Nickelodeon believes in creating great programming that appeals to kids, as opposed to creating programming that will make great toys for kids.

That said, over the past five years, licensing of Nickelodeon properties has become an important part of the company’s business mix.

The network has a two-tiered licensing approach: licensing products that specifically relate to on-air shows, as well as licensing items that embody the spirit of the overall Nickelodeon brand. In both cases, merchandise is designed so kids can experience the feel of the network, even when they are not watching it.

Since the creation of consumer products isn’t priority one in Nickelodeon’s business, it can afford to be patient and wait for interest or demand for a character to build before developing licensing programs. ‘We don’t look at a show with the idea of ‘What kind of products can be derived from this show?” says Lisa Marks, vice president of marketing at Nickelodeon. ‘We don’t have a formula per se on how we develop our product lines.’

Such is the case with Rugrats. One of the most highly rated of all Nickelodeon series, the network has only now made the show which debuted in the summer of 1991 a top priority in its licensing area for 1997. Rugrats has previously been featured in promotions with Kraft Foods, General Mills and Kellogg’s, but this will mark the first time the property has been offered in all major kids product areas. Rugrats products will debut later this year, with a steady roll-out into 1997, when 13 new episodes of the series premiere, and into 1998, tied to the release of an animated Rugrats film.

For major licensing efforts such as the one being implemented for Rugrats, Nickelodeon works hand-in-hand with its licensees to develop products that imbue the spirit of the series and extend the property beyond on air to give it another dimension for kids. As much as manufacturers rely on Nickelodeon to provide designs, materials and a guidebook of the program’s characters for inspiration, Nickelodeon also gives its licensees a lot of leeway to create unusual and fun products. ‘We want them to use their creativity and come back to us using their expertise and what they know about their industry and product line,’ says Marks.

Interest and enthusiasm for Rugrats-licensed products are high, but Nickelodeon will be careful not to oversaturate the marketplace. The increasing sophistication of the licensed children’s area in the last few years has taught both licensors and licensees the importance of being smart about how licensing programs are introduced, and of creating a product line that meets, not exceeds, demand. Additionally, this growing expertise makes it less necessary to remind manufacturers about the need to develop new, unique products to keep the property fresh for kids.

Nickelodeon encourages its licensees to create cross-promotional opportunities together to maximize advertising and market exposure. It holds licensing summits and keeps its partners up-to-date on programming developments. While it welcomes comments from them on how its programming may be enhanced, Nickelodeon won’t necessarily alter content just because a suggested change would make for a better toy. ‘First and foremost, our objective is to create great programming,’ says Marks. ‘We’ll figure out a way, if appropriate, to create a product line that will appeal to kids. Once you have something that appeals to kids, I think the licensing process works very well. I think it [then becomes] a matter of being smart and strategic about how you develop and introduce your licensing program.’

The biggest issue facing the industry today, says Marks, is the consolidation among both manufacturers and retailers. ‘There are fewer resources to work with on both ends. On the retailing front, there’s retail consolidation and this new process of ‘just in time’ inventory. Retailers are buying less product and waiting to see what a product d’es before really committing to a program. It makes it tough to create the kind of statement you’d like to make at the retail level in support of a property.’

Nickelodeon will be featuring Rugrats and Nickelodeon brand products at the licensing show.