How is the entertainment licensing sector setting itself to more quickly exploit sudden, unanticipated opportunities?

The rapid growth of streaming services, in particular, is increasingly creating demand for licensed product almost overnight, as new shows turn into sudden hits or memes go viral even out of existing programming.

In essence, the entertainment business is trying to take a page from the sports licensing sector in having plans in place for hot market opportunities.

An action plan
“If something happens at a pro sports game, the entire organization knows what to do,” says Trevor George, CEO at POD supplier Trevco. “When something like Squid Game happens, I am not sure the entertainment industry knows what to do because you need to have an agile ecommerce plan to address it.  Entertainment hasn’t used quick turn or [unplanned] hot market that much, but they acknowledge that POD exists and that is a place to start. The 24-hour period where they (the entertainment industry) have an action plan if something goes viral doesn’t exist yet.”

When Squid Game became an overnight sensation in the U.S. after launching on Netflix on Sept. 17, the first products became available through the Netflix online shop about two weeks later. Netflix had pre-approved designs in a style guide. But Mad Engine had its artists sketch designs – the numbers were a key element — taken from the series as it was streaming. Approvals were received within “hours” of designs being submitted and t-shirts were available about a week after the series became a hit, says Dean Allen, Chief Merchandising Officer at Mad Engine.

Similarly, UK retailer and POD supplier Zaavi, which plans to open a new production facility in Kentucky late this year, had a 13-piece collection available online on Oct. 4. That includes high-top sneakers, apparel (t-shirts, sweatshirts), fleece blankets and pillows that are available as “quick buys” priced at $22-$59 featuring the series’ six childhood games.

And a hot market strategy doesn’t even need to apply only to goods that can be delivered quickly. Striking while the iron is hot, Funko started taking pre-orders for Squid Game Masked Worker Pop! figures in October that aren’t slated to be fulfilled until well into the first quarter of next year.

Boost from POD and eCommerce
The advent of POD and the integration of eCommerce have radically changed the quick-response landscape. Think back to Disney’s Frozen in late November 2013, when product initially was so scarce that Princess Elsa dresses were selling the following April on eBay for $1,500. Fast forward to late 2019 when shirts based on The Mandalorian’s big reveal – “Baby Yoda”  — were available online within 10 days. (That was by design, since the showrunners kept Baby Yoda secret from licensees to guard against spoiling the surprise. Licensee Fifth Sun, which was acquired by Mad Engine late last year, now receives Mandalorian assets two days in advance of a Sunday night episode and product is available the next day, says Allen.

On the studio side, when Cobra Kai became a surprise hit after being launched for a third season on Netflix last January – the first two were on YouTube Red starting in 2018 — Sony Pictures Entertainment sped the approval process to 24-48 hours from a more typical 10 business days and licensees had product available within 30 days, says Stacey Kerr, SVP for Licensing at Sony – a process that also can be applied to memes and viral moments going forward.

“I definitely see this happening more in the future because this is a phenomenon where you have to chase opportunities and be nimble,” says Kerr.  “If something hits big you want to have product available as soon as possible because something that is top of mind goes away quickly. You want to capture it at the peak and that puts pressure on all sides” including studios, licensees and retailers.

In the sports world the reaction is swift. POD supplier BreakingT uses an internally developed CrowdBreak software platform that monitors social media for sudden spikes of interest in a team, player or play that might signal a merchandisable moment, says CEO Jamie Mottram. For example, quarterback Cam Newton’s return to the Carolina Panthers after a one-year stint with the New England Patriots was marked by his exclaiming “I’m Back” after scoring a touchdown in 24-14 win on Nov. 14. That catch phrase was emblazoned on t-shirts the next day owing to a quick approval process with NFLPA, says Mottram, whose company sold “hundreds” of the t-shirt within 24 hours their being available.

“What hasn’t been developed yet in entertainment is the unplanned hot market that exists in sports” for the World Series, World Cup and other events, says Mottram. “There is a valuable stake there to be carved out. The hard part is you can’t predict ahead of time how a TV show or film will fare so you almost have to produce merchandise in the moment and by then it’s [the moment is] almost over. You have to be so timely with these things and the broader you can go” in licensing studio content for consumer products “the more capable you are capitalizing hot market business.”

Not surprisingly, even with advance approvals from licensors, hot market product is typically only available via eCommerce at the start and largely limited to quick-turn categories like apparel. Lead times to get onto physical shelves can add another 10-14 days in the case of Walmart but stretch to six weeks at some department store chains, licensee executives said.

“You can’t get it on every Walmart shelf overnight because no one wants to pay [the cost] for that because they know within 2-3 weeks they will have it,” says Allen. “But having it online is another story.”

And while increasingly retailers are seeking hot market products in categories outside apparel, many licensees face longer lead times – at least longer than 24 hours — to finalize designs and get approvals. For example, the fastest Concept One could have  a hot market backpack designed, produced and air shipped is 45 days, says CEO Sam Hafif.

“Retailers call us immediately” as hot markets emerge and “want to know how quickly we can react,” says Hafif. “We hound licensors but it’s never fast enough” for retailers. “In my categories, licensors haven’t been quick enough and they are missing opportunities and we are losing millions of dollars of opportunities.”