As the aftermath of the recession of 2008 drags on, the licensing business struggles. This has been reflected in the aisles of the New York International Toy Fair for several years, as the prevalence of licensed toys has declined in favor of nonlicensed items. While licensed toys still account for a significant percentage of toy sales, nonlicensed varieties tend to be associated with higher margins and less risk for toy makers.
With less competition from high-profile entertainment licenses, properties with roots in children’s literature—from Dr. Seuss and Wimpy Kid to Pinkalicious and Olivia—have been among the most prominent properties at recent Toy Fairs. As the U.S. economy slowly recovers, however, licensing is showing signs of a turnaround. The NPD Group estimates that in 2013, licensed toy sales grew 3% compared to the previous year, whereas the toy industry overall shrank by 1%. That was evident on the exhibition floor this year, as toys based on TV shows, films, mobile apps, and other brands seemed to have had a slightly greater presence than in recent years.
The preeminent properties at the show, which ended its annual run in New York on February 19, were those from the Disney/Marvel/Lucas family, which encompasses strong current licenses such as Marvel’s various brands, Star Wars, Disney Junior shows including Sofia the First and Doc McStuffins, and the films Frozen and Planes. But an eclectic mix of other properties was scattered throughout the aisles, including Duck Commander (the company owned by the stars of Duck Dynasty), the Smithsonian, National Geographic, Teenage Mutant Ninja Turtles, Lalaloopsy, Hello Kitty, Lego, and Angry Birds.
Many of these extend to publishing as well, of course, and several publisher/exhibitors, both trade and mass market, highlighted licensed titles at their booths. Silver Dolphin launched its first two of four titles under a new license with the Smithsonian, for example. The two 64-page titles, Discover: Space and Discover: Flight, contain three pouches full of activities and will debut in the fall. “Our brand is known for educational activity books, but the Smithsonian license is a way to give us even more credibility,” says Silver Dolphin associate publisher and editorial director Lynn Brennan. “It’s a good fit between what we do and what they do.”
Famous felines with origins in YouTube videos or other social media, including Grumpy Cat, Lil Bub, and Venus “the two-faced cat,” were a growing presence among licensed properties this year, especially in the form of plush figures. (Chronicle Books holds the publishing license for Grumpy Cat and Gotham Books for Lil Bub.)
On the other hand, properties with roots in mobile apps—a big trend over the last two years—were few and far between, except for a number of Angry Birds product lines and a couple of other sightings. Several exhibitors mentioned that Angry Birds, which has been a top property through 2012 and much of 2013, was starting to see softening licensed merchandise sales.
Kappa Publishing holds the Angry Birds license for children’s coloring and activity books, and the property is still performing well in that category, according to Andrew Steinberg, president of Kappa’s Modern Publishing division. “Apps are a viable entertainment platform,” Steinberg explains. “There’s Nick Jr., there’s Disney Junior, and there are also apps.” Kappa holds the rights to other mobile properties as well, including ZeptoLab’s Cut the Rope and Disney’s Where’s My Water?
Books as Licenses
As the incidence of successful entertainment-based licensed properties grows, children’s book properties are keeping a lower profile than they have during the last few years. Characters such as Fancy Nancy, Elf on the Shelf, and Clifford were among those being exhibited by a variety of toy companies, while several marketers specializing in book-based licensed products, such as Yottoy, New York Puzzle Co., and Wonder Forge, also were present. Overall, however, the number of book-origin properties was more limited than in the recent past.
A newer book-based license that is gaining traction is Pete the Cat, illustrated by James Dean and represented for licensing by Merrymakers. Licensees to date include University Games, which introduced its Pete puzzles, board games, and Colorforms at Toy Fair; National Sporting Goods for skates, skateboards, and helmets; Lakeshore Learning for storytelling kits; Demco for library materials; and Wonder-shirts for T-shirts and totes.
Following in the footsteps of Merrymakers, which got into outbound licensing for the first time when it began representing Pete last year, a handful of publishers are considering whether some of their brands might have licensing potential. School Zone, which launched an educational tablet, inspirational workbooks, and educational titles for pre-preschoolers at Toy Fair, is thinking about eventually developing a licensing program for its first educational video series, Charlie & Company, says president and CEO Jonathan Hoffman. The series was created for School Zone’s new Little Scholar tablet.
Innovative Kids, an educational book, craft, and activity marketer, launched a separate company called Sugar Lulu, which debuted at Toy Fair, to create accessories and other products for tweens; customers help create Sugar Lulu products through social media crowdsourcing. The company currently is making products internally, but may license manufacturers for some categories, such as bedding.
Nearly 35 publishers exhibited at Toy Fair in 2014. The roster includes some notable newcomers, such as Parragon, Landoll, and National Geographic Kids.