With a sharpened focus on their core businesses, major toy companies are increasingly licensing out their brands to fellow toymakers in a bid to wring revenue from heritage labels.

To the consumer the process appears seamless. Few realize that the classic Fisher-Price toys sold by The Bridge Direct – Chatter Phone and Record Player musical toy – are being sold by someone other than Mattel. And it’s hard to discern that K’Nex Limited Partnership Group’s Lincoln Logs are created and marketed by someone other than brand owner Hasbro, which hasn’t fielded the product in 18 years.

Benefits for Both

For the licensor, the agreements free them of categories that might not fit into their product plans, but still guarantee a return on their asset. And for licensees it’s a stable revenue source.

“To the consumer it’s all Fisher-Price and they don’t know who makes it, so we love supporting that,” says Mattel’s Nitya Madhavan, VP of Global Brand Marketing for Fisher-Price. “It is really about making sure we are handling the categories that make sense for us. The heritage toys are really about nostalgia so sometimes it is a bit of a different consumer than might be attracted to Mattel’s other brands. This allows licensees to focus on a single product or category.”

For a licensee, the heritage brand brings an obvious revenue opportunity, but there can be added benefits, too. The Bridge Direct, for example, markets the classic Fisher-Price toys through the retail areas of Cracker Barrel restaurants – a new distribution channel. (They’re also sold through other retailers.)

In the case of heritage toys, it’s all about nostalgia for an item that may have vanished from product plans, but could benefit from the attention a smaller company affords it. For example, K’Nex overhauls Lincoln Logs once every four years, but even then doesn’t vary much from the products frontier themes, says K’Nex’s Kristen Krikorian.

Specific Expertise

For Spirograph, Hasbro was looking for a licensee with expertise in arts and crafts and found one in Kahootz Toys, says Hasbro’s Simon Waters. Hasbro, which owns 1,500 brands, acquired Spirograph in 1998 and licensed it to Kahootz in 2012. Kahootz deepens the link to the brand’s heritage, selling Super Spirograph with the Kenner name, a company acquired by Hasbro along with its parent Tonka in mid-1991.

“We knew there was a huge opportunity in arts and crafts with nostalgia so we found a partner who knew how to build that business at retail,” says Waters. “It is complementary to our core business and they are able to dedicate the resources that are needed. Our portfolio is quite broad and we may not have the time need to succeed with some of the heritage brands.”

The licensees, who may need time to revive what may have been a languishing brand, typically sign three-year deals that provide the time needed for product development. But given that the heritage brand in many cases already is well-known to consumers, any changes in product design can be incremental:

• Aurora World, a long-time Hasbro licensee, signed a 5-year renewal of its agreement for Raggedy Ann with Hasbro. Aurora makes slight changes each year in the Raggedy Ann dolls it carries, mostly to meet current trends. For example, it introduced a “Timeless Value” special edition 16-inch doll at New York Toy Fair earlier this month with feet that were pointed to the side instead of straight forward in a nod to older versions of the doll that could appeal to collectors. The doll also had an “Understanding and Forgiveness” tag tied to the morals presented in old stories. In 2016, Aurora had a “Support Our Troops” special edition doll. “We look at current trends including color palettes and fabrics that still very much display the essence of Raggedy, but can remain relevant to the market,” says Aurora’s Dee Dee Valencia. “This keeps the collectability going with the equity that the brand has.”
• K’Nex reintroduced a wood version of Tinkertoys at Toy Fair to complement the plastic product in ceding to consumer demand, says Krikorian. K’Nex, which signed the Tinkertoys license with Hasbro in 2012, initially replaced the original versions with plastic at the request of mothers tired of cleaning the wood, says Krikorian. Now K’Nex has two versions with the plastic 65-piece set priced about $10 less than the wood variety. With Lincoln Logs, K’Nex ventured outside the frontier theme that is the playset’s hallmark, but quickly returned to the original version in the face of customer complaints. It also burnishes the game’s “Made in the USA” by having Pride Manufacturing Co. manufacture the logs in Burnham, ME. “People are so focused on the frontier old set theme and even when we have new sets, the themes don’t change too much,” says Krikorian.
• The Bridge Direct hews pretty close to the classic Fisher-Price design, but is considering adding colors to the chatter phones.
• Toy State is a long-time Mattel licensee for Hot Wheels RC cars and added versions for Barbie and Thomas the Tank Engine. “I think every company has its core competencies and there are always efficiencies,” says Toy State’s Andrew Friess. “Our core competency was in lights and sound with RC vehicles so this was a natural match.

While licensing a well-known toy brand can provide instant recognition and credibility, it also always runs the risk of becoming successful enough that the licensor decides to return the product to its own line. For example, Bridge Direct had a license for Hasbro’s Simon, but that ended when Hasbro decided to reintroduce the brand itself, adding a Star Wars product in 2016 and launching a head-up visor-based version of the game this year.

“Hasbro had a vision of contemporizing Simon, which they did with Simon Air and Simon Swipe and they didn’t want their products competing with ours,” says Foreman, whose company fielded the classic version of the Simon game. “That is the risk you run when you license other toy products.”

Separate Distribution

To avoid even the appearance of competing with a licensor, many toy licensees stake out separate distribution for their heritage brands. While Aurora sells its own brands such as Yoo Hoo and Friends dolls through Walmart and other mass retailers, it limits Raggedy Ann to specialty toy stores that can appeal to collectors.

“The audience where she is known for the brand heritage is more associated with that channel of distribution,” says Valencia. “The sales of the brand are very consistent and there may be small peaks, but generally it is a very stable business.”

That stable business may be tied, in part, to the longer contracts that the time-honored properties typically carry. And licensees themselves typically rely on social media to get the word about a heritage brand, rather than a costly advertising campaign.

“We want to find properties that are going to be successful in our product ranges for five or 10 years so that we can truly invest in them,” says Friess.

Yet for some licensees, the brand’s name resonates with consumers without much prompting.

“Many of these brands like Lincoln Logs people remember so well that you don’t actually have to do much to remind people that the brand exists,” says Krikorian.

Contacts:

Aurora World, Dee Dee Valencia, Products and Retail Development Mgr., 562-205-1222 x292, deedee@auroragift.com

The Bridge Direct, Jay Foreman, CEO, 561-997-8901, jforeman@thebridgedirect.com

Hasbro, Simon Waters, General Mgr. and VP Entertainment Consumer Products, 818-478-4804, simon.waters@hasbro.com

K’Nex Limited Partnership Group, Kristin Krikorian, Marketing Dir., 215-996-4236, kkrikorian@knex.com

Mattel Fisher-Price, Nitya Madhavan, VP Global Brand Marketing, 716-687-3000

Toy State, Andrew Friess, Pres.,781-349-1000, afriess@toystate.com