Let’s kick off broadly, Melissa: how healthy is the licensed toy category currently?
Licensed toys are very important to the toy market with over €2.7bn sales in the EU5 (France, Germany, Italy, Spain and UK) in the last 12 months to July 2019, accounting for 21% of total toy sales. However licensed toys sales are declining by -7% year-to-date July 2019. Toys are facing increased competition from other licensed categories such as apparel.
What isn’t working for licensed toys today that traditionally has?
The licensed toy market is undergoing a shift in the type of licenses that consumers want. Movies are still the largest source of licenses but increased competition from other areas means that some film licenses don’t have the same volume of sales as they had five years ago. At the same time, we’ve seen an increase in sales from video and digital games and from toy IPs, although from a much smaller base. TV, DVD, digital, streaming has been fairly consistent.
Pre-school is perhaps the most competitive category for licensed toys. What brands are doing it right and what makes them a winner?
Children aged 0 to four years account for a third of total toy sales in EU5, so while it can be a highly competitive area, it is also one of the most valuable. Pre-school is still dominated by evergreen properties who take the lion’s share of sales. Peppa Pig has outperformed the toy market in 2019 as has Mickey and Friends – both have double-digit growth in 2019. PAW Patrol continues to be strong in the core categories of pre-school figures and playsets through new product innovation each year.
There also some smaller licenses that aren’t in many countries which are doing well, such as Hey Dugee in the UK, which focuses on plush offering rather than spreading the license too thinly. I think we often forget that there is also competition from movies (Cars in 2017 and Toy Story in 2019) and superheroes, with Batman and Spider-Man both extremely popular with pre-schoolers.
With Fortnite and other gaming IP aimed at kids around 10 – where they generally begin to drop out of toys – are gaming licenses keeping kids in the toy ecosystem longer into life?
We have definitely seen an increase in sales in EU5 from toys purchased for or by 10 to 17-year-olds in the last three years. Sales are up 9 per cent since 2016 with some key video game and digital gaming licenses proving to be beneficial for toys. Fortnite is actually the top new property for toys in Europe 5 YTD July 2019 with products across a number of different areas – collectibles, action figures, games and blasters.
Staying on that theme – the kidult market has become a huge source of revenue for companies like Funko, Hasbro and LEGO who often trade on long-running, nostalgic brands. What can you tell us about this demographic and how can brands tap into it?
The kidult market – toys purchased for or by people 18 years-plus – was worth €1.7bn in the last 12 months in Euro 5, with nearly two thirds driven by men. The appeal is essentially around the collectability and display of these products as well as gaming. Nostalgia also plays a huge part. Kidults tend to start families later and/or hold onto their childhood for as long as possible. Look at what brands were big 10-15 years ago and see what modern twist can be added!
We’ve seen the likes of Ryan’s World and Tiana launch their own licensed toys and merchandise in recent years. Do you see influencer licensing becoming a bigger part of the toy market – or can the market only handle a few of these at a time?
Ryan’s World has certainly made an impact this year and, with influencers becoming a bigger part of children’s lifestyles, I think as long as children are watching or following influencers there is a place in the licensed toy market for them. Influencer own-licensing is still in its infancy for toys, but I think the overall success will come down to the individual influencer and the quality of the product (which should never be overlooked!).
From your research, where are the licensing blindspots for toy makers?
Speed to market is a big drawback for toymakers with licenses – it can take a long time to design, produce, approve and then ship new toys, and licenses often miss out on short term trends which can drive sales. Some examples are squishies in 2018, which was predominately a brand or generic item.
I also feel expectation can be a killer – with licensing much more diverse than it was 10 years ago, the toy market cannot expect relaunches or reinvigorated licenses to be the same size as previously. I would just add one thing: innovate. Don’t play it safe. Look at Wow! Stuff and the Harry Potter Invisibility Cloak, which just received the 2019 Licensing Award for best toy.
Tell us a little about your session Opportunities in Kids Licensing, and who should be sure to stop by?
While the licensing market is challenging this year – especially in toys – there are some areas that have done spectacularly well and other areas which have the potential to be much bigger than they currently are. During the session, I want to highlight these and share some European opportunities as well as local UK opportunities. The session is open to everyone, but I would say if your license has a strong appeal for kids 0-14 years or want to know what impact toys has on the total licensed market, then come along!
Melissa is presenting a session at BLE 2019 called Opportunities in Kids Licensing on Tuesday 1 October at 11.45.