Contributions from Kristen McLean

With evergreen and emerging IPs competing head to head for shelf space and consumer dollars, the US$147.6-billion licensing industry is arguably one of the most difficult markets to navigate in the entertainment ecosystem. To help brand owners chart a course for success in these rough waters, Circana’s senior executive director Kristen McLean breaks down today’s top trends to consider in strategic planning:

Reflect trends, but do not chase virality

Be aware and participate in trend conversations, but virality is moving too quickly for reactive strategies to be successful. Focus on originality and authenticity. The bottom line is that growth in today’s licensing market is going to come at the expense of someone else, so it will be key to stand out from the crowd.

Incubators, partnerships and collaboration are important for innovation

IP owners and creators should be tapping into these pockets to grow. Turn the content and channel noise on its head by looking to smaller markets, independent creators and international collaborations to find creative product ideas and fresh aesthetic inputs. Global trends are popping up everywhere—from food and beauty products, to toys and TV shows—as consumers expand their taste horizons.

Tap into the consumer desire for both freshness and familiarity 

“Newstalgia” is a trend that gives old favorites a modern twist. From Barbie to Spider-Man, we are seeing a rise in nostalgic-inspired designs for intergenerational audiences. Related, Circana is also following the influence of parental affinity on licensed sales. Are sales of a particular license impacted by how much adults themselves like it? Spoiler alert: The answer is yes.

Content diversity may be good for consumers, but not for manufacturers and retailers vying for shelf space 

Looking at the volume of toy properties, the big ones are not actually getting bigger; there are more mid-sized competitors and less revenue for each property. Smaller and newer properties—including, but not limited to, CoComelon, LankyBox and Gabby’s Dollhouse—are in the highest growth segment of properties with a brand footprint of US$50 million to US$100 million in US sales, while the biggest properties (generating more than US$250 million) are plateauing, according to Circana’s Retail Tracking Service. The result is that the biggest brands must spend money just to run in place, while smaller, more nimble brands are nipping at their heels with increased penetration and market share. This is an opportunity for emergent brands, but their owners need to be strategic in how they build their businesses, thinking incrementally and planning for a longer timeline to reach scale.

Content discovery is spreading out and creating challenges in aggregating an audience 

Consumers are using more video streaming services, causing viewership to spread and engagement on any single platform to erode, based on findings from Circana’s TV Switching Study. On top of that, social media continues to steal watchtime from traditional media, including long-form and episodic programming. It’s no surprise that this social media movement is more pervasive among younger consumers, but let’s not overlook that nearly 30% of consumers ages 65 and up are watching user-generated videos on social media platforms, according to Circana’s data. It’s more important than ever to study which consumers are using which platforms to reach your audience, because the demographic profiles of who is using what varies widely.