How’re we doing?

PLAYTHINGS recently spoke with licensing industry people who have an eye on the toy business and posed two questions to them: A—Where would you put the state of licensed toy products today as compared to any time during the last decade?; B—What can you see as “the next big thing” to make the most impact on retail licensed toy sales?

From my perspective, licensed products remain very important to the toy market. I think there will be continued emphasis on the use of licensed properties, especially those which are heavily promoted through television, films, videogames and the Internet. The equity in a licensed property should draw attention to the product and it should be appropriate to the product.

Our job as toy marketers is to create a happy marriage between a licensed property and a solid product concept. While we struggle to identify trends, in the end, consumers want good products that provide fun and enjoyment.

As a marketing tool for toy products, licensing is just as important today as it has ever been, perhaps even more so. A manufacturer’s primary job is to develop creative and marketable toy products, and then when appropriate, search for and select those licenses that will enhance and best match up to the product. Looking back over the past decade, I believe many of the greatest successes have come from the development of unique and innovative toy products being complemented and improved upon with the use of a perfectly matched license.

One of the best examples of that winning formula is VTech with its V.Smile Learning System line. VTech created an absolutely wonderful product and then used the right mix of licensed titles to enrich the product and make the line even more appealing.

Licensing will definitely impact toy sales in 2006, as long as the development process begins with superior products and an effective marketing plan.

First, when it comes to toys, movies will still impact the business in 2006, just as Star Wars, Batman, and Fantastic Four did in 2005. I see Cars from Pixar and Disney and Superman Returns from Warner Bros. leading the way. However, don’t overlook the potential of some of the other well-known movie properties arriving in 2006, such as X-Men 3 from Marvel, Open Season from Sony, Ice Age 2 from Fox, and never underestimate anything that comes from DreamWorks, such as Over the Hedge and Flushed Away.

For longer-term licensing opportunities, I advise my clients to focus on publishing and television sources. Of course, one should pay close attention to what is airing on Nickelodeon, but there is great programming and excellent merchandising opportunities available from shows on The Disney Channel, Kids’ WB!, 4KidsTV, PBS Kids, and for sure, Cartoon Network.

I always smile to myself when someone asks me about the next “big thing” in licensing. Honestly, I don’t think that anyone can answer the question with 100 percent certainty, including myself. My advice is to spend sufficient time in searching for the best properties for one’s line, and at the same time develop a reliable set of criteria to help choose the best license from the hundreds that are out there…and guess what, you might discover that what becomes the most successful [licensed products] are not always the most obvious.

While the toy industry remains incredibly creative and innovative in delivering exciting new toys that stimulate, entertain and educate children, over the past several years, the toy industry has faced mounting competition for share of mind and leisure time. A new generation of products that deliver music, interactive entertainment, communication and more are on the holiday wish list of every child age 7 and older.

As a result, the toy industry has shifted focus to preschoolers and to a new generation of interactive toys designed to appeal to tweens. Simultaneously, a more conservative and defensive approach has led to the relaunch of a number of classic toy and entertainment brands, many of which have succeeded, because they still offer the appeal and play value that made them “hot” 10 and 20 years ago.

In reality, the best years in toy sales have been driven by those “gotta have” toys that bring consumers back to the toy department, and we need those toys on the shelf in 2006 if we are to invigorate toy sales.

The Toy industry in general is going through a substantial change. Kids are aging older younger than ever before, which means that 6 - 11-year-old kids are no longer playing with toys...3 - 5-year-olds are...preschool is taking on a whole new meaning…“edgy preschool” will become the new mantra. Toy properties traditionally held for 6 - 11-year-olds will move to 3 - 5-year-olds. The television shows and movies will continue to dominate the landscape. What once appealed to a 6 -11-year-old will now appeal to a 3 - 5-year-old—Superman, Transformers, Avatar, Xiaolin Showdown.

The 6 - 11-year-olds are using/playing with “gadgets”—electronics—with the average 6 - 11-year-olds spending 60 to 70 percent of their time in their room. They are on the computer, watching Nickelodeon, instant phone messaging, gaming, and “ipodding” all at the same time.

We have trademarked the term “edgy preschool.” We believe in it.

CopCorp Licensing has always kept a close eye on the tween and teen consumers as an important and growing market, and we’ve been seeing some healthy trends there as mass merchants and a whole array of specialty retailers are now selling licensed toy products to an older, non-traditional customer.

Happy Bunny toys and games, for example, are sold at Claire’s, Hot Topic, Spencer and Musicland—retailers where one would not have previously expected to find art-brand based toys. Barcode Kitties, another art-brand property, has been licensed for a wide array of dolls and figurines that have been featured at Claire’s Accessories, and will soon be available in specialty, catalog and select mid-tier retailers.

In more traditional toy markets, we’ve rounded out our licensing roster for Totally Spies with a major toy partner, videogame partner and edutainment software partner, which are getting placement at not only mass merchants but at non-traditional toy retailers such as OfficeMax, Best Buy, Comp USA, and Circuit City. So, as far as CopCorp Licensing and its clients are concerned, this is a great time to be in licensed toys.

One of the growing toy trends … is the rise of licensed toys offering fun, positive female characters who love science and/or technology while still being “girls.”

Excellent examples include the range of wonderful Franny K. Stein toys and activity sets created by Basic Fun to expand and build on the enormous popularity of Jim Benton’s Franny K. Stein kids book series from Simon & Schuster. We are also proud of the way that Totally Spies action/fashion dolls and accessories from RC2, Totally Spies videogames from Atari, and Totally Spies educational software from Brighter Child, which bring cool gadgets and technologies from the television show into play activities.

One of the great things about this trend is that both boys and girls seem to enjoy watching the Totally Spies television show on Cartoon Network and reading the Franny K. Stein books, so there are a lot of boys and girls growing up seeing female role models in scientific and technologically-adept roles.

The last decade seemed dependent on the old classic toys, but reinvented and remarketed such [classics] as Mr. Potato Head, Play-Doh, Strawberry Shortcake, Cabbage Patch, Care Bears, etc. The only exceptions seem to be Bratz and Nickelodeon properties. Nothing new and creative seems to be on the horizon. Some Anime has been a hit on television, but marginal in licensing. Also, less battery-operated toys and more electronic [operated] toys [will be popular].

It appears Spider-Man will always be with us—but other superheroes don’t seem to be creating the same excitement they once did. I believe a property will be generated from a different medium as well as a new concept from Nickelodeon. I believe younger children will be more involved with licensed electronic toys. There is also a chance an old classic could come back in a big way, like Speed Racer.

Today’s Gen X and Gen Y parents are more discerning and demanding of the products and services they buy for their kids. And when it comes to toys, they want products that are not only fun but also educational. The desire for more educational products is evident in the success of LeapFrog and the industry-changing LeapPad learning system. LeapFrog products demonstrated to parents and their children that educational products can also be fun.

Additionally, educational product companies are beginning to license out their brands into toy and non-toy categories. LeapFrog will be launching a licensing program in 2006 that leverages not only its characters, but its educational content. Through licensing, LeapFrog will be able to bring its leadership and expertise to a wide range of product categories targeted to infants, preschool and elementary school-aged children.

 While the recent trend focuses on learning, we expect that the next trend in toy licensing will focus on physical health. Increasingly, companies that market to children—especially food and beverage companies—are being criticized for promoting unhealthy lifestyles that may lead to childhood obesity. In the future, we believe that licensors will be looking for licensed product extensions in the toy category that will facilitate physical activity and health.

Children will continue to seek electronic gadgets. There may be an opportunity to combine technology with play patterns that encourage physical activity. If technology is the right catalyst to encourage kids to be more active, licensed characters, and technology, will help create a more robust line of products that focus on physical health.

The toy industry overall, not just licensed toys, is in a tough spot. With the reduction of retail outlets, there is a much higher tooling and development risk if “the big guy/guys” do not support a program. There is no second tier to go to in order to develop a success story so that a toy program might then be picked up after the big retailer sees the success. Now new programs must be successful right out the box, so to speak. There’s no “germination” period.

There seems to be a spiral of risk aversion that has created an era of new licenses that have a tough time getting traction or retail support. So licensees hesitate to develop against new brand licenses—everyone is looking for properties that deliver pop with minimum risk.

I do not think anyone knows where “TNBT” is going to come from.

Movies with new IP (intellectual property) are tough to merchandise, as the window at the box office is so small. DVD sales help, but movies need to have a preexisting equity with kids or mom to really have a chance at being a merchandise blockbuster. NASCAR is going to be marketed to a younger crowd, as toys overall go younger and younger. I think that video games and new technology are going to be where new licensed toy sales come from.