With Hasbro toy brands Action Man and Centipede yielding TV series, and Mattel and Lego continuing to step up outlicensing activity, executives pegged toys-turned-properties as one of the defining trends of 2000. The year also saw dot.coms plant the seeds of an off-line licensing trend, with indies such as Nikolai and Funschool signing character licensing agreements and gaining agency representation. While still in its infancy, execs noted that web-based merchandising stood out as something new in a licensing year deemed a ‘quiet’ one.

Pat Schmidt, VP of Hasbro’s 3D Licensing and Promotions (North America), says this year’s toy outlicensing peak was driven by an increasing consumer affinity for classics. ‘In the specialty market, we’ve seen a real trend in retro properties,’ says Schmidt. Hasbro’s retro portfolio-which includes `80s arcade property Centipede (now being developed into a CGI-animated series by Hasbro and Cartoon Network)-has really benefited from the trend, she says. Not only did outlicensing peak in 2000, but Hasbro has witnessed double-digit increases in retail dollar value for toy brand outlicensing each year for the past two or three.

Some execs attribute the outlicensing increase to a shift in focus away from entertainment properties. ‘I think the whole brand side of licensing is stronger than it was, in that it’s less high-risk than the entertainment properties,’ says Claire Derry, managing director at U.K.-based Link Licensing. ‘In this country, we’ve seen a number of high-profile, successful businesses catching colds on the licensing of major entertainment properties that haven’t worked.’ Derry cites Star Wars as a recent example of a property that fizzled in the U.K: ‘Star Wars, by normal standards, would have been a success, but a number of companies like Dorling Kindersley overestimated the potential and got into serious difficulties.’

Katerina Dietrich, director of entertainment at Copyright Promotions Licensing Group’s German office, concurs. ‘Every retailer and licensee is looking for the least risky decision when they buy a license or stock licensed merchandise, so if the property has proven acceptance in the toy program, then to go out and license it in broad categories works.’ What may not work in every territory is brand extension into the TV medium, as Hasbro has done with Action Man in the U.S. ‘There are very few toy-based concepts that would make it onto British television because ITC regulations forbid it,’ says Link’s Derry.

As licensing professionals assess the potential of the Internet as a property launchpad, most tread warily, given the costs and challenges of attracting enough traffic to popularize unknown characters. Lisa Shapiro, director of entertainment licensing at U.K.-based The Licensing Company, thinks that Internet character licensing, while almost negligible now, has potential. ‘I think it will come from an older age group rather than a younger age group at first, as the Internet is speaking to us more at the teenager level at the moment.’

There is evidence to back up that claim. The YTV Kid & Tween Report 2000, a national survey commissioned by Canadian kidcaster YTV, shows that Net access in Canada’s tween households has increased 36% since 1999, and web usage among tweens has increased 58% since 1999. Kids ages six to eight aren’t far behind tweens in Net access, but they spend only one hour or less on-line each week.

Sony Pictures Consumer Products executive VP Peter Dang personally thinks the Internet is where kids are going, making it an excellent breeding ground for new characters and properties. But he also concedes that it’s not ‘delivering enough eyeballs’ to make web-based licensing programs worthwhile. The consensus is that studios and networks have a near insurmountable edge over indie dot.coms because they have the power of the huge media/mega brand engine behind them, and already have licensing arms in place. The ones most likely to succeed, in the eyes of Tim Hall, executive VP of Cartoon Network U.S., are the ones tied to analog programming. He adds that it’s very tough for indie dot.coms on an ad revenue basis right now. Tim Collins, director of HIT’s U.K. consumer products division, holds a similar view. ‘There’s going to be the exception of course, but I think by and large a lot of [indie] dot.com companies will probably not be part of the landscape in the next few years’ time.’

Execs say that Internet character licensing will gradually comprise more of the market as more kids migrate to on-line usage, and later, to wireless. ‘Content distribution and straight licensing deals could grow to represent as much as 10% of the total licensing business in five to 10 years’ time,’ says Hall. CPLG’s Dietrich also predicts a market percentage of up to 10% over the next five years. ‘After this, I think the increase would be at least double or else zero-this platform will either be accepted or dead by that time, or a new format will take over,’ she says.

Best property-turned-food

Richard Scarry

Richard Scarry’s world got a little busier in 2000, as the late author’s characters sprouted up on an organic food line that hit U.S. supermarket shelves in July and August. Products under the brand, which targets kids ages two to eight, include canned pasta, cookies, juice and cereal, and are the result of a deal between Viacom Consumer Products and Braintree, Massachusetts-based New Organics Co. ‘That was an innovative thought process on behalf of the licensor and the organic food company to really take that leap of faith,’ says Holly Stein, VP of HIT Entertainment’s U.S. consumer products division.

Best food-turned-property

M&Ms

The licensors of the M&Ms brand have a melting hot property on their hands just five years after the advent of their licensing program. This year M&M/Mars, which has its own U.S. licensing department, appointed Copyrights Promotions Licensing Group Europe as its U.K. agent for M&Ms. As of September 2000, 12 licensees had signed on for a range of product categories including plush, games, bed/bath accessories, car accessories and stationery in various territories.

Best toy-turned-fashion brand

Barbie

Barbie turned 41 in 2000 but continues to place top-of-mind in the collective consciousness of the licensing world. She’s also proven she’s more than a doll. ‘We hardly use an image of the doll now,’ says Link’s Derry. ‘What we have done with the licensing of Barbie is create Barbie as a fashion brand that stands aside from the doll. She’s become a fashion icon for three- to eight-year-old girls.’

Best Euro licensing program

Pokémon

Pokémania burst onto the European scene this year with a licensing program handled by the U.K. office of Leisure Concepts Inc. ‘This property proved the power of the playground, in that it was very much the trading cards that drove the licensing program,’ says Link’s Derry. ‘It was the first time we’d really seen a phenomenon take off from trading cards.’ HIT’s Collins says Pokémon shouldn’t just be a two- or three-year property, and warns against overexposure. But it’s already too late for that according to TLC’s Shapiro: ‘I think it’s dying, it’s on its way out. I don’t think it was the best managed program, personally.’

Property with the most potential

Harry Potter

As potential licensees vied to tap into the impending Warner Bros. feature Harry Potter and the Sorcerer’s Stone, licensing execs predicted that J.K. Rowling’s character will be a huge hit. ‘2001 is going to be the year of Harry Potter,’ says Cartoon Network’s Hall. ‘That’s going to be a pretty amazing property. I think Warner Bros. Consumer Products does a really good job of brand management. They really understand the long-term perspective.’

Best licensed kid property overall

Pokémon

Although most North American execs believe the Pokémon craze is subsiding State-side (beyond the phenom Gold and Silver game sales), few could point to a more widespread success for 2000. The panel pointed to the property’s collectibility, the gaming and the broad age range (kids as young as three and as old as 14) as reasons for its sustained success. ‘There are a lot of different characters and they have their own individual personalities,’ says Mary Graziano, director of licensing at Cinar. ‘They all have fun names that parents can’t pronounce, so it seems to the kids that they have their own language, and that they’re into something that their parents can’t fathom.’

Best web-based property

Yahoo.com

Yahoo received several clicks of approval from our licensing panel, mostly due to its recognition as a brand. ‘I think that it’s a recognizable name and one that is associated with good service and good quality,’ says Leigh Anne Brodsky, senior VP of consumer products at Nickelodeon. The portal entered the off-line licensed merchandise arena in 2000 with a product offering designed to connect kids to their computers. Licensee Tiger Electronics’ Yahoo! branded digital cameras and HitClips mini boomboxes hit U.S. retail shelves in August 2000.