Plugging in: Video game properties make a play for kids licensing

June 1, 2009 by Emily Claire Afan

With video game hardware and software sales sitting at a cool US$21.33 billion in 2008, and a console or Nintendo DS occupying the spare time (not to mention hands) of most kids over eight right now, it’s not surprising that industry IP owners and creators are making a serious play for traditional licensing territory currently dominated by character- and entertainment-driven properties. In fact, a video game-filled interactive section is gracing the floor of Licensing Show for the first time. Several game publishers, including giant Electronic Arts, are exhibiting in one area in the hopes of convincing licensees and retailers that the next licensing hit need not come from a movie or TV show.

The move no doubt reflects the influence of video gaming on the daily lives of kids and young adults. Recent NPD Group report Kids & Digital Content III, for example, looked at the use of entertainment content on consumer electronic devices amongst US kids two to 14 and found that while video game consoles are employed to screen other forms of entertainment, a full 85% of users still got their game on. The study also found that 82% of kids between the ages of two and five are playing games on digital devices.

Moreover, the Entertainment Software Association and NPD reported that family-friendly video games – rated E for Everyone and E10+ by the ESRB – accounted for more than half of all game sales in 2008, making it the most popular genre. Coupled with a

19% gain in video game industry revenues in 2008 over 2007, the flagging fortunes of key kids licensing category toys, and the sheer amount of time kids spend immersing themselves in their fave games, merch programs based on bestselling interactive IP are poised to gain some ground. But it’s likely that video game licensors are going to face an uphill battle in the marketplace as notoriously risk-averse retailers are still tied to traditional measures of an entertainment property’s chance for success – ratings and box office take. With that in mind, let’s take a look at what the licensing hopefuls are planning.

Game on
San Anselmo, California-based licensing agent Dimensional Branding Group is definitely looking to tap into a presumed wellspring of brand love for Sony PlayStation’s portfolio of properties. The hardware biggie appointed DBG as its North American rep and the agent’s CEO Larry Seidman and EVP of licensing Marsha Armitage-Bristow are confident PlayStation brands are among the most stable in the rocky economy. Take LittleBigPlanet, for example, which launched in November 2008 on the PS3, and has been garnering attention outside the core gamer world. Aside from winning overall game of the year at DICE, and the Interactive Animation award from Cartoons on the Bay this past spring, DBG has been fielding licensee interest in the game’s main character – cheeky, cute and customizable Sackboy.

Already licensees have brought merch targeting kids eight and up to retail, including IV Gear and ODM (apparel) and Mezco (figures, plush, magnets, backpack ornaments, stickers, model kits), and DBG is looking to expand the lines of toys, apparel, publishing and collectibles. It’s also planning to play on the kid-appeal inherent in the Loco Roco and Ratchet & Clank franchises, the latter of which already has nine titles to its name.

But contending with retailers is a different story, and over in the UK, Target Entertainment has been tackling that terrain with its recent pick-up of the Sony PlayStation brands across the pond. Head of licensing Samantha Kelly says even though the video game market was up 23% in the UK last year and more than 83 million software units were sold during the same period, she finds herself spending time easing retailers into uncharted waters. To that end, Target held a launch event for prospective retailers this past April in Sony’s New York head office that also included potential US and UK licensees. ‘We opened it up by saying there’s nothing to be scared of where gaming is concerned because their initial reaction was to run,’ she says, noting it’s not an area that’s traditionally licensed. It was too early to divulge partners at press time, but Kelly says several interested licensees have already approached her for a planned spring 2010 product rollout, and her category priorities include apparel, gifts, collectibles and posters.

It’s worth noting that the economy isn’t helping interactive licensors to forge inroads with retailers, either. Asked whether or not retailers would be open to these new business opps, LIMA’s SVP of industry relations and information Marty Brochstein says, ‘Intellectually, yes. But given the economy and paucity of shelf-space, the reality is that it’s probably tougher now than it has been in the past.’ Even though retailers are generally playing it safe and going with what they know instead of taking a chance on some unknown property, Brochstein adds that everyone’s still searching and holding out hope for The Next Big Thing.

‘I think the delineation between what’s a video game property and what’s a traditional entertainment property is blurring somewhat,’ notes Brochstein. ‘Most of the big successes of this business have come in at least somewhat under the radar, so there could be that thing that breaks that barrier,’ he says. ‘It hasn’t happened yet, and to some extent, I’m surprised it hasn’t.’

DBG’s Seidman, however, remains optimistic, noting that large retailers like Best Buy are dedicating more space to interactive products. ‘All the video game merch is at the front of the store now, whereas two or three years ago, it was a much smaller section and not in a prime location,’ he says.

While DBG is making its case for new Sony IP, Capcom will be touting the evergreen potential of its 20-year-old title, Street Fighter. As one of Capcom’s best-known brands and one of the most successful fighting game franchises to date, Street Fighter has sold more than 25 million units worldwide.

Though rated T for teens, SVP of licensing Germaine Gioia says the game is more of a martial arts challenge than a violent bloodbath and Capcom is set to push the anniversary at Licensing Show. It’ll be on the hunt for licensees targeting a younger-skewing audience, and Gioia envisions a multi-tier back-to-school program for boys with toy, stationery, apparel (fashion tops, swimwear, loungewear, sleepwear) and accessory items leading the charge.

Since many gamers who grew up with the franchise are now parents, Gioia says she’s also exploring the market for Street Fighter as a retro property. She’s keen to talk to potential partners about creating infant and toddler products, such as onesies that could eventually migrate outside specialty channels and find homes at mid-tier and mass retailers.

And what about the arguably hottest video game company out there right now, Nintendo? VP of licensing Steve Singer says that its taking more of a conservative approach and being selective about its licensees by looking for category leaders with strong retail relationships, but adds that Nintendo is aiming to grow its business. With apparel already at retailers from Hot Topic to Walmart, Singer is looking to leverage that presence within existing channels and is seeking to enter new retail environments, like catalogue-driven outlets. He says the brand licensing team is looking for a lifestyle approach with character-based art for back-to-school items (stationery, backpacks) targeting the eight to 12 set.

Early adopter
Whereas companies with traditional TV and film-based properties are looking at ways to move their brands into the interactive space, video game properties have that gene built into their DNA. VP of EA Entertainment Patrick O’Brien says that 70% of the game publisher’s titles used to come from in-bound licensing and it was time for a change in thinking. ‘We were so used to being a licensee with our little slice,’ he says. ‘Now that we own it outright, the company’s growing and increasing awareness that we can push things to reach our consumers in many different ways by turning our attention to merchandise.’

EA Sports recently made its first major move into the consumer products arena when it inked a deal through licensing agent IMG with New York-based Toy Island. With Hello Kitty, Nickelodeon, Sesame Street and Disney properties in its portfolio, the toyco was seeking to move into the junior sports arena and saw the potential of partnering with EA Sports, despite the absence of a TV series or film backing the brand.

‘EA was already a household word with incredible distribution, producing close to two-thirds of all the sports titles on the market,’ says Toy Island SVP of sales Mark Cohen of the first video game property to join the toyco’s portfolio. ‘It was really a no-brainer.’

What also attracted the company to the brand, says Cohen, was the fact that EA had retail management groups and a strong marketing force surrounding the annual release of major titles, such as the Madden NFL franchise, bringing more exposure to the brand.

The multi-year agreement, which was signed this past February, will see a wide range of electronically enhanced product, primarily targeting the three to six set. For example, Sweet Spot Sports Baseball contains a high-density polyethylene foam bat that emits sounds imported from EA Sports titles, like a crack and a cheering crowd, when a child whacks the accompanying ball.

Does this open up the door for more of EA’s kid-friendly properties? Cohen likes to think the option is on the table now that the two have developed a relationship. ‘The penetration to get product in the household is already there with the video games,’ he says. ‘There are great opportunities to work with other EA licenses in appare and footwear and we can build EA sections in stores with some beautiful presentations.’

Digital marketing muscle?
Part of what might be a growing attraction of joining forces with gamecos is how they’re stepping up efforts on marketing, particularly around tentpeg titles and online activity. ‘A lot of games are now introduced with what’s almost Hollywood-ish promotion,’ notes LIMA’s Brochstein. ‘There’s no reason why that can’t play into the same scenario that surrounds a big movie opening up.’

Gamecos are also leveraging their interactive expertise with online marketing, a space with which they might be more adept than most kids entertainment types. A quick overview of popular gaming blogs and forums like Kotaku, NeoGAF and 1UP.com reveals that gamecos are getting very good at building consumer anticipation for titles that are months away from their release dates. It’s also a good feedback loop, as fans regularly register comments expressing their excitement and what they want – and hope – to see in upcoming titles.

In fact, Dimensional Branding Group has taken advantage of the large online community base that’s built around Sony Computer Entertainment of America brands to push a limited release of apparel, including t-shirts for LittleBigPlanet. The agent and SCEA partnered with specialty retailer Hot Topic in March, and posted notifications that tees were available at the brick-and-mortar shops across the US on fan-friendly blogs. Armitage-Bristow says the tees sold out in one day and that promoting them on the blogs definitely contributed to getting the fans into the retailers quickly – they knew exactly where to go.

LittleBigPlanet
Licensing agent: Dimensional Branding Group (US), Target Entertainment (UK)
Categories of interest: toys, apparel, accessories
Target demo: Eight and up, potential to skew younger
Contact: Marsha Armitage-Bristow at DBG (marsha@dimensionalbranding.com), Samantha Kelly at Target (licensing@targetentertainmentgroup.com)

Mario, Kirby, Zelda
Licensing agent: Nintendo of America
Categories of interest: toys, apparel, back-to-school
Target demo: kids eight to 12
Contact: Nintendo’s brand licensing team (BL@noa.nintendo.com)

Street Fighter
Licensor: Capcom
Categories of interest: back-to-school, stationery, toys, collectibles, infant and toddler products
Target demo: Kids eight and up
Contact:
Germaine Gioia, EVP of licensing (germaineg@capcom.com, 310-943-5473)

MySims
Licensor: Electronic Arts
Categories of interest: apparel, stationery, back-to-school, collectibles
Target demo: kids eight to 14
Contact: Steve Seabolt, head of global brand development for EA Play (seabolt@ea.com, 650-628-5492)