The mature and typically stable book publishing industry has experienced a period of volatility since the start of the pandemic, accompanied by some big changes to segments such as young adult titles, comics and graphic novels, educational workbooks, and licensed publishing. “Understanding Trends in the U.S. Kids’ Book and Licensing Market,” a June 23 webinar presented by Kristen McLean, executive director and U.S. book industry analyst for the NPD Group, covered several key developments.

As of June 5, 2021, total unit sales of books (for all ages) have grown 21.4% year-to-date, compared to the same period in 2020, with signs pointing to a strong finish for the year as a whole. Typically, sales of books are very stable, with an increase of about 3% considered a very good year. “This speaks to how volatile 2021 has been,” McLean said, pointing out that the growth in the first six months comes after an out-of-the-ordinary year in 2020.

Adult fiction and nonfiction are driving the growth in 2021, followed by juvenile fiction. The last segment has seen unit sales up 13% through the week of June 5, driven by holiday bursts for Valentine’s Day, Easter, and the Dr. Seuss-driven Read Across America week in March. McLean describes the Seuss event as “very impactful” and noted that the controversy surrounding the discontinuation of certain Seuss titles also contributed to a doubling of franchise sales in March.

McLean highlighted the young adult “super-category” a normally small and stable segment, as one that is seeing some notable changes. Unit sales grew 50% in 2021 to date, following a fairly strong 2019. “But what was driving 2020 is not the same as what’s driving sales in 2021,” McLean explained. In 2020, YA was driven by bestsellers, including major frontlist releases like Stephenie Meyer’s Midnight Sun and Suzanne Collins’s Ballad of Songbirds and Snakes. In 2021, however, there have been no major releases.

“There’s a really, really engaged community that has emerged this year called #BookTok,” McLean said, noting that the group’s advocacy has pushed certain titles, especially backlist books, to the bestseller lists and kept them there. Several of the top YA books this year fall into this category, including They Both Die at the End by Adam Silvera, We Were Liars by E. Lockhart, and S.E. Hinton’s The Outsiders. “It’s really shifting the whole dynamic of YA,” McLean said. “This is the first time we’re seeing a meaningful impact from organized social media to put backlist titles back on the bestseller lists.” She noted that retailers are watching this trend too, which increases the community’s influence on sales.

Juvenile nonfiction has been the only super-category to show a decline in 2021 so far, with units down 1% year-to-date. But that is due to the strength of that category last year, as home schooling drove unprecedented sales of workbooks and coloring and activity titles from the likes of Rockridge Press, Workman, School Zone, Spectrum, and Scholastic. “It’s down a little this year but still strong,” McLean said of the category. She expects educational nonfiction to remain robust into the fall, saying, “Parents are worried about their kids falling behind.”

The comics and graphic novel space is also an interesting one. The category has seen unit sales grow from 14 million units in 2006 to 30 million in 2020, representing an 8% compound annual growth rate. In 2020, unit sales were up 17%. But the drivers have changed in the past year.

Growth through 2019 was propelled by juvenile titles, notably Dav Pilkey’s Dog Man franchise, which remains “an absolute juggernaut,” McLean said. But in 2020, the market for kids’ titles plateaued due to store closures, and adult manga, particularly titles associated with anime programs on Netflix, Hulu, and Crunchyroll, started to push the market forward. “Manga went from a passionate niche category to something mainstream,” McLean said. “This in my opinion is one of the few true white spaces in publishing,” as manga is expanding the comics audience by bringing in brand-new readers. So far in 2021, the total comics and graphic novel market has seen an increase of 112%, with manga up 284%, YA titles up 123%, and kids’ titles up 33%.

McLean also noted the current strength of board books. The format has seen unit sales rise 19% year to date in 2021, a pace of growth that is one and a half times the rest of the kids’ print market, which is up 11% collectively. “There’s lots of competition from new and small presses with well-priced lookalikes taking share,” McLean cautioned. “It’s a supercompetitive part of the market. There are a lot of quick and nimble publishers muscling in on the space.”

In kids’ books (as in publishing overall), there has been a trend away from frontlist and toward backlist sales. The children’s space has witnessed a 13-point shift toward backlist between 2004 and 2020. In 2004, frontlist titles accounted for 35% of unit sales, declining slightly to a 33% share in 2016. In just three years after that, however, in 2019, frontlist sales had shrunk to 28%. And, with stores closed in 2020, making it more difficult to discover new titles, frontlist books accounted for just 22% of unit sales.

Despite the fact that stores are open again, the trend continues into this year, with frontlist titles commanding a 21% share at the year’s halfway point. McLean noted that the business is structured around frontlist, which generates less and less return on investment as its share vs. backlist shrinks. “If you ask me what’s the number one risk for the book market, it’s in the discovery of new frontlist books, especially for children,” she said. “How will brand-new authors or children’s books find an audience right now?”

The growing challenge of discovering new frontlist titles is one reason for the current strength of series books in the children’s space. “Series offer parents an easy buy and keep kids engaged at home,” McLean said. In 2021, two of every three kids’ books sold have been series titles—led by Beginner Books, Dog Man, Little Golden Books, Dr. Seuss, Step into Reading, and Harry Potter—and series saw a huge bump in unit sales in 2020, to 174 million units from 154 million in 2019.

Challenges on the Licensing Front

The strength of backlist and series publishing is one of several factors impacting the licensed portion of the kids’ book market. This is one area that has faced challenges in recent years, accelerated by the pandemic. It remains an important segment of publishing, with 15% of all books and 31% of all kids’ books sold in the U.S. featuring a licensed IP. NPD defines licensed properties as including both book-native properties that are licensed to other companies, as well as non-book properties that come into the industry through what it terms a “pure licensing” arrangement.

“Like series books, [licensed titles] make their case at a glance at retail or online,” McLean said. But she pointed out that licensed books are underperforming the rest of the market, with unit sales rising just 5% in 2020. The challenges facing this segment are not just pandemic-related; licensed publishing has seen a decline of 11% in units since 2016.

Backlist dominance is even greater in licensed publishing than in kids’ books as a whole, with frontlist titles representing just 16% of the total. The licensed portion of the market has become dominated by literary licenses, which represent 73% of total volume of licensed titles, at the expense of “pure licenses.”

“Mass retailers have played a very strong role in this,” McLean said. “[Literary licenses] sell like hot cakes in the mass category, and they’re starting to push pure licenses off the shelf.” Literary licenses include Dr. Seuss, which NPD pegs as the top licensed property in the book industry, accounting for 14% of sales of licensed books and driving more than 50% of the growth in licensed titles for young readers ages four to eight this year.

Another factor impacting licensing is the fragmentation of the licensed IP landscape, as the business moves away from tentpole properties such as movies and toward alternatives such as streaming video on demand (VOD), video games, and the like. The number of properties has been proliferating, but fewer are the mainstream hits that formerly characterized the licensing market.

“More and more licenses are asking for our attention,” McLean said. “There are more of them and they’re smaller. Traditional pure licenses are at a disadvantage in the current marketplace.” This evolution in media consumption makes it difficult for consumers to discover a new favorite license, for retailers to decide which licenses to support, and for publishers to figure out a rollout strategy for tie-in books.

As a result, the business model for licensed publishing is changing to more of an evergreen strategy. “We’re just not seeing these large tentpole releases perform the way they did just a few years ago,” McLean said. “There is evidence that streaming VOD paired with a movie and a retail play does have the ability to keep IP on the shelf longer than in the past. But it’s early days.” Video game-based book franchises like Five Nights at Freddy’s and Minecraft, on the other hand, tend to see sales remain steady or even increase over time, unlike film licenses where sales plummet shortly after the movie release without a successful streaming VOD window.

Furthermore, an evergreen property can perform as well as a high-profile tentpole film these days. Disney’s Frozen franchise drove sales of three million books over 294 titles, with a total value of $38 million, from 2017 to 2019 leading up to the release of Frozen 2, NPD estimates, with the top title, a Little Golden Book, selling 131,000 units. At the same time, Sesame Street drove 3.1 million unit sales across 373 titles, for a value of $31 million, with the top title, The Monster at the End of This Book, selling 274,000 units, a comparable performance to Frozen over that period.

As McLean said, “An evergreen strategy is essentially investing in backlist that will keep selling.”