This year’s edition of Licensing Expo International attracted fewer exhibitors and fewer attendees than in past years—many publishers brought smaller teams than usual—due to a combination of the poor economy, a tough licensing landscape and the show’s move to Las Vegas from its longtime home in New York City. But most attendees and exhibitors said they were happy with the level of business and the quality of contacts, especially given low expectations.

There was not much high-profile news coming out of the show. Reflecting the nature of licensing these days, most of the highlighted properties and deals were extensions of existing programs rather than new initiatives. Retailers and licensees are leery of risk-taking, preferring the tried and true.

The licensing business has fared even worse of late than consumer products industries in general, with retail sales of licensed merchandise in the U.S. and Canada falling 14% in 2008 to $59.1 billion, according to the Licensing Letter. Even Disney, which has a global consumer products business valued at $30 billion, has revised its goals. Rather than predicting double-digit annual growth in licensing, as it has over the last several years, its objective now is to increase market share by outpacing its rivals, according to a presentation by Jessi Dunne, Disney’s executive v-p, global consumer products.

The significant drop in sales of licensed goods—on top of several years of essentially flat results—has led licensing executives to focus on established and classic properties, sequels and other brands perceived as less risky, to test licensed merchandise before introducing any sort of mainstream initiative, and to launch smaller, more focused publishing and other merchandise programs.

In this environment, properties originating in the book world, whether as the basis of entertainment such as films or television series, or on their own, tend to be attractive. While they often do not have the same kind of marketing behind them that a wide-release film or popular TV series would have, they do boast a built-in fan base and a track record of success.

“They engage the consumer for so much longer,” says Marsha Armitage-Bristow, executive v-p licensing at Dimensional Branding, an agency that represents book properties from Quirk and Chronicle. “But the difference is in the marketing. It’s really about educating the retailers at this point. It’s a tough world out there. Everybody’s risk-averse and the paradigm is changing.”

The power of book-based properties is reflected in the fact that Twilight was a big winner at this year’s International Licensing Excellence Awards, presented during the show. The property, licensed by Summit Entertainment, Striker Entertainment and Most Management, received kudos as best film, television and entertainment brand program; best film, television and entertainment licensee in soft goods (won by toy and collectible marketer National Entertainment Collectables Association), and best retailer (Hot Topic). Fancy Nancy also was nominated for two awards.

Another indication of the popularity of book-based properties for licensing these days is their increasing appearance in kids meal promotions at quick-service restaurants. Burger King is doing a four-week promotion in August featuring craft kits based on TheDangerous Book for Boys and The Daring Book for Girls, licensed by The Sharpe Co., while another QSR chain, as yet unnamed, will be doing a promotion featuring Scholastic’s Goosebumps series in the fall, to name just two.

As usual, some of the high-profile movies being previewed or pitched by the major studios for 2010 and 2011 were based on books, including Warner Bros.’ Guardians of Ga’Hoole, based on the Kathryn Lasky title, Universal’s newly announced Where’s Waldo? movie, Dreamworks’ How to Train Your Dragon, and Tim Burton’s Alice in Wonderland from Disney, starring Johnny Depp. Some of these have potential for additional publishing; HarperCollins is releasing three children’s titles tied to the fall film Where the Wild Things Are from Warner Bros., as well as an adult-targeted “Making Of” book.

Despite the challenges of licensed publishing, books remain a key category for new properties, particularly animated and family films. Studios showing non-book-based films to publishers and other licensees included Paramount with Rango, Disney with Toy Story 3 and Cars 2, Universal with Despicable Me, Fox with Alvin and the Chipmunks: The Squeakquel, and Sony with a live action/3D-animated Smurfs movie.

One trend of note in licensed publishing is that boys’ action properties from film and television are on the upswing for formats beyond comic books and graphic novels, such as handbooks, storybooks and activity books. While some boy-skewing properties, such as Pokémon, have done very well in publishing in the past, in general this has been a difficult niche. But recent deals involving properties ranging from Cartoon Network’s Secret Saturdays and Bakugan to Hasbro’s GI Joe and Transformers show promise, some licensing executives believe.

With the licensing and publishing businesses each going through difficult times, both publishers and licensors are looking for new distribution channels, and sometimes a licensing alliance can open doors. Suppertime recently launched a brand called Planet Color from children’s author Todd Parr, for which licensed products such as backpacks will be distributed in department stores, along with Planet Color books from Chronicle and other Parr books from Little, Brown.

Stone Arch Books, a division of Capstone, was one of the rare publishers to take a booth at this year’s show—Scholastic’s media division had one as well—and was looking for opportunities to license out the characters it has established in the school and library market, as well as for potential properties to license in, building on the success of its DC Comics tie-ins. Shannon Zigmund, Stone Arch’s marketing manager for fiction, reports that licensors of film and television properties were interested in working with the company specifically because of its presence in the school and library market. “The school market is a huge draw,” she says. “They’re seeing what we’re seeing. Kids are in school all day.”

Meanwhile, more trade bookstores are featuring licensed titles prominently, sometimes bringing in related merchandise as well. That was the case with Twilight at bookstores such as Borders and Books-a-Million. Similarly, Simon and Schuster’s Playskool books with Hasbro, now in their second season with a total of 11 titles, have seen upfront placement in the trade. “We’re starting to see tables and endcaps in Barnes & Noble and Borders,” reports Matt Gildea, Hasbro’s publishing director.

As expected, interactive products and properties represented a key theme at the Expo. Scholastic announced it was representing Toots, an online brand for ages 6—12, for licensing. The Web site features 150 characters, 50 games, 30 virtual worlds and other customizable and social networking elements. Licensing plans include interactive plush and a variety of other categories; Scholastic Media also is talking to its sister publishing division about the potential for future Toots books. “The sheer vastness of the content was what attracted us,” says Daisy Kline, director of marketing and brand management.

Interactive elements and publishing can go hand-in-hand in many ways. Parr’s Planet Color is associated with a virtual world for young children, created by Animax, and its URL will be included in all of Parr’s books, both from Chronicle and Little, Brown, including backlist titles as they’re reprinted.

The partnership of publishing and online can be a powerful one in driving sales of related merchandise. The Disney Fairies franchise, which has its roots in publishing (from Random House and Disney) and is supported by a million-member virtual world, generates over $2 billion in global annual retail sales of consumer products after just two years, twice the company’s forecast and already half the level of its well-established Disney Princess brand, according to Dunne. “It may be the tiniest in stature but it is on its way to becoming our fastest-growing business in 2009.”

Next year's Licensing International Expo will be held in the same location, the Mandalay Bay Convention Center in Las Vegas, June 8—10, 2010.