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Maybe the last thing the merch industry needs right now is a hit

Following the Pokémon merch flameout, the licensing industry has learned to live without a global hit--the hard way. Some say a new licensing craze will revive retail confidence and foster a risk-friendly market atmosphere, but it could also undo everything the industry has accomplished in the interim.
June 1, 2002

Following the Pokémon merch flameout, the licensing industry has learned to live without a global hit–the hard way. Some say a new licensing craze will revive retail confidence and foster a risk-friendly market atmosphere, but it could also undo everything the industry has accomplished in the interim.

With no powerhouse brand pumping up the market, rights owners, licensors and agents have been forced to develop innovative licensing strategies over the past 18 months. Rather than merely striking deals with retailers and licensees, they now take the time to develop relationships–true partnerships that leave no room for questioning whether there is a market for a product. And this shift has resulted in a healthier industry than that which existed during Pokémania.

The next international hit could change all of that. Suddenly, you’ve got something everyone else wants, market power shifts in your favor, and the rest of the industry rides your success wave. Innovation? Relationship-building? Who has the time when you’re drowning in licensee pitch meetings and product reorders?

Then, when the fad invariably dies or the property takes on more subdued dimensions as an evergreen brand, the entire industry suffers through an anticlimactic withdrawal period. Retailers dig in their heels and refuse to take on product created around original concepts and short-windowed opportunities. Licensees refocus on core strengths and pare down their product lines to match the decreased retail demand. And licensing properties once again becomes really hard work.

Every licensor has how-big-can-this-get aspirations for their properties, but contrary to popular opinion, hits don’t make or break the market. Instead, they distort perception, artificially inflating the market for a given period of time, and leading to a slow-leak letdown and missed opportunities for industry players.

To avoid such dramatic highs and lows, the industry needs to work at building reasonable expectations and avoiding the hype factor when selling licenses to manufacturers and retailers. By collectively making the effort to communicate the right information with its proper meaning to licensees and retailers, licensors might actually deliver better globally.

Of course, the kids entertainment industry has been paying lip service to this idea for years. But now, licensors are finally taking the time and effort to ensure that individual buyers at all key retail outlets in their market are aware of a new property and how it’s relevant to their product categories. And the lower-level, longer-term success that breeds is my definition of a hit.

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