A successful licensing program is defined by many crucial decisions along the way. KidScreen finds out how and when licensors decide to widen or narrow the scope of a licensing program and explores the challenges tackled in assembling a program when introducing a property into a foreign territory. This report also profiles the licensing strategies behind some of this year’s new properties, checks out the response to the recent wave of Star Wars product releases and outlines licensors’ key properties at this year’s event.
Once a kids property has entered the marketplace, knowing when to expand or to go niche with a licensing program is crucial to maintaining the longevity of the property. Add too many licenses too soon, and you risk sticking licensees and retailers with product neither can move; act too late, and you can miss out on capitalizing on a property’s critical mass.
‘If you’re working in TV, ratings and audience shares are good baseline indicators of how your property is performing,’ says Elie Dekel, executive VP of consumer products and promotions at Fox Family Worldwide. And given how much relies on ratings and audience shares to drive licensing programs for TV properties, licensors are putting increased efforts into engineering good numbers, for example, Canadian toonco Nelvana moving its animated preschool show Franklin from CBS to Nick Jr. in January. Franklin had been languishing on CBS’s Saturday morning kids block since its debut in September until December `98, grabbing an average rating of 0.6 among kids ages two to five, but enjoyed a pleasant ratings spike when it made the jump to Nick Jr., where it has maintained an average rating of 6.5 among kids ages two to five. This revitalized an anemic licensing program for the property.
‘We had an uphill battle at CBS trying to use our ratings as a vehicle to promote our brand to potential licensees. They just weren’t there,’ says Sid Kaufman, executive VP of worldwide licensing at Nelvana. In February, armed with early ratings, Nelvana went to Toy Fair and managed to more than double the licensee count for Franklin from 12 to 30. ‘TV is the engine; to the licensees, it’s a door opener,’ says Kaufman.
Susan Eisner, VP of licensing at Leisure Concepts Inc. (LCI), agrees. LCI’s Japanese import, Pokémon, has been a monster ratings success with kids since it hit North American TV screens in September, and is the chief reason why every company that has ever made a tzchotzke for kids is scrambling to snare a Pokémon license.
‘Licensees are most concerned about programming. They want to know if the show will be on the air for a second year, because it takes 18-month to two-year lead times for them to create product,’ says Eisner. ‘When you start seeing a pattern where the ratings continue to increase, where you know you have a good two-year program ahead of you, you start looking at long-term licenses, not just your core categories, but your ancillary product lines,’ says Eisner. LCI knew Pokémon would be on for a second season two months after it debuted in syndication in the U.S. in September `98, and heading into this year’s Licensing Show, Pokémon had 50 U.S. licensees on board, up 30 from the time of its TV launch.
TV ratings don’t always provide the truest reading of a property’s licensing potential. The sell-through velocities of key licensed categories, such as toys, plush, video games and home video, can buttress robust TV ratings or just as easily provide a counterpoint to weak ones, says Dekel. A case in point, he proposes, is Saban Entertainment’s The All New Captain Kangaroo. While the show has been garnering nominal ratings since the day it began knocking heads with preschool powerhouses Teletubbies and Blue’s Clues in August `98, Captain Kangaroo videos, nevertheless, have been selling at a strong clip. Since hitting retail with little marketing support, the three videos to date have sold in excess of 100,000 units in the U.S. since October `98. A test sell of Captain Kangaroo books at Target has also yielded positive sales, says Dekel.
‘The numbers demonstrated to us that a solid brand can sell in the marketplace irrespective of how it may be performing at that time on television,’ says Dekel. Saban Entertainment Consumer Products is using the strong video and initial book sales to serve as the foundation for a long-term licensing effort. Recently, it inked a deal with Busch Gardens in Tampa Bay, Florida, and Williamsburg, Virginia, to build two Captain Kangaroo Theaters that will feature live Captain Kangaroo musicals and plays. The company is also planning to increase the number of video titles it will release this year.
‘In Captain Kangaroo, we’re seeing little data points of success that transcend other pieces of information that are telling us `don’t bother.’ You can never take any one of these elements in isolation and make a decision based on it,’ says Dekel.
The disconnect between a property’s merch sales and the eyeballs it receives is not limited to television. In the recent past, at least two licensors of kids theatrical properties have had to reconcile wildly disparate merch sales and box-office grosses.
DreamWorks’ 1998 CGI kids flick Small Soldiers did rather small business at the box office, barely breaking the US$50-million barrier domestically, and yet the property pulled in a whopping US$100 million in domestic toy sales. ‘In our business, I look at box office, but then I have to directly relate that back to the sell-through of product at retail,’ says Travis Rutherford, head of licensing at DreamWorks. ‘Though many people say the two are directly related, oftentimes, they’re not. Box office can outsell product and vice versa. Both have to be looked at before you can begin to broaden or narrow your licensing program.’
So, what’s the next step in licensing for Small Soldiers? According to sources at DreamWorks, the company is planning a theatrical sequel to Small Soldiers to be released in 2000. Though Rutherford would not confirm this, he added that any new licensing efforts would be contingent upon the introduction of new entertainment into the franchise.
‘Even with today’s big hits, retailers are getting in and out of licensed product quicker than ever. So, it becomes a question of how do you take a franchise opportunity and grow that franchise, and the answer is by bringing out fresh entertainment or giving some support to the property, whether it’s through promotions, marketing or licensing,’ says Rutherford.
Faced with the inherent difficulty of predicting how a feature film will fare at the box office, Sony Signatures, the consumer products division of Sony Pictures and Columbia TriStar Television, is going one step further to build licensee and retailer confidence in advance of a theatrical release with its kids properties, such as Godzilla, Men in Black and Stuart Little. Typically, the company gets core licensees to buy into five-year plans, and in turn, grants them permission to create product for each entertainment property that comes out of the franchise. The continuous entertainment rollout, from movie, to cartoon, to movie sequel, is designed to get licensees and, by extension, retailers, on board for the long term by guaranteeing them sustained public awareness of the brand, says Peter Dang, executive VP of worldwide licensing, merchandising and consumer products at Sony Signatures. While helping to establish major kids properties for Sony, an offshoot of the strategy is to insulate licensees from any product bombs that might occur along the way. ‘What you need is a plan on what you might make over the life of a property,’ says Dang. ‘You need to approach the marketing of a potential franchise like you would plan any packaged good. You don’t plan for a can of soup, for example, to be on the shelf for four weeks in the summer and then that’s it.’
Early on, that looked like a wise strategy, since the shelf life of Godzilla-the movie-appeared as if it might be short. In the U.S., the kid- and adult-targeted movie did US$136 million in box-office returns. Though a respectable number, critically, the movie had failed to meet the public’s expectations, which Sony, to a large degree, had created. Conversely, sales of Godzilla’s 3,000 SKUs had already generated US$400 million in worldwide sales by the third quarter of 1998, meeting Sony Signatures’ sales quota for the whole franchise. In the interim, the Godzilla cartoon has gone on to pull in strong ratings, ranking number one with boys ages two to 11 its in time slot since it started airing on Fox Kids Network in September `98. Good or bad, none of the key indicators motivated Sony Signatures to expand or narrow its licensee list. Based on the marketing research Sony Signatures had conducted up front, which had included extensive focus group testing, Dang was confident the execution of the Godzilla licensing program would succeed. ‘Godzilla had a 98% awareness factor, so in planning the licensing program, we knew we could go wide [in terms of the number of licenses we issued],’ he says.
Dang et al won’t have the same luxury with Stuart Little. Only 30% to 40% of Americans know the character, according to Dang. Consequently, Sony Signatures is moving ahead with a much more modest program for both mass and specialty. Core categories in publishing, toys and interactive are covered, but any major licensing push down the road will depend largely on how those key product categories perform and the ability of each successive Stuart Little entertainment product to build critical mass.
‘In today’s marketplace, if you really want to manage the growth of your property, you have to match the scope of your licensing program to meet the consumers’ ability to recognize who or what the property is,’ says Dang.