|
As written for The Licensing Journal
By Carol Rehtmeyer
Licensing is huge in the toy industry. Approximately 70% of all new toy product introductions have a license. The toy industry also maintains the lions' share of all licensing revenue. How did this happen?, Why did this happen? and What does this mean for the future of licensing? The answer is that adding a well known license image or mark is viewed as a safe way to gain immediate product recognition and interest without the risk and expense of taking on an unproven new product concept. With fewer retail outlets and a huge array of product offerings competing for limited shelf space, licensing appears to be the most surefire way of getting a "home-run" with minimal risk. Even with toy companies complaining that there was no one licensing "hit" (although the "Harry Potter" license might be argued to be the "hit" for the year 2000 and "The Grinch" was also deemed quite popular), licensing remained at an all time high in the toy business. While the toy industry took a more traditional and risk aversive role, so too did the license property entertainment business. Some of the biggest names in toy character licensing were those from a past era. Remember Scooby Doo, and Star Wars? They were ba-aack!
As licensing has grown to an all time record high in the toy industry, product innovation has suffered. Where was the "hot" new "must have" toy product for 2000 that parents were willing to wait in line for hours just to say they got one? Beyond the "Play Station II", it didn't exist in the core toy industry. There just wasn't anything "out there" that was that exciting. Will there be one next year? We think so, but our prediction is that it will not come from Hasbro or Mattel, but from an independent inventor turned entrepreneur.
The guard is changing. The toy industry is a mature market. The largest companies gobbled each other up at an astonishing rate leaving narr a trace of some of the companies and products consumed in their path. Only two major companies exist out of more than a dozen that use to exist. Two mega companies that once controlled the game business (Milton Bradley and Parker Brothers) and had the presence of a mighty giant, now, combined under a different name must be checked for a pulse. Yet, the NPD group reports indicate that the game and puzzle category increased 30% from 1999 to 2000. Where can this growth be attributed? It's the smaller companies and independents that are quickly picking up the slack. The business opportunity scraps that the larger, slower moving toy companies leave behind are being quickly gobbled up as opportunities for the smaller companies (with far less overhead expense) that are delighted with these profitable morsels.
So, what does all this mean for the licensing industry? Our predication is that the licensing will remain very strong in the toy industry with renewed interest in characters and licenses from past decades. With more entrepreneurs successfully entering the toy arena, the more affordable and less risky license properties of renewed interest will likely prove to find a home (and more opportunities) with smaller companies; many of whom may not have obtained licenses in the past, now competing for these licenses. The large companies will most likely continue to look for that "home-run" license over innovative product. Product innovation will likely rise as these entrepreneurial companies seek new ways to capture market share and consumer attention. Then, if those products become a success, the large companies will probably gobble them up! And that makes for a healthy toy ecosystem!
|
