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Remember the days when a successful boys licensing program could be launched with the all-powerful triumvirate of broadcaster, master toy licensee and mass market retailer? In the new multi-platform universe, that power of three has been diluted. And emerging through the cracks in this formerly impenetrable ivory tower are new boys licensing program drivers - notably the video games segment, which enjoys an ever-broadening distribution at retail.
February 17, 2009

Remember the days when a successful boys licensing program could be launched with the all-powerful triumvirate of broadcaster, master toy licensee and mass market retailer? In the new multi-platform universe, that power of three has been diluted. And emerging through the cracks in this formerly impenetrable ivory tower are new boys licensing program drivers – notably the video games segment, which enjoys an ever-broadening distribution at retail.

According to NPD Group data, US video game sales were up 19% in 2008 over 2007, generating a sizeable US$21.33 billion at retail. On the console front, in a continuing trend of market domination, annual unit sales for kid-friendly system Nintendo Wii sat at just over 10 million, while the handheld Nintendo DS registered 9.95 million unit sales. Nintendo also had the top-four software SKUs in 2008 with Wii Play, Mario Kart Wii, Wii Fit and Super Smash Brothers Brawl. And that level of success – in an overall soft market – simply can’t be ignored.

For their part, licensors are watching the space very closely. ‘I think the continued growth of video games is due to people spending more time at home now,’ muses Simon Philips, president of worldwide consumer products, animation and interactive entertainment licensing at Marvel. ‘Video games are a way of escaping; you can immerse yourself in another world and become another character.’

Interestingly, Marvel will launch its first-ever kids-targeted video game based on new TV series and property Superhero Squad this October with publisher THQ. The property is clearly aimed at boys ages five to eight, a group that has resided well outside the core gamer demo – until now. According to Philips, the Superhero Squad game leverages the motion opportunities of the Nintendo Wii controller that have been so successful with younger kids to enhance playability and ease of use.

And with the growing popularity of kid-friendly systems like the Wii, more licensors are pursuing master video game agreements and putting more marketing muscle behind single titles on retail shelves, driving up the quality of licensed games.

‘Licensed games historically have a bad reputation for poor game quality,’ notes Alison Quirion, VP of marketing for D3 Publisher of America, maker of the Ben 10 series of video games. ‘Now, we’re getting better at not only bringing the license to life, but making it a high-quality, enjoyable game as well.’

Publishers and licensors are also taking the next step of ensuring that the talent pool of the TV show or film is being used in the game as well. But games are no longer direct translations of what appears on screen – licensors are extending the property’s universe with new characters and storylines. ‘Licensors are finding video games a great opportunity to grow the brand,’ says Quirion, whose company recently announced it’s developing a tie-in game for the new Astro Boy movie launching in October. ‘And it gives us as publishers the opportunity to feel a bit more invested in the brand as opposed to a direct screen-to-game translation,’ she adds.

But the big question remains: Are video games strong enough to drive the launch of a boys licensing program?

While industry pundits claim that boys programs need to be multi-dimensional and often require both a master video game and master toy partner to drive success (witness video game-based Pokémon that required toys to push its revival into overdrive in 2006), some envision a day in which video games take the lead.

‘Video games are widening their audience beyond core gamers and bringing in the entire family-Nintendo Wii has revolutionized the space,’ says Christina Miller, Cartoon Network Enterprises VP of consumer products. ‘It’s something we now look at and consider, whereas in the past, toys and softlines were more prominent.’ For example, Cartoon Network launched its Ben 10 program with a master toy assortment, followed 12 months later by a video game title. But when the broadcaster rolls out the licensing program for action-adventure series Secret Saturdays this fall, toys and video games will be in market at the same time.

Of course, the decision to launch a boys program with a master video game partner is dependent on a number of factors, chief among them are age target and the property’s storyline and play patterns. In the three to six space, for example, master toy is still clearly the way to go. But as you move into the seven to 12 set, ‘video games can drive the play pattern and action figures can drive collectability,’ says Reyne Rice, toy trend specialist at the Toy Industry Association. ‘And with a good vs. evil, shoot ‘em up storyline, you get a better response with video games because of the rich role-play opportunities they provide.’

For their part, video game publishers like licenses that have an element of fantasy, but are relatable. ‘We look for something action-oriented, something kids can aspire to, something empowering that makes them feel strong,’ says Quirion, who notes that D3 is looking to grow its licensed portfolio. ‘That’s why Ben 10 works so well for video games – kids relate to his human qualities and aspire to his fantastical ones.’

Understandably, toycos are keeping a close eye on the upward trajectory of the video game segment. ‘Video games are grabbing tons of kids in our demo,’ says Adam Beder, VP of global licensing for Toronto-based toyco Spin Master. ‘A companion game is currently not enough to drive a program on its own, but it will happen one day.’

And what are toy companies doing to balance the scales in a market where boys are beginning to put down action figures and pick up Nintendo DS at an increasingly younger age?

Marvel’s Philips says since modern kids simply expect their toys to be interactive, he’s observing toy companies incorporating more sophisticated electronics into their toy lines and finding unique ways to enhance existing character play patterns. Philips points to the new flying Marvel R/C line from Walnut, California-based Silverlit Toys as a key example. ‘Silverlit is taking the technology of flying to a new level, and it’s exciting for us,’ he says.

But for today’s kids, interactivity means connectivity as well, which is why toycos are delving deeper into the content development space. CNE’s Miller notes an uptick in companion content, particularly online. ‘Where toys can click into that and be more enhanced will be more important going forward,’ she says.

Spin Master is currently looking at ways to create an interface between its toy lines and the online experience. Beder says that no one has been able to replicate the runaway success of Webkinz yet, noting that the toy drove collectability and enhanced the web-play. ‘No one has yet figured out that breakthrough application for bringing a toy feature to life online,’ he adds.

At press time, Spin Master was just getting ready to reveal a master toy deal for a boy’s action brand that will closely connect the toy line to the online story. And on the content development front, interactive arm Spin Master Studios is currently working on an immersive online skate world for wheeled vehicle brand Tech Deck. ‘It’s a massive investment,’ Beder says of Tech Deck Live, which is slated to launch in the first half of 2009.

Large outlay of cash aside, it is clear toycos and video game publishers alike must continue to step up efforts at connecting with their targets in engaging ways. It’s worth noting that a new study from NPD indicates kids are increasingly seeking to acquire entertainment content digitally as opposed to traditional physical means.

NPD’s Kids and Digital Content III reports convergence is the name of the game in the CE realm, with kids spending 12% of their time on video games systems watching movies. And gaming is on the rise with the six to eight set, while overall usage of game consoles, PDMPs and laptops has risen since last year, mainly as a result of increased usage from kids nine to 14.

But don’t rule out the preschoolers. In fact, one might expect industry players to begin adapting their current boys’ action strategies for this key demo. A notable 82% of kids between age two and five play games on one or more of the four devices surveyed – computers, portable digital music and/or video players (PDMP), cell phones and video game systems.

‘Things are more diluted than they’ve ever been, so we need powerful triggers to connect with kids,’ says Beder. ‘We need the video game cranking. We need online cranking. We need a film or TV presence and we need grassroots promotions. It’s an increasingly intricate puzzle.’

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