing
44
42
-4.5%
Non-Profit
36
38
+5.5%
Others
35
22
-37.1%
Total
5,847
5,606
-4.12%

Applications continue to expand.
Included among the new exhibitors this year were Disney Consumer Products, Better Homes & Gardens, FDNY, First Flight Centennial, Masterfoods USA (M&M's and Mars), NYPD, the rock band Phish, Revlon and Almay, plus apparel-based brands PJ Salvage and Woolrich. In addition, a number of UK based firms were present, made possible by a special government subsidy.

"As the licensing industry has matured, it has become more complex and multifaceted. New and innovative ideas and applications continue to expand the scope of the industry and create new opportunities each year in all segments of the business. This growth is further proof that the future of licensing is very bright. Both here and abroad the prospects for business expansion become more significant every year," observed LIMA President Riotto.

Continuing a feature initiated in 2001, the show contained a Product Sourcing Zone, an area designated to feature manufacturers who are often licensees already and capable of providing contract manufacturing resources to licensors, licensees, retailers and promotional partners.

Chow of Postbox.com: different promotion channels used.

Postbox.com Limited was a Hong Kong firm that produces licensed miniatures of postboxes from around the world. The firm has enjoyed significant success, selling more than US$10 million of these replicas since the firm was founded in 1996 - mainly as souvenirs and collector's items. Samson Chow, senior vice president, sales and marketing noted that these items can be used as clip dispensers or coin banks.

The postboxes have been distributed through post offices, souvenir shops, airport stores, stamp collection shops and promotional channels, he said.

Another exhibitor was David Halsall International, which is celebrating its 50th anniverary. Originally launched to distribute toys and seasonal products in the UK, Halsall now has sales approaching US$100 million and distributes in 40 countries. Halsall is the official licensee of Barbie Sports toy items and a large category of Simpsons toys and gifts.

Another Hong Kong company present was Asian Licensing Partners Limited. President Jay Smith said his firm is a full service brand management and licensing agency, connecting Western brands with Asian manufacturers, distributors and retailers.

Asian Licensing Partners: connecting parties.

"We work with brand owners, master licensees or licensing agents who hold worldwide rights, but lack personnel to execute strategies in Asia," said Smith. "Our extensive network of contacts ensures that licensees with the resources and expertise necessary will be building the client's brand in the region."

Hong Kong-listed Magician Industrial was another company taking part in the 2002 Hong Kong exhibit. Rona Yang, noted that the firm, a producer of plastic and metal houseware products, carries over 6,000 product items. In the past 25 years, the firm has averaged more than US$85 million in sales annually she said.

William Tang, general manager of Hong Kong's Alpha Creative Manufacturing displayed a collection of hats, caps, backpacks and gloves and scarves. The firm produces Walt Disney clothing accessories within the trademarks of Mickey Mouse, Winnie the Pooh, Monster Inc. and Lilo & Stitch.

"For several years we have possessed the licenses in manufacturing consumer products of Formula One Michael Schumacher, Ralf Schumacher and other brands of US car racing," he said. His firm offers Formula 1 racing caps. He noted that a new racing backpack will be produced in the US in July 2002.

Tang of Alpha Creative with company products.
Neat applications are making waves.

from special correspondent Ira P. Schneiderman, New York