What is licensing’s long game now?

As IP owners and toymakers deal with delays in manufacturing and shipping, Rob Corney looks at post-outbreak opportunities.
March 25, 2020

In the best of times, the purchase decision for character-branded goods is more discretionary than many categories, and in this current climate there isn’t exactly a movement to panic-buy Pok√©mon t-shirts or Teenage Mutant Ninja Turtles toys (pictured). The challenges for licensing in this climate though are more abundant than usual.

The outbreak in China meant factories have been unable to supply ships, which then would not sail with incomplete cargo. And with retail around the world locked down, goods are not moving and distribution centers are full of essential items (such as the elusive toilet paper). Even if they were in a position to take in stock, retailers do not want the risk and the supply chain is gridlocked. As the outbreak continues to spread across the globe, 2020 will face a huge disruption to the entire supply chain.

This means that even as kids are spending more time on screens consuming content, the ability to reach them with product has temporarily ended. Non-essential goods retailers without an online channel are looking at temporary closures, and those which trade online are prioritizing shipments around life-sustaining products, like food and household cleaning items.

Businesses are prepared to weather poor years, but the extraordinary and immediate drop in revenues is not something any company can plan. As different governments announce varying measures to ensure commercial survival, those in charge are readying the small print and cutting discretionary spend.

But planning for the long-term is just as crucial. The 20th century saw both the greatest level of destruction and the most rapid economic growth in history, and the 21st century is equally able to survive extraordinary events.

The modern commercial world is robust and, while the current crisis is causing personal tragedies on a heart-wrenching scale, the moves to isolate will be a temporary loss of income for businesses which will save incalculable lives. This crisis will end and how the market reacts is, in part, up to us—the roaring ’20s followed immediately after the First World War and the Spanish Flu as people celebrated their lives and the re-emergence from lockdown.

The markets may well react in a similar way and governments are certainly doing their part, now with greater resources available to them to hopefully avoid the depression-era of the 1930s that famously followed the decadence of the flapper era. A busy time lies ahead as we create strategies to re-enter the currently-dormant market.

Flexibility will be needed throughout the value chain once the reset button has been pressed—maybe now would be a good time for some notable members of the industry to bring their royalty expectations in line with other brand owners as a way of contributing liquidity to the market.

Rob Corney is managing director and CEO of UK-based Bulldog Licensing.

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