Planet Superheroes recently announced its store expansion footprint to go beyond the metros of India. With six new retail stores in the last quarter – they have expanded into towns like Jabalpur, Surat, Mangalore, and Vapi making the total count at 25 across India. With 10 more stores opening in the next quarter, Planet Superheroes is leading the way in terms of its omnichannel footprint across both physical and online channels.
Planet Superheroes was launched in 2014 to cater to the huge comic fan community of India which was hungry for a brand focused on providing officially licensed character merchandise. In a market that had been widely polluted with counterfeit products, Planet Superheroes took the leap of faith that Indian customers wanted value for money and preferred official merchandise with consistent quality over counterfeit products. They have now established themselves as a market leader in just under five years both in terms of retail footprint and in the breadth of characters and categories they sell. They have also established a pan India distribution in the toys category to cater to the Mom and Pop Stores of India that still rely on traditional distribution channels.
In terms of licensing partnerships, they work with almost every major licensor from Disney, Warner Brothers, EONE, Viacom, Spin Master and Hasbro bringing joy to its end customers across age categories from Pre-School to hardcore Action Figure Fans who have no age limit! They sell 50+ categories from Apparel, Toys, Collectibles, Electronics and Accessories to name a few. They have also been winners of the Comic-Con Gold Awards for two years in succession.
Licensing in India
The Annual Global Licensing Industry Survey 2018 estimated that the global licensing industry is worth $271.6 Bn. However, licensing in India is still at a nascent stage. But the entry of licensees like Planet Superheroes, coupled with advancements in technology and ever-expanding marketplaces have provided the much-needed tailwinds needed for the growth of this sector. There is still a lack of retail players as traditional retailers do not understand the power of curation. As one of the earliest licensed merchandise brands, Planet Superheroes started focusing on creating ‘character merchandise’ as a category in itself and became a forerunner in bringing this concept to end consumers. While brands like Hamleys, Reliance, Lifestyle etc. also sell character merchandise in silos under Apparel, Electronics, Toys, Planet Superheroes has taken a contrarian “curated category” approach on the lines of other global players in the world that have succeeded in this space.
The most important challenge in retail is managing the expectations of the mall owners who often expect Planet Superheroes’ “trading density” (Revenue per square foot) to be on par with other premium fashion brands. This is a challenge because, despite the better than average conversion, the average price of these products are much lower compared to the bigger brands who command a much larger premium. However, after successfully executing its first 5 stores and proving the value addition, most mall operators now approach them to become a part of their upcoming mall launches because of the uniqueness and customer engagement value that they bring to the mall. They currently work with almost all the marquee mall developers from Phoenix Mills, Viviana, Nexus, Infiniti, VR Mall and Forum to name a few.
Planet Superheroes will continue to expand its retail footprint into territories that are underserved. Their next focus will be in the Eastern and Northern parts of India going as far as Guwahati in the North East of India. Planet Superheroes is a brand with a technology DNA – their technical ambitions surpass their current scale. While most retailers 5x their size have started thinking about these problems, Planet Superheroes has been quietly investing in leveraging automation, data-warehousing and intelligent algorithms to crack the complex world of omnichannel inventory management. They strongly believe that their robust tech infrastructure and process-driven expansion would be key differentiators as they scale from store number 25 to 100.
Special thanks to Jaineel Aga & Nikita Zankar from Team PlanetSuperHeroes.
Rainbow Production’s David Scott leads the tributes to the co-founder of CPL who sadly passed away last week.
David Cardwell was an inspirational man. Many of us know all about the successes of CPL (or CPLG as it is now called) over the past 45 years, but few people know that he worked his way up from an under-privileged background, leaving school at 14 and coming to London full of ideas, energy and ambition. He worked as an errand boy for the Daily Express, helped create the Elvis Monthly (and relished the chance to interview Elvis himself).
He then worked as a music journalist, including for NME, became a publicist and manager for new pop music acts, most notably The Paper Dolls and Pikketywitch, and then in 1974 mortgaged his family house to help fund the first big contract for the just-founded CPL, working with Cosgrove Hall to make a TV series of Noddy.
And that was before most of us in licensing had even met him…
In those early days, together with his business partner Richard Culley, and along with a very small number of other pioneers and competitors, they established the UK licensing industry. David was someone who has not only helped shape a sector of British business, but also our very way of life and how we consume and interact with entertainment and the media. There are generations of people who have treasured memories of their childhood characters who will never know that their pleasure was enhanced by toys, clothing and a myriad of other items that only exist as they do today because of the drive, vision and creativity displayed by David, Richard and their competitors/colleagues some decades earlier.
CPL grew to become a major player in, firstly, UK licensing followed by an expansion into mainland Europe via a joint-venture called ELG (combining latterly with CPL to become CPLG). Indeed, it became a global success with a worldwide reach and a key port of call for overseas and home-grown rights owners wishing to exploit their brands in the markets where CPL was established. Always at the forefront of the industry, CPL was a veritable academy of licensing and many of its old boys and girls have themselves gone on to become leading lights in the licensing business.
It was a sad coincidence that we should hear the news about David’s death during BLE as the very first licensing exhibitions, and the forerunners of BLE, were supported by CPL which was such a strong player in the licensing world by that time. However, it gave those of us who knew him a chance to meet and chat together and reminisce about David and relate our favourite stories. I have included some of these stories, and thoughts, all recounted with affection by people whose lives, like mine, were changed by their good fortune in knowing him.
I am indebted to Dr Sarah Cardwell Davies, David’s daughter, who kindly provided the details of David’s early years and below are comments from a small number of those who knew him.
David Cardwell – Reminiscences from Friends & Colleagues
“It was a bold decision when David and I set up CPL in 1974; back then character licensing really was in its infancy. Most of the outside world had no idea what we were talking about and had doubts we could make a living (Noddy on t-shirts? What next!). We proved them wrong, of course.
Our enduring partnership I believe lasted as long as it did, mainly because we complemented each other perfectly, were passionate about what we were doing and had the ability to make each other laugh. At the beginning David was the money man and I was acquiring rights and selling licences. It worked; we built from there. David became so knowledgeable I started to believe he’d crept off and done an accountancy degree such was his overnight ability to challenge more than one accountant, and mostly he was right.
Building the company together from scratch was challenging and exciting in equal measure. We had enormous fun over the years, took risks and many paid off. It became a little more serious when we sold to Mosaic and then went public, but at the start we really were living by the seat of our pants. One day David told me simply, we were running out of money. As luck would have it, I received a cheque that day for an advance on one of the first licences we’d secured. We celebrated in the very first branch of Pizza Express in Soho! The next week David issued a set of rules: no taxis, no couriers (all mail in London to be delivered by foot or bus), no business lunches and a freeze on hiring. He was right, of course!
I feel blessed to have met David, follow our dream and grow CPL with him into the global success it has become.” Richard Culley
“It’s difficult to dissociate David from the industry and my career – he gave me my first break in the business, as he did to so many. He had a strategic business mind and was a visionary – he was perhaps the first to see the opportunity for toy driven licensing/brand extensions. Knickerbocker Toy – which quickly became Hasbro Europe – was a client, with My Little Pony being one of the first of those properties to launch in the UK when I joined CPL in 1984. David quickly saw the opportunity as MLP became a craze and Hasbro could not keep up demand for toy products so licensed merchandise from CPL met that demand. Toy buyers were taken by surprise… one I remember calling it ‘My Little Warthog’ and refusing to stock it… oops!” Charles Day
“He was a visionary and a mentor to me, as he was to so many others.” Caroline Mickler
“David was one of a kind and I was privileged to have worked for him. He gave me an opportunity that I will be forever grateful for as it changed my life. There are so many memories to pull from such as weekly dinners at Chez Gerard or late nights at the Essex House bar in New York during Licensing Show, but my most memorable were the many meetings in the 12th floor board room on Percy Street where I would desperately try to breathe through a cloud of smoke as I hung my head out the window gasping for some fresh air which needless to say was always a challenge in Central London. They broke the mould with David and he will be missed.” Kirk Bloomgarden
“David Cardwell, a true entrepreneur and visionary, a great friend and mentor. I knew him as an industry leader and his unique business style was very apparent when in the space of one week, he agreed to let me open up the first CPLG office in Germany in 1996, after having bought the remaining shares of the ELG operation. In the early Nineties (1992-1995), he started a pan-European agency network, a testament to his vision of future market developments.
As a smoker I fondly remember his office in Percy Street being a bit ‘smoky’, unlike his business instinct and decisions. When he last bought back CPLG from a Swiss based sports licensing company, he offered several members of his team the possibility to invest in the company and I remember him pushing us to stop reading the 150 plus pages purchase agreement, as everything should be fine [and] we should just get on with it.
David never really was a patient man. The board meetings were always short and to the point and if anyone started to ramble on, he was quite quick to put a stop to it. However, when he was asked about the future of the licensing business or for his advice, he always took the time to explain. I am extremely thankful to have worked closely with David, he formed my insight into our business. He was great fun to be with and I have so many fond memories of our travel together, the business diners, the drinks and many cigarettes! David had a great sense of humour, a sharp intellect and loved to live a good life and I will miss him dearly, as many others will do. Cheers David.” Katarina Dietrich
“During my time at Copyright Promotions I held various roles, one of which was a new business one that encompassed developing new opportunities for licensing sales outwith and within the group, combined with seeking out new representations. Often I had to report directly to David. While he could be very direct in his feedback I welcomed his advice and encouragement.
He would always make pro-active suggestions, often fired up by products he had seen in the US and he, of course, had a great reservoir of knowledge of the licensing industry. He always knew someone, or else someone who knew someone. I really enjoyed chatting to him and listening to his anecdotes including ones from his time in the music industry. He was also very kind to me when my father was terminally ill and in hospital. He allowed me to leave work during office hours and actively encouraged me to leave the office to go and see my Dad. It was a thoughtful thing for David to do and to suggest. I remember David with fondness, respect and admiration. He helped shape our industry and helped a lot of us build our careers.” Ian Downes
“Deeply saddened to hear of David’s passing. A real master of the understated but an unwavering enthusiasm for his clients, people and business. RIP.” Simon Gresswell
“I have many fond memories of David. Aside from him accidentally meeting the Queen, one that always makes me smile is our morning cigarette in the Percy Street office while we waited for the kettle to boil and David describing how he made a jam roly-poly over the weekend. Only he forgot to remove the tea towel and rolled towel with the sponge! I will hold these little stories and moments in my heart forever, along with his random texts to check in over the years. No more texts my dear friend, thank you for everything you did for me – I will miss you very much.” Angeles Blanco
“My first job in licensing was head of PR at CPL and I very quickly recognised that I had joined an industry full of fantastic characters who really knew how to work hard and play just as hard. David was most certainly one of these! Something we all looked forward to was the annual Christmas party which, certainly at that time seemed extravagant affairs at which there was very little in the way of holding back. There is now a select group of licensing people who will always remember seeing David careering down the stairs at Shepperton Studios on a tea tray!” Jane Garner
“David offered me a job in 1992 with a struggling company called Rainbow Productions, which was a subsidiary of CPL in those days. He interviewed me on a Monday and I had the job of managing director by Friday (David was not one for hanging around) despite my not knowing what a costume character was, nor ever having visited the Rainbow premises. He was a hard taskmaster but always kept faith in myself and the Rainbow team until, in 1995, he went one step further and sold me the company – in the process changing my business career immeasurably for the better.” David Scott
It’s a world in which high-profile unaffiliated teams carry names such as FaZe Clan, Team Liquid, Cloud9 and Evil Geniuses; where stars with handles such as Ninja, Shroud and DrLupo are, in some cases, better known than the games they play; and where the playing fields are games as varied as Overwatch, League of Legends, NBA 2K, Counter-Strike, and Call of Duty, among many others.
All three of those aspects segments – teams, players and leagues are at the core of an eSports business in which revenue from such areas as sponsorships, media rights, advertising, tickets and merchandise are expected to roar past the $1 billion mark this year, while event attendance and viewership (both online and via broadcast on such outlets as ESPN) also soars.
For companies in the licensing business, however, the road toward leveraging that interest with merchandise is still being built. It’s difficult to get a handle on the current size of the merchandise piece, but research firm Newzoo predicts that global merchandise and ticket sales revenue will increase 22.4% this year to $103.7 million.
Here’s a look at the current state of affairs for the eSports licensing business.
Who is the esports consumer, and how does this fan watch? How many of them are there?
The potential market is sizeable. Global revenues –largely from media rights, advertising and sponsorships – are expected to rise 26% this year to $1.1 billion as the eSports audience jumps 15% to 453.8 million driven by viewership on ESPN, Twitch and other streaming platforms delivered to PCs and mobile devices, Newzoo said. It expects total revenue to reach $1.8 billion by 2022 when the audience – a mix of enthusiasts and occasional viewers – is forecast to be 645 million.
The technology consulting firm Activate projects that by the year after next, eSports will have 84 million U.S. viewers, second only to the National Football League (141 million), and ahead of Major League Baseball (79 million) and the National Basketball Association (63 million). By next year Activate forecasts, 70 million people will be watching a single eSports final. Esports is most popular among the coveted 18-34-year-old consumers, who account for 73% of the viewers and are decidedly male, Activate said.
What’s the licensing play? What’s been done so far?
For the licensing community, there are three basic avenues into the world of esports: leagues, teams and players.
eSports leagues are built around specific games, such as Activision Blizzard’s Call of Duty and Overwatch, Riot Games’ League of Legends, Take-Two Interactive’s NBA 2K, Valve Corp.’s Defense of the Ancients (DOTA-2) and Counter-Strike: Global Offensive (the latter of which is that basis for the Europe-based Electronic Sports League). So, in a sense, if a company has a license for one of those titles, it has an inherent connection to the game.
Many of the leagues have taken on the structure of other professional sports leagues with centralized licensing.
For example, Activision Blizzard designed trademarked logos and handles merchandise licensing for all league franchises in the Overwatch League through a central organization. It signed a deal earlier this year with sports licensing ecommerce and licensing powerhouse Fanatics to supply and market league and team apparel.
Twenty-one of the National Basketball Association’s 30 teams have franchises in the NBA 2K League – a joint venture between the NBA and Take-Two Interactive. Licensing is operated by the existing NBA Properties organization, which developed distinct logos for each of the franchises. Companies with NBA 2K League licenses include NBA licensees such as Champion (team kits) and New Era (caps, t-shirts), while adding videogame-oriented companies such as Scuf Gaming (controllers), Raynor (gaming chairs) and HyperX (headsets).
Licensing of the League of Legends brand is administered by developer Riot Games. In conjunction with its League Championship series, walmart.com in May launched sales of jerseys from 10 teams, taking to Twitter to promote the collection through an LCS Fan Shop, and sounding much like it was promoting the NFL or NBA: “Wear what the pros wear as you cheer them on to victory,” Walmart said.
ESL, which among the oldest eSports leagues, handles licensing of its brand through its Cologne, Germany headquarters, but also is represented by Beanstalk’s Tinderbox division across Europe.
As already noted, licensing related to teams in the NBA 2K League and Overwatch League is handled centrally while there are 10 independent teams in League of Legends North America, 16 in League of Legends Pro League in China (and countless others competing in League of Legends tournaments around the world).The three-year-old ESL Pro League has 48 independent teams.
Those independent teams carry names such as FaZe Clan, Evil Geniuses, Team SoloMid, Team Liquid; they’re not directly affiliated with the leagues, but rather compete in lucrative tournaments around the globe. Most of them have squads to compete across multiple games.
One of the more developed independent teams is FaZe Clan, which has 29 players competing in as many as eight leagues at a time. It’s based in California and expects to have a licensing operation formed by late this year to represent both the team and individual players for merchandise deals.
The teams – whether as franchises in the centralized leagues, or as independents – have drawn investments from other parts of the sports and entertainment worlds. For example, the Pittsburgh Steelers in December invested in the Pittsburgh Knights eSports teams which compete in several tournaments including those for Playerunknown’s Battleground and Electronic Arts’ Madden NFL 20. Dallas Cowboys owner Jerry Jones bought a stake in compLexity Gaming in 2017; the team is based at the GameStop Performance Center, which opened earlier this year at the Cowboys training complex. Owners of franchises in the Overwatch League have connections to such traditional sports teams as the New England Patriots (the Kraft family), New York Mets (Wilpon family), Colorado Avalanche and Los Angeles Rams (Kroenke Sports and Entertainment), among others. And athletes and rappers also have purchased stakes in teams. For example, former NBA star Shaquille O’Neal and baseball star Alex Rodriguez having invested in NRG eSports, which fields independent squads competing across nine games, while rappers Miles “Lil Yachty” McCollum and Kiari Kendrell “Offset” Cephus have stakes in FaZe Clan.
For the most part, player licensing focuses on eSports gamers that aren’t affiliated with a team, but rather have built huge following on social media based on the fame they developed earlier in tournament play.
Among the top unaffiliated players is Tyler “Ninja” Blevins, represented by the talent agency Loaded and licensing agency Brand Central, who has 22.4 million YouTube followers and 14.6 million followers on Twitch (before switching to Microsoft’s Mixer game streaming service earlier this year). Ninja has about a dozen licensing agreements including toys (Wicked Cool Toys) and housewares (Zak Designs).
Loaded also represents Michael “Shroud” Grzesiek, who has 6.9 million followers on Twitch, while the agency ReKtGlobal has about 50 eSports gamer clients, including Benjamin “DrLupo” Lupo, a Fortnite player with 3.4 million followers Twitch.
“We believe the individual streamers have the ability” to translate better to retail than teams as “they have a media platform to appeal directly to fans who get to know them in the same way digital influencers have made an impact at retail,” says Brand Central CEO Ross Misher. “It is difficult for an individual eSports player to get recognized nationally since they are part of a team. Once players leave the teams and become streamers, that’s when their profile and popularity rises” and they become strong candidates for licensing.
An exception among teams may be FaZe Clan, which has positioned some of its players for licensing. For example, the team is positioning its first female member, 13-year-old Soleil “Ewok” Wheeler, who plays Fortnite and has 200,000 followers on Twitch, for women’s apparel, says FaZe Clan President Greg Selkoe.
“Through Twitter, Instagram and other social media, we seed the marketplace by having our players stream and promote their and our stuff in advance of a drop” in seeking to build demand for products,” says Selkoe.
That’s not to say the leagues aren’t preparing players for licensing – Minnesota Timberwolves Gaming point guard and NBA 2K championship series MVP Michael “BearDaBeast” Key is among those players viewed by the NBA as having licensing potential based on his personality and social media following, says an NBA spokesman.
“When you see a player like him [Key] it starts to make sense,” he says. “When you have a charismatic and engaging competitor, we want to align with him just like we would with any other [NBA] athlete.”
One attempt to leverage the influencers’ popularity is by Wicked Cool Toys, which plans to release this month five-inch eSports influencer collectible figures that are packaged with a QR card that “unlocks” a game developed by LAMO for play on a mobile device.
What’s happened so far at retail? What does the future look like?
There’s a relative trickle of eSports-licensed product making its way to retail so far, as licensees and merchants feel their way through a necessary learning process. For example, sales of Champion Athleticwear co-branded with six eSports teams (OpTic Gaming, Counter Logic Gaming, Dignitas, Spacestation Gaming and the Renegades) reportedly fell short of forecast at 75 Footlocker stores during May and June.
“There is definitely an appetite for eSports,” says one Footlocker executive, “but right now it is in its infancy, and we are going to continue to support and grow with it. Maybe what will trigger the business is merchandise tied to a specific event in a given market.” Footlocker sold the apparel through four of its chains – Footlocker, Footaction, Eastbay and Champs — with the latter having the most success with the line.
Adds Matt Waterman, VP-GM of Champion North America: “We see eSports as emerging sport that people are competing in. It is a natural extension our brand since the uniforms are typically t-shirts, hoodies and sweats all of which we produce.
“We are exploring different elements within eSports and it [the eSports licensing program] will become more formalized in the way it is executed. We are very much developing this as we go and as we understand the players and their needs.”
There are other signs that eSports is moving toward the masses. For example, Fanatics — which has licensing agreements with and operates the ecommerce sites for all four major U.S. professional sports leagues, and top global soccer clubs such as Manchester United, Real Madrid, Manchester City (among many other ventures)—billboards “eSports” on its menu bar right alongside those leagues’ logos. Click on “eSports,” and you’re taken to full shops for the Overwatch League and NBA2K League. Its assortment of Overwatch League t-shirts, hoodies, socks and other apparel also is merchandised on Walmart.com and affiliate Jet.com.
Walmart has split the Overwatch apparel with lower-priced goods being sold through its own web site, while more expensive ($59 and up) team replica jerseys, hoodies and jogging pants are sold through Jet.com, which is expected to bring in League of Legends products in November. Jet.com staff also have taken the lead in buying eSports products for both websites, says an executive familiar with Walmart’s plans.
“They [Walmart] see this as a chance to get a jump start in what they think is going to be a growing eSports business moving forward,” says that executive. Walmart didn’t respond to requests for comment.
Sales of goods tied to the NBA 2K League have been built around a sub-site (https://2kleaguestore.nba.com/) of the NBA store online, and at the NBA Store in New York, with shirts from Champion and New Era, and socks from Stance. The NBA also began in-venue sales this year at the league’s eSports arena in Long Island City, NY.
Esports goods have also been popping up in less-obvious places. For example, FaZe Clan sold $1.7 million of co-branded Champion apparel in a 24-hour sale in April on NTWRK – the app-based venture that offers unique merchandise drops via “shoppable shows.” FaZe Clan also had a pop-up shop with player autograph signings and apparel at the shoe store Stadium Goods in Lower Manhattan in late July, drawing throngs of fans already in New York for the Fortnite World Cup. FaZe Clan also is launching co-brand warm-up kits with Manchester United starting with a game on Oct. 6 as part of an agreement with team uniform supplier Puma.
“It isn’t about units and volume, but rather maintaining that edge and doing things that might not work other more traditional leagues that are focused on competitive gaming,” says Selkoe.
There’s also the question of whether eSports merchandising migrates anytime soon to become a staple at brick and mortar, or rather continues to live mostly online. Given that eSports is very much an online endeavor, says Champion’s Waterman “there may not be as much of a brick and mortar play, and it may be mainly an ecommerce business. We are trying to find that natural evolution of where this is going, and we want to be part of it.”
What products are on the market?
While apparel has been the major focus, equipment aligned with playing the games also has proven popular. Controller supplier Scuf Gaming has FaZe Clan and NBA 2K models. Activision Blizzard’s Overwatch League took a page from other professional sports in licensing Upper Deck for player-signed trading cards that are packaged with swatches of game-worn jerseys.
There also have been the more conventional uniform deals.
Nike announced an agreement last month to supply the uniforms for 16 teams in the League of Legends Pro League (LPL) in China, combining the LPL team logo with the Nike Swoosh. And Puma struck an agreement earlier this year to supply Cloud9 uniforms.
The Puma deal allows Cloud9 to “affect broader culture” where “if you want to be able to relate to younger people globally, you had better be thinking about eSports as much as you are thinking about cultural lenses like music and sports,” says Cloud9 Head of Partnerships Jordan Udko.
The footwear company K-Swiss worked with the eSports firm Immortals Gaming Club on “One-Tap” slip-on lightweight sneakers that are designed for those competing in multi-player video games. Then there is AjX Armani, which was among the first fashion brands to enter the eSports business when it signed to provide the Italian eSports team Mkers with uniforms for global tournaments. (They’re not available yet at retail.)
“We are trying to offer fans as many products as possible to help them express their fandom and connect with one another,” says Activision Blizzard eSports Licensing Head Daniel Siegel. “We know that fans respond strongly to any product that our players wear or use on stage.”
Like Activision, the NBA 2K League has focused on building out its team and league brands by drawing from the NBA’s roster of licensees (such as Champion, Stance and New Era), while adding gaming-specific newcomers such as Scuf Gaming (controllers), Raynor (gaming chair) and HyperX (headsets).
“Everything we have done with NBA, WNBA and G-League is serving as a template for eSports in terms of licensing,” the NBA spokesman said. “If you look at the NBA2K League, we have an advantage — the NBA knows how to build a business around the teams and league and has a record of building a local fan base, creating compelling content and selling merchandise and sponsorships.”
The focus thus far most leagues and teams has been on premium priced merchandise. For example’s Scuf’s Vantage NBA 2K controllers sell for $225. And a home textiles company that is developing League of Legends backpacks for the U.S., is redesigning a base model that typically sells for $10 with more room for storage and better materials and is pricing it at $49. And Faze Clan youth hoodies typically retail for $60.
“Consumers will spend on high-quality and features because the products are an extension of their fandom,” says Daniel Amos, of lifestyle apparel supplier Difuzed, whose company is developing a co-branded apparel line for ESL due in spring 2020. “For [eSports] apparel it is a different cut and sew technology; it’s not necessarily a blank t-shirt where you put a logo on it and you have made money. It needs to be more than that.”
In some cases, licensees say, indy teams such as FaZe Clan 100 Thieves are positioning themselves as lifestyle brands and, along with the social media influencers, have even greater potential than most for licensing.
“I am not sure the future is team and eSports merchandise in the same way we think about traditional leagues,” says Aaron Levant, CEO of ecommerce and content platform NTWRK. “It is more of the culture of gaming, where the real fandom is, and where the real merchandise dollars are going to be in this space. The leagues don’t yet have the generations of people that have grown up around eSports, and have an affinity for it in the same they do with other professional leagues.”
And leagues concede that many companies are still early in their understanding of eSports and how licensing plays into it.
“There is a little bit of education that comes into play and when we are looking at brands, and we’re qualifying them, it does go back to: do these brands want to just look at our audience as a transaction?” Riot Games executive Matthew Archambault told Game Haus. “If that is the case, it’s probably not the best suited for us as a brand.”
Activate, Michael Wolf, CEO, 212-326-4444
Activision Blizzard Entertainment, Daniel Siegel, Head of eSports Licensing, 949-955-1380 x64507, firstname.lastname@example.org
Rather than just representing the brands of others, a growing number of licensing agencies are developing their own IP, buying or investing in properties developed by others, or doing other business to create new revenue streams.
These strategies are being deployed both to give agencies greater control of their fate and as a hedge against the ebbs and flowing of the licensing business. It also comes amid heightened competition for licensed products both online and in stores as retailers launch a growing array of private labels.
Global Icons bought Fred Segal earlier this year, capping a six-year effort in which it both sought to buy brands and develop its own IP, says Global Icons CEO Jeff Lotman.
Jewel Branding and Licensing purchased the Rachel Hale brand last year, acquiring a label it had previously represented for 10 years, says Jewel President Ilana Wilensky. Jewel is seeking to expand the brand into back-to-school products in North America and apparel and publishing globally.
Evolution Management is working with toy design consultant Olo Industries on a toy-related IP that it will seek to license to toy companies with a goal of having product in the market starting next year.
Brand Central is launched a licensing program for its faith-based Bible BBs brand, which it co-developed with the artist collective Friends of You, landing agreements for publishing (Scholastic), activity books (Bendon) and is nearing a deal for a master toy licensee, says CEO Ross Misher.
“More brands just are available these days to be purchased or developed, and it is really about agencies wanting to protect their futures and looking at it as ‘this can be the right thing for me long term’” for generating additional revenue, says Lotman. Global Icons wants to buy additional brands, while Brand Central, on the other hand, is investing in developing additional IP.
“I think the trend to acquire or develop brands will continue as a way for agents to maintain more control of their business,” says Wilensky.
Agencies’ venture into becoming IP owners can be fraught with challenges given the inherent conflict between the brands they own and the ones they represent. In most cases, agencies that have entered the IP ownership business have separated it from their core representation operations and have brands that don’t compete with those of their clients.
In buying Fred Segal, Global Icons had the backing of investment firms and inherited 12-13 employees dedicated to the brand. The acquisition also came with several licensees and plans for opening stores.
Evolution partnered with Olo in a separate venture and Brand Central set up a separate group to work with its trend group Brand Central Insights to identify white spaces and growth categories that are free of conflict with client-related business.
“They [Brand Central’s clients] realize there is value in our agency diversifying its business, and it gives us a new perspective as an owner,” says Misher.
Another angle for generating additional revenue aside from owning a property is seeking production agreements for clients’ properties. Striker Entertainment partners Russell Binder and Marc Mostman receive fees for serving as executive producers on film projects for brands they represent that flow back to Striker. For example, these include a first-look agreement with Blumhouse Productions, which also is developing a film based on the Five Nights at Freddy’s mobile game. And a new series version of the 1982 film Creepshow that launches on AMC Networks’ Shudder video-on-demand service on Sept. 26. In both cases, Striker has agreements separate from the ones they have for consumer products with the IP owner negotiating their own pacts with the companies financing a film or TV show, says Striker Partner Russell Binder.
“We are a licensing agency at our core, and what we do is extend IP, but the question is, is there a reason to limit the extension of IP to purely consumer products?” says Striker Partner Russell Binder. “If we have relationships with Hollywood and financiers to extend IP, it is truly full brand extension.”
Some agencies also seek to invest in brands rather than owning them outright. Brand Liaison weighed developing 1-2 of its own brands for about a year, but neither of them “moved up to the front burner” in terms of licensee demand, says Brand Liaison President Steven Heller.
Instead it’s near an agreement to invest in an unnamed fashion brand later this year, says Heller.
“If you buy into an existing opportunity and own a piece of brand, that is a different business model” than owning it outright, says Heller. “It doesn’t require capitalization or fund backing and if it hits, you can share in the success.”
Yet not all agencies are moving into developing their own IP or buying a brand. For example, neither Beanstalk nor Brandgenuity say they have any immediate plans to do so, largely to avoid conflicts with client business.
“It is a way to control your own destiny, because you become your own client, and you are able to set your own priorities and drive the truck yourself,” says Beanstalk Chairman Michael Stone. “But if you pay a lot of money to buy something, you have to put your resources behind it to make up the cost of the acquisition. That is not to say I wouldn’t do it, but there is a built-in, inherent conflict to be representing brands and owning them at the same time.”
And of course not all bets succeed. Binder was an executive producer on “Candy Crush Saga,” which aired on CBS-TV in 2017, but wasn’t renewed after a 10-episode run. Striker at the time represented Candy Crush developer King Entertainment, which was sold to Activision.
“It [the Candy Crush series on CBS] was not able to adequately capture the magic of the game,” says Mostman. “The Candy Crush game show has to captivate an audience whereas a mobile game only has to captivate an individual. The creative just had to be slightly retooled.”
Yet for those developing their own IP, the risk that a brand might not find a home is outweighed by the potential financial return if it proves successful, which can be greater than the 25%-35% royalties many agencies typically receive for representing a licensor’s brand.
“If you own a brand, whether you are the sole creator or have a partner, you get the lion’s share of the royalty stream rather than a slice of it,” says Evolution Management CEO Travis Rutherford. “We are taking a finished, fully baked concept from start to finish and making toy companies our master licensee with the hope that one of these will hit and will gain enough traction so that the downstream licensing activities can be layered on top.”
The additional revenue can also prove invaluable as licensors increasingly seek shorter “tails” – the period of time after a representation agreement ends during which an agent continues to receive payments for signed deals. While agreements once had agents receiving these payments in perpetuity, few pacts now carry payments for longer than 10 years after an agreement ends, with some in the 3-5-year range, say agency executives.
“The tail portions of the contracts have gotten significantly shorter and perpetuity deals are a thing of the past,” says Stone. “As licensing became more important to companies (licensors) and they have understood the benefits of licensing and importance of it to their brands, the tail portion of contracts has gotten shorter. An agent deserves a tail because sometimes it takes years for an agreement to bear fruit.”
This week, luxury retailer Barneys New York announced that it had filed Chapter 11 and planned to close most of its stores (Reuters), leaving retail analysts and consumers wondering: Are we witnessing the death of department stores as we know it?
On Tuesday, Sears Holdings announced it would close 21 Sears stores by late October (CNN)–adding to the long list of Sears and Kmart store closures that have taken place since Sears Holdings Corporation’s October 2018 Chapter 11 filing.
But, wait, there’s more. On Wednesday, women’s fashion retailer A’Gaci filed Chapter 11 with plans to close all brick-and-mortar locations.
Though the economic implications behind what’s happening at retail are too nuanced and complicated to package into a neat sound bite, it’s clear that department stores are in trouble. Whether it’s because of convenience, competitive pricing or an increase in free-and-fast shipping— think Amazon Prime— more consumers have turned away from traditional brick-and-mortar stores and towards e-commerce to make their purchases.
In today’s retail landscape, options abound, which means high-end luxury retailers must compete with a seemingly limitless pool of competitors, who opt to offer the best possible deal to lock in the price-conscious, coupon-code-wielding consumer of today.
Even consumers who are attracted to luxury items want a good deal–and are willing to shop around for it. If you’re a Millennial mom strapped for time, why leave the comfort of your home to scour the aisles of a department store only to see whatever happens to be in-stock at the particular time when you can set advance search functions of a site like Gilt.com.
In 2019, it’s almost an antiquated idea go to a department store. Furniture? There are several furniture e-commerce sites and retailers to choose from. Clothing? Just scroll down your Instagram feed and you’ll happen upon a barrage of ads from clothing retailers–high-end and fast fashion–cleverly promoting their products to you via incredibly targeted ads that happen to know exactly what you’re poised to purchase. Cosmetics? Why not head to Sephora’s snazzy website, where you rack-up points toward your next Givenchy lipstick purchase and get free samples of product or search Amazon’s endless supply of products. Appliances–again, Amazon.
So, what place do department stores have in today’s retail landscape? Who will choose Barneys, Neiman Marcus, Nordstrom or JCPenney over an online shop? Or, maybe the better question is, how can department stores compete (and beat) the e-commerce giants and today’s easily-accessible myriad of retailers? What is the strategy? Who is the ideal target demographic? And what is the point of differentiation?
The natural solution might appear to be to target the older consumer who doesn’t shop online but prefers a more tactile approach to shopping; someone who grew up going to Macy’s sales event. But catering to this group is only putting a temporary Band-Aid on the problem.
You’ve got to play the long game like establish brands such as Nordstrom have done. In recent years, the luxury retailer has been lauded by organizations like the National Retail Federationfor leveraging the latest technology and training to provide quality customer service. Nordstrom’s use of mobile apps combined with their focus on personal service has seen the store survive the changing tides of retail and see modest growth over the last few years(GeekWire).
Stores must evolve and embrace the inevitable societal and technological changes that are irreversibly affecting consumer trends. Traditional department stores must aim younger and cooler and leverage all available technology and social network platforms. Macy’s, for example, gets it. The retailer announced this week that its back-to-school promotion would include shoppable commercials on the “Snapchat” app. Macy’s will also launch a video-sharing challenge on the “TikTok” app dubbed “All Brand-New Challenge,” encouraging teens to record videos that showcase their new school outfits and share them via social media. This clever call-to-action speaks to younger consumers in their language–snap and share. Macy’s has also launched campaigns for pop-ups that featured “Pinterest” Pincodes for visitors to scan, which revealed a board with curated outfits based on each location. For the 2018 holiday season, Macy’s also offered shoppable Instagram stories based on personalized gift guides.
Though Macy’s faces an uphill battle (the retailer reported a decline in Q1 revenue, year-over-year), it’s on the right track and launching clever marketing campaigns that highlight its own brand name and cool narrative-driven retail concepts, such as STORY. Department stores should follow suit and implement fresh marketing campaigns that tackle all consumer touchpoints and authentically attract a younger customer base to ensure longevity. Offering free shipping is a must, and meeting consumers where they are–online–is no longer an option but a necessity.
The stakes are high, and department stores who don’t adapt will face the same fate as Barneys, Sears, et al.
Do you know him as Neo from The Matrix? The eponymous John Wick from the famed action trilogy of the same name? Maybe as Johnny Utah, the undercover cop/surfer, all-around-cool-guy from Point Break? Or, perhaps, it’s not from a movie role at all.
If you’re like one of the thousands of kids who met Reeves at E3 this year, your answer might actually be that you know the actor as the “‘Fortnite’ Guy.” The Johnny Mnemonic star told Polygon that while walking the halls of this year’s massive video game convention, gamers approached him in droves to ask for a picture with who they thought was the guy who inspired the latest “Fortnite” character skin, Reaper. The battle royale game’s skin bore a striking resemblance to Reeves, so much so, in fact, that the creators of “Fortnite” partnered with the actor to create a John Wick-styled character skin.
Reeves’ anecdote about being the “‘Fortnite’ Guy” speaks to the game’s massive influence in pop culture. Nearly everyone is a gamer in some form, whether that’s playing “Pokémon Go” on a mobile phone or “Call of Duty” on a PS4. This expansive medium of entertainment has proven lucrative for licensing, and companies are now getting creative with the ways they bring their brand into the gaming sector.
Character skins, like the ones in “Fortnite,” have proven valuable for getting brands in front of a new audience. These cross-promotional licensing deals are a unique way to ingratiate a character into the video game space without spending the capital on creating a game that lacks community buy-in. Famed IP such as Reeves’ John Wick and Chief Hopper from “Stranger Things” have already jumped into the consciousness of gamers with in-game collaborations.
Aside from the Keanu Reeves mashup, “Fortnite” developer Epic Games has also done some clever licensing work with other non-gaming properties, such as “Stranger Things.” The Netflix original series just launched its third season, and to capitalize on the debut, the streaming giant partnered with Epic Games on limited-edition “Fortnite” content.
The timing of show-inspired character skins and locations makes sense, as the series just launched its latest string of episodes. However, such a move would also align perfectly with the modern ecosystem of gaming, where studios launch a free-to-play game that relies on continual new additions that can be purchased as add-ons (i.e., skins and levels).
Licensing in-game content is just now playing a major role in today’s gaming landscape, but as more companies copy the business model, it’s bound to become a more common tactic. It can take a game that has been on the market for months, or even years, and provide a steady-stream of new content that keeps gamers coming back. Not to mention, it leverages the cultural zeitgeist to make something old new again.
Downloadable content is just one aspect of the new model of game development. The second major aspect of a successful game franchise is competitive gaming opportunities. Esports competitions are a major part of a property’s success, as the World Economic Forum reports that the space could rake in revenue of more than $1 billion annually in the next two years.
One of the first to take advantage of the success of competitive gaming was Nintendo’s “Super Smash Bros.” franchise. The grandfather of esports fighting games started out in tournaments dating back to 2002 and carried on to the present day with the most recent release in the series, “Super Smash Bros. Ultimate.” Nintendo’s franchise was also one of the first to license third-party properties as in-game characters.
In 2008, “Super Smash Bros. Brawl” debuted with new characters from Sony properties including Sonic the Hedgehog and Solid Snake of “Metal Gear Solid.” That licensing deal with Sony marked the beginning of the third-party licensing craze in gaming that since led to the “Fortnite” deals and others by the likes of Brawlhalla. For both gaming companies, the deal was perfectly synergistic, as esports professionals go on to use third-party characters in competitions around the world.
Gaming’s Changing Ecosystem Has Transformed Licensing
Gaming is the most popular form of entertainment in the world. It’s also at the forefront of revolutionizing how entertainment works in terms of retail and licensing. From free-to-play to esports tournaments, gaming companies have turned their properties evergreen.
This paradigm shift provides ample opportunities for licensing in-game and bringing characters in front of a whole slew of new consumers. These can be synergistic deals for many character and entertainment brands looking for ways to market their properties in front of a massive audience. And if you don’t believe that’s the case, just remember, a bunch of kids at E3 thought Keanu Reeves was a “Fortnite” character.
We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. Don’t let yourself be lulled into inaction – Bill Gates
The combination of artificial intelligence (AI) and collaborative robotics has the potential to change the world. AI unlocks entirely new capabilities for robots, which, without AI, are rigid and unresponsive to the world around them. We were able to spot many real life applications at the intersection of robotics and AI. This edit is a recap of some of our observations.
Lead innovations in retail will start to happen in the area of mass public consumption. By keeping a close watch here, you will be future-aware and get future-ready.
#1 Robotic Cocktail/ Mixologist
Cooking is an art for chefs, and when a mixologist readies a glass of drink to meet the customer’s expectations and satiate his thirst, it’s both art and science at play. Watch a robotic mixologist in action here or click the image.
#2 Shop Comes Home
Why go to a shop when the shop can come to your door step. A smart combination of Cab Hailing, Self-Driving Car and Shopping all in one. Watch this innovation here or click the image below.
#3 Robotic Pharmacy
From prescription to tendering the medicine, this robotic pharmacy is fully self-serve. With digitisation of the medical system, this explodes the possibility of using data to improve both the doctor’s diagnosis and future prescriptions. You can watch this innovation here or click the image below.
#4 Offline Retailing Personalised to One
With a face scan, pick up a self help scanner and start your shopping. As you scan an item, contextual offers, promotions, marketing messages pop-up. Complete your shopping, check out with your wearable. This is retailing to the level of one which best of companies are able to practice online now, coming to offline soon. You can watch this innovation here or click the image below.
Here is an unmanned store concept. Enter with your Face ID, shop and keep moving.
#5 Localised Automation
Automation need not be at the scale of a Store. This innovation is a clear example of automating one process, for eg., Check-out scanning. One of the key issues in bar code based scanning is many bar codes are not readable and there is plenty of time wasted and customers have to wait. This 3D scanning machine with computer vision can recognise the products irrespective of where the bar code is and even if the bar code is missing (using the image and text on the packaging). You can watch this innovation here or click he image below.
#6 Computer Vision: Possibilities
Computer vision provides machines, the cognitive capabilities which helps machines now to do a lot of skilled jobs at scale. The following possibilities are covered in the video below
a) Object Identification b) Weapon Detection c) Character Recognition d) Personality Identification e) Violence Detection f) Emotion Detection g) Drowsiness detection
You can watch this innovation here or click the image below.
#7 Smart Wall
This is a see throughsmart screen which can be fixed in malls or retail stores with a camera right on top. As the people walking by stop there, they will get personalised recommendations of brands and products. They can interact with the screen and shop. The walls collect information on the people who came using the camera and share the details on customer profiles and their interactions with the brands. Consumer research and interactions made simpler and at scale.
Social and humanoid robots will help us do a lot of mundane tasks in the time to come. I had the opportunity to interact with Sofia, the world’s first robot citizen, and Han (a humanoid robot created by Hanson Robotics). I also interacted with another mini social robot which converses with us and slowly becomes like ours, a huge potential in changing education and user interfaces in the time to come. We captured these memories below.
You can watch Sofia in action here or click the image below.
Hope these innovations are stimulating some thoughts in you for the business you are in.
With the capabilities of machines improving by the day, what we need to do as human is changing rapidly. If you are not seeing it, it is coming to you faster than you think. It is important for each one of us to look at the skillsets of our teams and organisations in this context to be future-ready.
Apart from bringing the AI technologies to fashion and retail industry, we at Stylumia would like to play a role in the skill enhancement with respect to understanding the technologies available today.
If you would like to know more about future skill-sets required for a fashion brand or retailer, please get in touch with me on the following – Email: email@example.com : Mob +91 8010812602
Sports merchandising not only creates great value for the brand but also creates engagement with the FAN off the field.
The community of FANS not only defines the legacy of the brand but also its shelf life. It can’t be truer for one of the biggest forms of licensing i.e SPORTS.
Globally, Sports Licensing is one of the biggest licensing categories for entertainment and has seen some hugely successful programs on Brand Extensions. There are typically 2 models that the teams/talent follow, and there have been successful case studies in both. Sports Licensing is currently valued at USD 24.9 billion and is expected to make USD 48.17 billion by 2024.
Sports Teams are built by their fans or fanatics, as they are popularly referred to, because of their excessive enthusiasm for their favorite team or player, and the devotion towards them.
India has been an untapped market when it comes to sports licensing. As far as sports is concerned, India has traditionally been a cricket dominated country, however, that hasn’t really translated into a merchandise program, except for IPL team Jerseys, which are predominantly sold during match days, and face severe issues with fakes. With technology and a large youth population, there has been a considerable shift in the genre. The rising e-commerce and online sales have further positively impacted market growth.
Some things to look out for…
IPL Merchandise will gain momentum –
IPL has already completed a decade and some of the teams, which have maintained consistency in players, culture, communication & performance, have developed a large fan base and are completely license ready. With the right strategy, they can create a very successful and long-term consumer product program. At Black White Orange, we manage the licensing program for the RCB (Royal Challengers Bangalore) & I’m happy to say that we’ve already initiated steps in the right direction. Hopefully, it’s a matter of time when others follow suit. With RCB, we’ve conceptualized the strategy, created an exhaustive style guide, found the right partners and products are now in stores! We’re planning to launch products across categories during & after the IPL this year. The support we’ve received from team RCB is immense & that goes a long way in projecting the right image & sustaining the brand.
International Sports Teams will expand their presence –
Football is becoming the preferred sport among youngsters and kids not just in viewership, but also in terms of play time. ISL has had a great start already. The success of the merchandise program is directly linked to the success of the league as well as consistent & competitive performances from the teams.
The NBA probably has one of the highest penetrations as a sport at school level, outside of cricket& are running a very successful grassroots level program. This strategy helps create a fan base at a young age, which starts consuming the brands and products very early.
Popular Sports Stars and their Extensions –
There has been a massive movement in this space with some of the top sports personalities venturing into their own line of products. The internationally co-branded line between sports personalities & brands has seen huge success with the biggest of them being Air Jordan with Nike. Messi and Ronaldo also have a similar line with Adidas and Nike respectively. Closer Home, Virat Kohli has led the way with the launch of WROGN & the recent addition One8, in collaboration with PUMA. Yuvraj Singh’s brand YOUWECAN that launched last year, has also been accepted well by the consumers.
Local Sports Leagues will be a big future
Sports outside of cricket are becoming a big draw and the success of Pro Kabbadi league and popularity of players like PV Sindhu, SainaNehwal& K Srikanth is a big testimony to that fact. There will definitely be some action in this space.
School & College Sports merchandise has massive untapped potential.
This is a 7 Billion dollar business in the US but completely unexplored in India, and as sports become a key part of School & College life, consumption of owning a piece of your school and college team is going to gain massive momentum.
Challenges in India;
Product Design Capability is a big challenge and creating high quality & aspirational creative assets, which translate well into products, is the key ingredient of a successful licensing program.
Indian brands should look at merchandising as a revenue model and not a marketing tool; it needs to invest in creating the right strategy, the right culture and the right infrastructure to get maximum value.
Counterfeit products pose a massive challenge for this business and immediate measures are required to curb this menace.
About the author:
Bhavik Vora, Founder & CEO, Black White Orange Brands Pvt. Ltd
A new-age start-up driven by experienced and passionate minds, Black White Orange provides merchandising solutions and helps brands, celebrities, media, and retailers find ways to strengthen their relationship with the most important stakeholder – the consumer. We offer services in retail, distribution, syndication, brand consulting & creative solutions, both within India & overseas.
What benchmarks successful Brand licensing in emerging markets ? Surely there are more than one factor that steers the business, in as much as the several pitfalls that render deals going south. It would be hard to have a consensus on all but here are some that would ring a bell from your own times perhaps.
BITING OFF MORE..
This goes both sides of the fence.. licensors and licensees falling on their own swords. Over zealous expectations from a market and the need for presence in a new market on the one hand and in trying to “win” the license, the prospective licensee often providing the licensor with a “best case scenario” instead of a more realistic case, on the other, are deterrents. The often hyped initial projections will then form the basis to develop minimum sales targets and royalties, which will then go into the contracts. Trouble looms when both sides agree to just about “any” terms in order to have a “get go” and the inability to achieve the objectives ultimately result in a stalemate. Getting in over one’s head, prospective licensees often try to secure multiple regions or channels as part of the deal. This may be because the licensee really believes it can take full advantage of all of the rights offered and sell its product into each of the channels or regions.
Creating unrealistic expectations also comes when licensees may not fully understand the true strength of the brand whose license they just acquired. The licensee may overestimate the power of the brand, believing the brand alone on their product will result in acquiring new clients or larger programs with existing clients.
Licensors often want the licensee to treat the licensed category with the same care they would treat a product category in their own organization. They expect the licensee to develop the product following the brand’s style guides carefully and to follow externally a similar protocol to the one that the licensor follows internally. The licensor wants the licensed product to be of a quality that the licensor would be proud to have on a retail shelf next to the internal product. Optimizing expectations on both sides is what’s key
DUE DILIGENCE The classic and most frequent mistake is to assume that a formula for the licensing or franchising of a brand in one market will work equally well, unamended and unadapted, in another market. There are many examples of brands which are large and successful household names in their home markets but have tried and failed in emerging markets.KFC Vs McDonalds in China, HOME DEPOT closing in China whereas B&Q flourishing by consistently reading the market better have been highlighted before too. The animated cartoon ‘Little Krishna’ which was a hit on Nickelodeon India is another eg. Bu then to launch a merchandising range featuring bath mats and bedroom slippers was a great mistake: Little Krishna was, after all, still a god and never, ever would you place your feet on an image of a god! The lesson is – selling in a particular market would need understanding the minds of the buying public or the target audience. What works in one part of the world may not work at all in another part of the world.
TRANSCENDING BRAND STRENGTHS
Assuming the brand is as well known and as highly prized in the local market, as it is at home, is another cry. It is remarkable how deluded senior executives in leading “Western” corporations are about how well-known their brands are in other markets. Even with the advent of the Internet, a brand may simply not be known to large swathes of the population in large parts of the world. As a result, in a negotiation with a potential licensee, the brand owner needs to articulate to the licensee the value proposition that is being brought to the table, and not to assume that this “speaks for itself”. Thus in a market which it plans to develop, a licensor would be well advised to offer additional marketing support and funding in order to assist a potential licensee,. This could include allowing the local licensee to get the benefit of bulk purchasing discounts on marketing materials, to offering prizes to fly successful sales staff to the head office. Patience and persistence in building up the brand in critical. A striking example of the difference between what might appear to someone sitting in the UK and what might appear to someone sitting in China is the story of Stockport County football (soccer) club which has just as much as brand resilience as Manchester United but then Stockport County club does not figure in any serious football rankings. This was because of the energetic efforts of the Commercial Manager of Stockport County, who regularly visited China, made sure that Stockport County was known in many different places, organized events and flew the team out for exhibition matches. As a result, the amount of goodwill attaching to the Stockport County brand in China was remarkable – even after the team’s fortunes in the UK had plummeted! At one point, one third of the club’s revenues came from China !
DIVERSE LICENSEE GENRES
Assuming that the licensee in emerging markets will have the same attitude to the license relationship, as licensees in mature markets is overrated. In many emerging markets, e.g. Africa, Russia, the brand owner must educate local licensees about what is involved in operating and managing a successful license, not just simply negotiating a deal, sitting back and waiting for the royalties. In Asian markets, the licensee will often take the view that if the license relationship has an initial term of 3-5 years it is likely (for whatever reason) not to be renewed. Thus they will be pushing for the best returns as they can, as quickly as possible, before the license is taken away from them. This, ironically, is at odds with the emphasis, much spoken of in Asia, about “developing a long-term relationship” with business partners. It perhaps suggests a certain cynicism towards Western licensors. Thus decisions which may not be in the long-term interests of the brand may be taken just to make a short-term profit. Licensors should invest much effort in selecting and educating licensees for the long term, who understand the overall strategy for the development of the brand. Naturally the licensor’s actions should support their long term assurances.
Assuming one can quickly find the right partner and tie up a successful deal gets in the way eventually. It is very unwise to fly into a country to sit down for a few pre-arranged meetings, expect to tie up a successful and long-lasting deal with a licensee, and fly out a few days later. That is simply not how business works in many emerging markets. The importance of doing whatever it takes to check the track record, background and bona fides of licensees cannot be over-emphasized. It is prudent to invest time and find the right partner or agent. than close a deal with any partner. Plan for multiple visits.
Contrary to the above if a deal has to be done quickly, one must at least make sure that in the license agreement there is an ability on the part of the licensor (and this need not necessarily be reciprocally granted to the licensee) to terminate the license arrangement quickly, easily and cleanly if things are not working out. We know of situations of a license agreement entered into for a key territory for 10 years which was only terminable on breach of contract or insolvency. In a later acquisition of the licensor’s business, the purchaser could walk away from the deal when it discovers the license, not being prepared to buy the business with a commitment to that territory for 10 years and which could only be exited on breach. On the other hand, of course, one needs to give the licensee a reasonable “run in” period in order to establish the business and the profile of the brand and to generate revenue. Three years would usually be a minimum.
IP PROTECTION Don’t worry too much about protecting your IP – it can be fixed later if need be. Wrong..wrong..wrong ! Especially in markets which are highly liable to infringement and piracy, if anything can be protected, it should be abinitio… not later. What may be considered “adequate” protection in Western markets from a trade mark perspective may well not be enough in emerging markets. The obvious example is the local language variations of the brand, including in local script if applicable. In several Asian markets, a brand will be known by a local name, whether ones chooses it or not. It is always wise to control this. A similar problem arises if one allows the local distributor or licensee to register the local version of their name. When the parties fall out there is nearly always a fight over ownership.
In addition, all logos should be separately registered (this is not a situation where you should cut costs by registering the word and logo together) and different variations of the name (e.g. MARY QUANT and QUANT MARY.) In addition, domain names should be covered to a reasonable degree, and other types of intellectual property, such as design registrations, should be protected where possible. The more official certificated registrations that are on files, the stronger is the position will be when problems (as they very likely will) arise.
As a sequel to the above there are still some countries where recording a trade mark license agreement perse with the respective government authorities is important. These include China, Malaysia, Singapore and Thailand. This will secure the rights of the actual trade mark owner in terms of “use” of the trade mark, countering any vulnerability to cancellation for non-use, and will enable the trade mark owner to take direct enforcement action. In addition, it can be very important to ensure that royalties can be remitted from the country to the brand owner. In many countries an abbreviated or pro forma version of the license, which does not give away the sensitive commercial terms, is sufficient for registration purposes. Naturally, this kind of registration must be kept up to date when the licensee changes or other significant alterations take place.
SUPPLY CHAIN AUDITS
Failure to carry out checks on the supply chain can be disastrous for the brand owner. There are examples where there has been a good “master” licensee who has done everything required of it under a license agreement in the emerging country, but was given a free rein to appoint sub-contractors (and sub-sub-contractors). The result was that the product manufacture was poorly policed so that overproduction and counterfeits flooding the market. The answer is to exercise a great deal of vigilance over who is to be allowed to carry out parts of the distribution or manufacturing under sub-contract and in default refuse to allow this unless the ultimate brand owner has vetted such sub-contractors. Another aspect of this issue is what might be termed “brand hygiene”. Brands, have struggled ever to recover their public image and credibility after it was discovered that products at the end of their supply chain being made for them in “sweat shop” factories involving child labor. The complexity of the problem gets further accentuated by the fact that once these factories are shut down, the wave of local complaints of it destroying a key part of the local economy have to be combated.
It is extraordinary how many licensors, whether in emerging or any other markets, seem to have a fear and reluctance of enforcing the commonly-included rights of audit under license agreements. The most usual excuse given for this is that “this might be seen as an aggressive move by the licensor”. However, in experience, over 95% of these exercises reveal underpayments of some kind. Very often underpayment of royalties is not done deliberately or maliciously but simply through incompetence or an over-narrow conservative interpretation of what is covered under the license terms, especially as new product ranges come on stream. To overcome the issue of alleged “licensee hostility”, the best approach is to automatically audit all licensees on a rotation basis, say once every two or three years, so that licensees do not feel that they are being “singled out”. Having a pre-revenue audit can be helpful in checking/helping the licensee understand what is required and checking that the appropriate accounting processes are in place.
Some brand owners, comfortable in their home markets, ignore the problems of counterfeit goods in distant emerging markets. Levi’s Jeans is an example in Asia. The problem is that, unless you “stop the rot” early, it will grow and grow.Then the counterfeits not only will flood the emerging markets, but they will begin to start damaging sales in your “home” market. Inclusive provisions for dealing with the problem of counterfeiting in your brand management budget, followed by swift and aggressive action is necessary. This is far easier to do than it was 10 or 15 years ago. Today, there are well organized firms with extensive networks able to give early warning of problems and take swift action. In any anti-counterfeiting programme, the key thing is to make sure that the goods are destroyed (and not merely impounded, because they may well be sold out of the back door by the official authorities once the brand owner has disappeared…) and to make sure that any enforcement action is publicized loudly in the local press so that there can be no question that the counterfeiters know that you are a brand owner who will stand up for your rights. Often in that situation the counterfeiters will shift their attentions to your competitor, who does not take action to enforce its rights, seeing it as a “softer” target.
These are just some of the alerts in the process of licensing brands in emerging markets. It sure requires consideration of multiple issues: legal, cultural and commercial and it is always advisable to seek expert local advice if need be.
About the Author:
Dave Sharat has spent many years in licensing with companies like Disney, 4 kids entertainment and Animation International managing businesses laser focused on markets in Asia including India.
A famous playwright once said “ What you consume is what you become”……
THE CASE FOR THE LICENSING BUSINESS IN INDIA
Today our planet consumes all kinds of natural resources and some unnatural resource as well. When I refer to unnatural resource I mean brands. We eat them, we LIVE them, we drink them and we dream about them. There is no escaping them. Brands hit us in all forms and sizes…be it superheroes, coffee, toys, apparels and even events. They leave an impression on us.
India is possibly the worlds youngest population filled nation. More than 500 million people in India are under the age of 40. They are not just 500 million in number, they are 500 million with smartphones, internet access, good education and an aspirational mindset. If somebody were to find the two inflection points in Indian consumer evolution, I would pick 1991-92,1995,1996 and 2009.
In 1991 India opened its doors to liberalization and a universe of ideas and opportunities.
In 1992 with Tamil Sun TV, India forayed into private television broadcasting.
In 1995 Cartoon Network first launched its India channel becoming India’s first kids channel.
In 2009, HTC launched HTC Dream, India’s first smartphone featuring a Google O/S.
Today we have over 28 million smartphones with data, 857 TV Channels and over 450 million Indians have access to Internet.
The above landmarks represent the landmark shift in consumerism in India.First came great content, then came great fanhood. Today people consume their favorite stars, brands on multiple levels. You might love watching Pokemon on TV, but you can now have a Pokemon lunch box, T shirt, stickers, toys and more. These expanded consumer product/ service related to a specific intellectual property or creative is essentially the face of the licensing industry. Licensing in India largely related to the consumer products space.
Licensing is not very old in India. From my perspective, Licensing industry is an industry created for the fans and people who hold mad love and passion for heroes, brands etc.
The need for licensing is there because somebody needs to assuage the hunger of fans!
The Licensed products consumer group
Lets delve into this. Somebody who knows a cartoon character, star or a hero decides that consuming just on TV/Theatre is not enough. He/She decides to display their love and passion for them by buying a product or service. This act is the first sign that there is a special relationship between the consumer and the brand as he/she buys a product which essentially gives them a license to celebrate this relationship. Kids are top rate consumers in this category as their affinity for their favorite stars extends into dozens of categories. Delhi toddler Arjun Gupta at 6 years owns around 17 different products with Captain America on it. There are countless kids in your locality who do exactly what Arjun or any other fan kid does.These children represent the eruption of a new age consumer, the consumer who wants the fullness/ wholesomeness in his brands experience.
A WORLD DOMINATED BY THE PERFECT CREATION, LED BY CHILDREN
Now what makes a cartoon character or star license worthy? He/She should have qualities which are not present in a normal human being and he/she should generate interest in themselves by their adventures and activitites. For Eg Kids love the costume of Captain America and the principles of “Faith” and “Honor” which guides his stories in beating up bad guys. Barbie still remains every living girl’s dream doll, it just weaves some magic into generations of kids by its appearance. Be it ChottaBheem,Spiderman, Wolverine, Superman or Batman, they all connect with their fans at some “spiritual” level.
In order for this to happen, companies need to create world class literary characters who suit the palate of a variety of audiences. The writers/creators of characters and superheroes have to create a world which attracts audiences and invites them to live in it with open arms.
AN INDUSTRY TO RECKON WITH
The Indian licensing products industry generates a revenue of over $350 million USD
(Rs 2340 crores) in retail sales according to some estimates but the potential is at least 10 times of that. This industry operates at multiple levels.
First, there is the studio/tv channel/production house who own a hit TV Show/movie etc. Second, there is a licensing division of this company or uses an independent licensing agency to license its cartoon characters or IP’s, Third are the licensees/ entrepreneurs/companies who pick up licenses of different IP’s for different product lines. Eg Hindustan Lever etc. And the last mile is the distribution/retailer ecosystem which sells products to the consumers directly.
The major licensors in India are Disney, Viacom 18, Warner Bros, Dream Theatre, Green Gold Animation, A.I.Licensing, Black White Orange, Carving Dreams and a clutch of selected agencies.
The products range from foods, apparels, toys,board games, back to schools products ( tiffin boxes, pencil boxes, backpacks, stationery products, sports items etc), book publishing and more.
Formula One Grand Prix also gave out license to build The Buddh International Circuit to Jaypee Group which put in an investment of over $200 million.
CHALLENGES BIGGER THAN IMAGINED
If one looks at the organized and unorganized retail market which is pegged at over $24.5 Billion USD in 2015 in a report by IBEF, the size of licensed merchandise business is tiny at $300 Million USD in retail sales. According to a recent study by VcCIRCLE and Technopak, the Indian education industry itself which is home to 10,000 plus colleges and over 1 million schools is estimated to be generating revenues of over $100 Billion USD with over 52% coming from schools alone. The licensing industry pales in comparison. WHY?
Lets try to get a perspective…
A SEMI BAKED PIE
Licensing is an extension to the entertainment business which is already reaching 75% of Indian households through television, mobile phones, radio, internet. This ensures the brands get a huge audience and fans. So what is the reason the sales are so tiny. A lot of Licensees complaint of not being offered a fair market to sell in. As in piracy and smuggled goods reach retailers very fast who are not willing to pay the steep license fees and minimum revenues share. The case of for MG’s come from the high expectations of the Indian retail business. Somebody high up in Disney or other studios drum up the logic of a country of half a billion target consumers with at least a billion dollars in revenue. The reality of this is quite different. These overestimation of business revenues from India results in this lopsided state of the licensing industry in India. Then there are sectoral problems like high real estate prices, high rents and expensive man power. Otherwise what will explain this mismatch of $300 million USD for a market size of at least $20 Billion annually. Moreover 95% plus retail business owners (small family run businesses) in India don’t know about licensing and its benefits.
I have been engaged in producing and executing kids expos and help children brands improve their brand experience for over half a decade.The kids market is attracting 100’s of new entrepreneurs joining in every year.
In my experience , the following benefits can enable entrepreneurs kickstart their businesses from the licensing business. :-
1. The Licensing business already gives you a readily built brand. For an entrepreneur that’s the toughest thing to do. Telling a customer who visits your store about who Doraemon/Angry Birds is a non existent issue. The buyer knows exactly what he wants, all you need to do is give a good product at a competitive price.
2. Connects the entrepreneur to a global brand and its practices. As a license is obtained, a licensee is expected to match up to high quality manufacturing which ensures global exposure to him/her.
3. As we head to GST, and a more sharper tax regime, the licensee is far better equipped as he tabulates and manages his numbers more transparently as opposed to a regular business owner.
4. Content for television and film is exploding at the seams which ensures that the licensing business is here for many years to come. This should help entrepreneurs to plan for the future and even raise capital. Content ensures that the fan is always ready to buy a product.
5. The humongous growth of modern retail is here to stay, giving larger shelf space and more visibility to licensed products.
6. The potential of the kids space/licensed products is immense and is fundamentally a strong consumer story.
NEED FOR THE GOVERNMENT TO STEP IN AND TREAT LICENSING AS A PURE INDUSTRY
As licensing industry is only at less than 1% of its minimum potential, the Govt should look at Licensing as a made to order industry at a time when they are cracking on black money, changing currency and continuously reforming the tax structure. Licensing has everything transparent to offer. A good clean ecosystem, a sector which deals with the future generation of the nation and a unicorn area which can explode if given support.
I feel the government can do the following things :-
Set up a Licensing committee at FICCI and CII to give the industry a voice on a big platform.
Educate entrepreneurs and people in general through start up India and Make In India initiatives as a business/job of choice.
Engage the I&B Ministry in the industry more actively
Set up a anti piracy task force to crack down on fake goods in the market. This itself will give a revenue fillip.
LIMA India should be involved in policy making to do with children consumer group.
In a country dominated by fans with their undying love for sports and entertainment, the future is nothing but bright for licensing businesses. With increasing tele density and wider coverage of 4G networks and a vast network of cellphones retail, content will reach more than 90% of India’s population. This will give fillip to both Indian and foreign content. Netflix and Amazon Prime TV have set up massive budgets for local content production in India.
Recently Mattel India created the exclusive Krrish action figures and merchandise for The Krrish movie franchise. The products were of world class quality. It was the first time an Indian IP went into such high quality merchandise strategy. Green Gold Animation’s stellar ChottaBheem character too has crossed borders by having a growing base of fans in Asia.
Theatrical Films release of Hollywood titles now has parallel release dates in India as with the US and other western markets. This keeps in full access to their favorite superheroes and cartoon characters.
India should eventually create an ecosystem of top rate licensed and should be the worlds top 5 licensing market given its enormous population and love for entertainment and sports.
Entertainment and Event properties are mushrooming all over India. IPL , ISL and Pro Kabaddi League are India created IP’s which can do phenomenally well as they are having a hug fan base.
In addition, the digital and web ecosystem are creating their own superstars like AIB,TVF etc.
Its my view that licensing as a business will grow exponentially. It just needs the right support and a fair playing field. With a revenue potential of billions of dollars, the Govt. should have a look at this promising industry which will benefit the consumers and the establishment.
About The Author:
Rahul Gupta is the Founder of World Children Expo(WCE) in India. In addition he runs a brand consulting outfit which helps kids focused brands/start ups in the edtech and retail spaces in fund raising and improving customer experiences.Rahul earlier worked with The Gotham Group in Los Angeles. He Holds a CFM from New York Film Academy and an MBA from S.P.Jain Institute of Management & Research, Mumbai.