By Mark Seavy

With Disney cutting content production and Paramount Global’s future still undecided, many licensees are hedging their bets.

In the face of so much recent studio consolidation, many licensees will rely even more deeply on evergreen properties rather than new theatrical and streaming content to address concerns about the unpredictable nature of film releases, said Sam Hafif, President of licensee Concept One Accessories.

From a studio point of view, it is all about the return on investment. Several of Disney’s film releases last year struggled at the box office and, as a result, the media giant is reducing the number of Marvel-based releases, CEO Bob Iger said in releasing earnings earlier this week. Disney also aims to cut the number of its other feature films released each year, planning to premiere two or three movies annually moving forward, as well as limit the number of TV series launched each year.

Looking forward to the rest of 2024, a new installment in the Planet of the Apes film series is being released this weekend, followed by Inside Out 2 (June 14), Deadpool & Wolverine (July 26), Moana 2 (November 26), and Mustafa: The Lion King (December 20). And considering those titles are all sequels or prequels, it’s clear Disney is leaning more heavily into franchises. The only “new” IP on the horizon is the film Thunderbolts, which is under the Marvel umbrella and due to be released in May 2025.

“We’ve been working hard with the studio to reduce output and focus more on quality,” Iger said. “That’s particularly true with Marvel. Some of what is coming up is a vestige of a desire in the past to increase volume. We are slowly going to decrease volume.”

And while Paramount’s franchises (including Mission Impossible, Star Trek, Top Gun, and Transformers) have fared well at the box office recently, the studio’s future—there is currently a possible $26-billion sale to Sony and Apollo Global Management in play—is giving some licensees pause.

For Sony, the deal would mark another major acquisition on par with its $3.4-billion purchase of Columbia Pictures in 1989, which shocked the industry. The potential merger would also reduce the number of major studios to four and give Sony the broad direct-to-consumer streaming service it lacks.

With the potential for further consolidation of film studios, which have become heavily reliant on franchises for movies and merchandise in recent years, will there be room for new IP?

To be sure, there have been surprise hits emerging from streaming services, including Stranger Things and Squid Game. But putting together a major licensing program for a suddenly popular IP can be challenging given that it typically takes nine to 12 months to bring merchandise to retail.

“Retailers and licensees are very skeptical about investing in new IP they don’t know, so it is a little bit of a self-fulfilling prophecy in that you have a new IP but the merchandising is not out there,” said Robert Marick, President of the consulting firm Marick Management Group and a former MGM consumer products executive. “You can much more easily sell to a licensee or retailer an existing franchise. But figuring out that balance and ensuring that you have the right product with entertainment buzz is what studios are trying to figure out. In focusing on the bigger franchises, you know where the merchandising opportunities are and that will translate into games, experiences, and other areas.”

Yet as the studios sharpen their focus on franchises, and licensees rely more heavily on evergreen IPs, the buyers of the resulting products tend to be older, licensing executives said.

“What is keeping everything going [for franchises] is the older demographic and that is becoming the more typical buyer,” said one licensing executive. “It is the consumers over the age of 40 that want to buy something safe, and that buyer is purchasing something they have seen in the stores before, so it is almost anti-newness. That consumer is spending while the younger buyers are being squeezed economically. So, there is some consolidation among consumers as well.”