5 Features Of Successful Licenses For Toys…

5 FEATURES OF SUCCESSFUL LICENSES FOR TOYS

At this time of year (post toy fair) some of those promising conversations with Licensors/brand owners are probably getting to a fairly advanced stage, and the ‘should we or shouldn’t we’ question is probably at the fore.

There is no doubt that licensing is one of THE major drivers of the toy business, and in fact, has become increasingly important in recent years, not less so, as the global movie slate has become so much sharply managed with few or no ‘fallow’ years in terms of toyetic movies.

However, anyone who has played the licensing game will have their fair share of horror stories in terms of licenses which didn’t work at all for toys. Personally speaking, I have launched many successful licensed products which absolutely flew out of retail, but have also launched some real dogs! The other important point is profitability…many top selling products I worked on/managed were very poor performers in terms of profits for various reasons. I also made/stumbled blindly into one of my biggest career mishaps via licensing, costing an unexpected $1.5m.

So how can we know whether a license is going to work for toys, well here’s 5 things to look for:

  1. Substantial media impact – if you are looking at licensing an entertainment brand driven by media, then logic suggests that you need a brand which has a strong media footprint i.e. a blockbuster movie, extensive TV programming or online metrics. And let’s be clear just being on TV or on You Tube is not enough – you need to have clear metrics i.e. 3 x 30 second episodes viewed by 7 kids is not going to drive toy sales, but 52 episodes hitting millions of kids just might!
  2. Strong brand – this one is a little less tangible, but nevertheless critically important! A weak, nearly generic brand with huge media footprint may not have enough brand recognition/kudos to help sell toys.
  3. Longevity – if we look at some of the biggest drivers of licensed toy sales in the past few decades, Star Wars & Power Rangers are consistent performers. This means that while products might need to be changed/developed around new iterations/characters as the content evolves licensees can be fairly sure that the brand will survive for the length of the licensing agreement. paying licensing royalties on a brand which already died away is very annoying and damages profits (as he shows off his been there, done that T shirt!)
  4. Toyetic – some brands are just not suited to making top selling toys as derivatives. Others have clear potential but only for a very limited array of products, while others can support a vast range. One of the biggest movie blockbuster franchises of all times targeting kids, which is much loved and has a huge footprint was a comparatively poor performer in terms of toy sales. So even if a brand is huge, it needs to have clear and obvious potential for toy product lines.
  5. Profitable terms – there comes a time in every toy person’s working life when they will have the chance to take on a clear hit license with strong potential for toy sales, but where the financials just don’t stack up. If you’ve been around the block a few times you will have both taken those things on & lost money AND let them go to competitors and rued the lost sales opportunity. The reality is that there is always another license out there. Kids entertainment brands/content is absolutely saturated. In my experience arguments about strategic importance and secondary benefits i.e. if a retailer lists this license they will take some of our other products may have some reasonable, rational sense to them, but the bottom line has to be – no profit, why bother’?

There you go, a quick snapshot of 5 factors to look for in terms of toy licenses. Needless to say this is not a complete list of all factors, nor is it in enough depth to become your sole guide to toy licensing, but it may just help a little…!

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by Steve Reece, CEO of Kids Brand Insight www.KidsBrandInsight.com,  a leading Consultancy to toy companies around the world, which helps companies with product reviews & awards, find the right toy & game factories, consumer research test their products with kids and parents and secure export distribution/market entry around the world.