COVID-19′s impact on the world economy is still playing out, and researchers believe we won’t know the true size and shape of it for years to come. In some cases, trends that were already picking up steam have been accelerated; and in others, entirely new consumer behaviors have emerged. In this new Pandemic Impact series, we’ve reached out to the industry to gather some predictions about what lasting changes COVID-19 is likely to bring about, and what everyone can do now to prepare for them.
Movie theaters around the world shut their doors in 2020 in response to the pandemic. As a result, many content creators have gone streaming-first in an effort to get their series and films in front of families.
Disney, for example, doubled down on direct-to-consumer in October when it announced a strategic reorganization of its media and entertainment segments to accelerate its streaming efforts. In fact, the House of Mouse released its live-action Mulan movie on Disney+ in September 2020 at an additional cost to streaming audiences (US$29.99), which marked a new strategy for the SVOD.
Warner Bros., meanwhile, announced in December that all films slated for 2021 would arrive on its streaming service on the same day as their theatrical premieres.
This shift in focus to streaming creates real complications for consumer products, however. The nature of streaming means audiences will find a series or film at different times—rather than watching through a broadcaster or theater on a set date—and that makes it incredibly difficult for toymakers and retailers to leverage the content through licensing.
For example, data from market research firm The NPD Group shows that US toy sales increased by 16% in the first half of 2020, but sales for the licensing-heavy action figures category declined in the same period (down 12%).
“The consumer products successes based on streaming properties have been minimal so far,” says Marty Brochstein, SVP of industry relations and information at Licensing International. “People are still trying to unlock that door with some regularity. Nobody has been through this before, where movie theaters all shut down and you didn’t have those summer blockbusters to rely on. The schedule for  has been jumbled. What everybody is trying to do is take the information they have, find parallels from history and make their best judgments. But part of the problem with doing that is we’re in such a different media and technology state from where we were even 10 years ago. The parallels are, in that sense, very difficult to draw. Everybody is sort of flailing, to some extent.”
The key to leveraging streaming efforts and putting the focus back on licensed consumer products, according to Brochstein, is to continue to treat those content launches like events. Part of that strategy involves a focus on experiential retail, but this could prove difficult as the pandemic continues to force retailers to close their doors. Even once consumers can return to in-store shopping, he anticipates the way IP owners and toymakers approach the tentpole launch will change drastically.
“The whole notion of the tentpole film is that licensees can take advantage of marketing the studio amasses to get stuff on shelves when interest is the highest. The visibility of the product is pushed by the marketing, and the fact that product is on store shelves is part of the communication of the movie being out. It’s sort of a circular economy,” Brochstein says. “To some extent, the streaming platforms have caught on to that. They’ve figured out that we can make an event out of the premiere of a movie or a program; this doesn’t have to just be [happening when a movie is] in theaters.”
Just how much IP owners, toymakers and retailers adjust their long-term licensing strategies, however, will depend on vaccines. Governments around the world, including the US, the UK and Canada, approved COVID-19 vaccines in early December. Those vaccination programs will continue throughout 2021.
“These are unprecedented times, and hopefully times we won’t live through again,” says Brochstein. “So you have to decide if you’re going to treat certain aspects of this [pandemic] as a one-off that we hopefully never repeat. It’s a very fluid situation. Everybody has hopes and expectations about vaccines and how widespread they’ll be. And a lot of things are dependent on that. It will play a part in when movie theaters open up, when theme parks open up, and when the sports industry can have people in the stands.”
“So much of the business of a Disney or a Comcast is built on bringing people together in one place. The whole notion of advance planning has been thrown for a bit of a loop, and the market will have to work itself out. People have to develop their [licensing] strategies based on their best estimates of what’s going to happen.”
Check back all week for more predictions about how COVID-19 will impact the world of kids entertainment.