Retail strategies for the new SVOD frontier

IP owners are navigating a new path to shelves as the old metrics for success fade from memory, and the hottest streaming platforms are launched by retailers themselves.
March 15, 2019

You might need a time machine to find an IP owner or toy manufacturer that has not been affected by the seismic shift in kids content consumption.

In a simpler era, an IP owner only had to present a potential retail partner with Nielsen ratings to show a full picture of how a property was performing. Today, content creators have fewer resources at hand, especially as there is no indication that streaming platforms like Netflix, Amazon or the emerging offerings from Disney and Apple will ever release the viewership data that has historically been an invaluable resource for licensors, licensees and retailers.

The loss of a consensus metric like Nielsen’s ratings has far-reaching ramifications for IP extensions, as content creators search out new means to convince retailers that their properties are worth taking a chance on. The 2018 shuttering of retail giant Toys “R” Us compounded this issue, as the streaming boom leads to more and more IP owners battling for limited shelf space, and retailers become increasingly conservative in an attempt to guarantee sales by focusing on brands with existing fans they can count on.

Traditional broadcast keeps kids coming back week after week, building an affinity for IPs and breeding a level of loyalty that translates into sales.But retailers seem skeptical that the binge-watching associated with streamers could lead to the same kind of love. Additionally, timelines for linear content—the launch of various consumer products around 18 months after the TV premiere, for example—often don’t apply to platforms like Netflix or Amazon, where all of the episodes are made available at once, and the timing between seasons is less regimented. The once-rigid process of bringing consumer products to market has been entirely disrupted.

“It is a whole new universe,” says Polly Beel, partner at Toronto-based licensing and marketing agency Neon Brands. “IPs that come from streaming services need new strategies. It has totally changed the rules.”

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To help promote True, Guru tapped celebs like Pharrell Williams (second from the left) to build buzz

Marketing measures of success

For one thing, IP owners are taking charge of an even greater share of a property’s marketing pie. Beel, whose company counts TV series Ponysitters Club, lifestyle IP Betches and comic book IP Zombens among its clients, says it is more important than ever for brand owners to pursue innovative promotional programs. Not only does it help boost early SVOD viewership numbers, which can aid a show in securing a second season, but it is part of the ancillary value that IP owners must create to fill the vacuum left by the absence of ratings.

Previously, Beel worked with Guru Studio on the 2017 launch of the first season of True and the Rainbow Kingdom on Netflix (it also airs on CBC in Canada). Guru created a red-carpet event to boost publicity and push viewers to the series at the time of its release. The event featured celebrities like Pharrell Williams (an executive producer on the show), among others who lent their own substantial social media followings to the event. By making a big splash for the premiere, Guru secured coverage in Entertainment Tonight, Access Hollywood and The Daily Mail.

Following the launch campaign for the premiere of True, Frank Falcone, president and executive creative director at Guru, leveraged a number of different measures of success to help grow a successful CP program.

“We didn’t have the traditional data points or ratings [from Netflix],” Falcone says. “But we did have parents posting photos online of their kids dressed as our characters.”

Using fans’ proclivity for dress-up as a springboard, Guru created and curated a dedicated Facebook page for the brand that featured contests incentivizing roleplay by creating an online contest with prizes.

Because of the full immersion into the IP and the deep knowledge and affinity one needs to participate in roleplay, it’s considered a strong indicator of brand passion. Guru was able to spin its growing online fanbase into a successful costume licensing deal with China-based Palamon.

“The costumes sold out within a week or two,” says Falcone. “It was one of Palamon’s top sellers in Canada.”

He adds that Guru was able to turn that success into other licensing deals with a handful of North American partners including Aurora World (plush), American Marketing Enterprises (sleepwear), GBG Socks (hosiery), Chouette (master publishing) and Bendon (coloring books and art sets). It was an alternative route to retail, but a successful one nonetheless.

The new Nielsen

“We are in a world where not everything that matters can be measured,” says Carol Spieckerman, founder of Arkansas-based retail consultancy Spieckerman Retail. “You need to be able to reach retailers through a combination of soft and hard metrics.”

Hard metrics include data like the number of platforms and territories where a series has placement. Soft metrics, on the other hand, can cover everything from online user comments and reviews on an official website, to Facebook “likes,” Twitter “retweets” and YouTube views.

In particular, many IP owners and marketers cited Google-owned YouTube as an integral part of building a brand story—a natural successor to Nielsen, if you will. Views must be cultivated through diverse offerings like bite-sized content that can exist alongside the premium fare featured on SVOD channels. This appeals to the top retailers that have extensive data-mining teams scouring social media platforms for the latest intel.

Take, for example, Phatmojo. The LA-based toyco has enjoyed success picking CP winners including mainstream IPs like Rick and Morty and Power Rangers (both series have morphed into SVOD heavyweights with global distribution), DuckTales, smaller videogame IP Bendy and the Ink Machine from Joey Drew Studios. The latter is an independent game with initial product lines that launched at Hot Topic in summer 2017, and moved to mass in spring 2018. The IP’s success was built upon engagement that falls outside of the traditional metrics, says Bill Graham, chief business development officer at Phatmojo.

“Social is a huge part of how we evaluate brands,” Graham says. “YouTube offers very compelling data—not just in terms of raw numbers, but also through the comments section.”

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LA-based toyco PhatMojo examines social media and online engagement before taking on IP’s like DuckTales

Different entrants

These workarounds are important aspects of maintaining and growing CP offerings for properties in the current climate. However, there is a possibility that a bigger shift in the licensing and CP marketplace is on the horizon.

In addition to creating alternative routes to retail and developing a brand story in the absence of hard ratings, many licensing and merchandising experts are looking at a future of unprecedented convergence between retailers and streaming platforms. Major players like Amazon and Apple are, at their hearts, retail platforms—giving them an advantage over pure streamers such as Netflix.

But even Netflix has begun to make CP a priority. In 2017, the SVOD tested the waters with a limited Stranger Things line at Hot Topic, which it expanded in April 2018 to Target locations across the US. Most notably, however, last September, the SVOD hired Christie Fleischer as its first global head of consumer products, the second major hire in its CP group. Though little has been announced since, Fleischer has some serious consumer products cred, having recently led Disney Park’s merchandise, experience and CP strategy globally.

In the same space, you have mega-retailer Walmart, which forged partnerships with Microsoft (on the tech side) and MGM (on the content side) in October 2018 to support its Vudu streaming platform. The agreement with MGM will see the studio create original series based on franchises from its film and TV catalogue, and that content will be made available exclusively to Vudu for North America.

“Retailers know they need to be in touch with platforms,” says Spieckerman. “They have become, or are becoming, platforms themselves. It is a complex environment, and that makes it more difficult for licensors and brand owners to navigate.”

Those in the production space are also recognizing the tighter relationship between CP and content. For example, Disney announced a reorganization of its corporate verticals in March 2018, creating a direct-to-consumer and international division to house its streaming businesses. The shift also saw Disney merge its traditional CP business with the Disney parks and resorts unit in the new parks, experiences and consumer products division.

Spieckerman says those who recognize this convergence will end up reaping the biggest benefits. “It’s a deadly mistake to have the old mindset that retailers need to be schooled on what is hot,” she says. “In many cases, they are driving it.”

She adds that in an environment ruled by retailers with substantial content plays, specifically Walmart and Amazon, IP owners would be wise to prepare for a future where product and content are inexorably intertwined. Spieckerman adds that content is shifting from a vehicle for engagement to a direct selling proposition. She calls it the “next frontier.”

A recent announcement from Amazon perhaps offers a glimpse of this future. The company signed both Tim Gunn and Heidi Klum away from Project Runway to a yet-to-be-announced series.

“Amazon is saying that the new show is going to offer a ‘shoppable experience,’” Spieckerman says. “As a retail platform, it has the capability to do that. I think we will see other platforms travel down that same road.”

She envisions a landscape where part of the new brand story will include embedded sales opportunities. In terms of awareness, she argues that the current climate of in-app purchases could be pre-conditioning consumers for a new CP reality.

Not surprisingly, kid content creators are less enthusiastic about merging IP and CP at such a basic level. Of course, this production integration is problematic in the kids space, where a number of regulations exist throughout territories in North America and Europe to safeguard children from commercial exploitation. For example, Oath—the Verizon subsidiary that owns AOL and Yahoo—inked a US$4.95-million settlement with New York attorney general Barbara Underwood in December for violating the Children’s Online Privacy Protection Act (COPPA) by conducting billions of auctions for targeted ads on children’s websites. The future could very well be shaped by the tension between storytelling and story-selling.

“When you are telling a story, you are telling a story,” says Guru’s Falcone. “Some shows should just be stories—not everything needs to be reflected in products.”

About The Author
Gary Rusak is a freelance writer based in Toronto. He has covered the kids entertainment industry for the last decade with a special interest in licensing, retail and consumer products. You can reach him at garyrusak@gmail.com

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