|
When discussing "licensing" in the toy industry, it is important to point out that there are really two distinct forms of "licensing". The first form of licensing is that of "Property" licensing. "Property" licensing is not offering the rights to a product concept, but that of a mark such as a character, celebrity, trademark, brand, etc. Some examples of "Property" licensing include: "Coke", sport leagues such as the "NFL", "WWF", "NASCAR"; also "Star Wars", the "Disney" name, characters, etc. and character properties such as "Pokeman", "Scooby Doo", "Blues Clues", etc.
The second form of licensing is "Concept" licensing. This is also referred to as "product", "idea or technology", and sometimes "patent" licensing as well. Some examples of licensed toy and game product concepts include such products as: "Furby", "Pretty Pretty Princess" game, "Bop-It", and "Super Soaker". "Concept" licensing is best described as an idea or an invention that is offered to a company on a royalty basis. "Concept" licensing is typically offered on an exclusive basis to a given toy company. The degree of completeness of a concept often varies. Toy companies have licensed ideas from cocktail napkin sketches to tooled, engineered and completed production samples. Today, more companies are demanding a very advanced degree of completeness to a product concept prior to serious consideration. Products with fully developed engineering and tool-ready designs are more easily licensed concepts as they offer a clearer understanding of the product, ability to truly test the concept in focus groups and a lesser degree of risk in terms of development and engineering investment.
Each form of licensing offer their own unique impact in the toy industry. Royalties are offered for both forms of licensing. The average royalty on a "Concept" is 5% of the wholesale selling price of that product. The average royalty on a "Property" is 10% of the wholesale price of the product.
|
