Entertainment and Character Licensing Booming

Posted on by Chief Marketer Staff

Royalties from licensing in the United States in 2004 were $5.85 billion, about flat with 2003, with the industry seeing a gain in royalty payments of only 0.7%.

“It’s not surprising,” Charles Riotto, president of the International Licensing Industry Merchandisers’ Association said yesterday at the Licensing International 2005 show in New York City. He cited as factors in the growth trends challenges stemming from continuing consolidation at retail and the fact that licensing as an industry is entering a mature cycle.

Entertainment and character licensing continues to be the largest category in the industry, accounting for 44% of the market. Trademarks/brands and fashion categories ranked second and third respectively, at 18% and 14%. Coming in fourth was the sports segment at 13.6% of the overall licensing industry, according to a study commissioned by LIMA and conducted by researchers at the Yale School of Management and the Harvard Business School.

In terms of fees, entertainment/characters reigned with an increase of $63 million to $2.57 billion, up 2.5% due in large part to the successful licensing programs for 2004 mega-hits such as Spider-Man 2 and Shrek 2, Riotto said.

Trademark/brands followed at a growth rate of 2% or $21 million to $1.08 billion. Music ranked third at $122 million, up $9 million or 8% (due to the popularity of celebrity licensing), followed by art up $3 million to $170 million (1.8%) and non-profit up $1 million to $41 million (2.5%). The non-profit sector continued to be strong with an increase of 2.5% from the prior year and 5% over the past two years.

Riotto added that housewares and home décor are up 17.3% and 6.7% respectively due to the strong “nesting instinct” still in place following 9/11.

Revenue for sports licensing took a 1.5% decline to $795 million from $807 million in 2003 due to cyclical changes in the industry, negative publicity some leagues suffered and the NHL strike, Riotto said.

Other categories that saw a drop off were art at 1.8% to $170 million, collegiate at 1% to $201 million, fashion at 4% to $814 million and publishing at 4.7% to $41 million.

Trends to watch this year include a boom in mobile and digital licensing, a $2.5 billion industry; sports (plenty of exhibitors this year including the Tour de France, Professional Bull Riders, the 500 Home Run Club, the game of poker, NASCAR and others) and educational toys (Baby Einstein, Leap Frog, Danger Rangers, Brainy Baby).

The licensing show is celebrating its 25th year. It began with 25 exhibitors and about 2,000 employees. This year there are 500 exhibitors and 20,000 attendees expected over the three-day event. Some 77% of exhibitors made deals on site last year, LIMA said.

The survey relies on direct responses from licensors and licensing agents as to actual royalty income in 2004. This is the seventh year of the study.

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