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What’s in Store for the Licensing Industry in 2024 image

What’s in Store for the Licensing Industry in 2024

By: Mark Seavy 

As the global brand licensing industry enters a new year and consumer habits continue to shift, Licensing International is looking at the trends that will inform several key categories in the months to come.

The Next Play for Toys

The move toward non-theatrical IP as the source for new toys will continue to deepen this year. This follows an 8-10% decline in U.S. toy sales in 2023 as retailers sought to clear excess inventory and adjust to tightened shelf space. Moving forward, retailers are expected to be cautious in placing orders and business is expected to remain slow in the first half of 2024 before gaining traction in the fall.

These contributing factors came to a head late last year when Hasbro unveiled plans to lay off 1,100 workers over the next 18-24 months to combat continued “challenges” to the business, according to CEO Chris Cocks.

“Growth will be just as hard to find in 2024,” Basic Fun CEO Jay Foreman said. “It will take real drivers and innovation to win shelf space. Companies will also need a robust strategy to handle the ever-growing online footprint and changing nature of consumer shopping habits.”

Several toymakers continue to shift focus to direct-to-consumer (DTC) sales—like Hasbro Pulse and Mattel Creations—as a hedge against slowdowns in the brick-and-mortar and online businesses. There’s also hope that Toys “R” Us will continue its expansion, if only to be a home for up-and-coming brands.

To offset business challenges, toy suppliers are expected to turn to categories that have remained resilient and rely on evergreen franchises that are less subject to film and streaming release schedules. In plush, for example, sales through October 2023 were up 4% from a year earlier, a trend that is expected to continue this year. In October alone, plush sales rose to $1.7 billion against $846 million in October 2020, according to research firm Circana. Another bright spot in 2024 and beyond is the emergence of videogames like The Last of Us and Five Nights at Freddy’s as major franchises and strong fodder for toys.

The Importance of In-Person

Location-based entertainment (LBE) will continue to be a major attraction for licensing in 2024. The effort to expand LBE this year will be led by well-established players like Hasbro, Disney, and Rovio as well as relative newcomers like WildBrain, which formed an LBE business unit last fall that includes the Peanuts franchise.

Peanuts Worldwide is expected to expand its café concepts outside Japan, complete renovations at its Snoopy Sound Stage Adventure at Universal Studios Japan, and launch an attraction in the educational category in 2025. Hershey, which operates four retail-oriented Hershey Chocolate World stores, is expected to start laying the groundwork this year a for a licensed experiential concept.

Additionally, two of the largest operators of U.S. regional theme parks, Cedar Fair Entertainment and Six Flags Entertainment, are expected to complete a merger in Q1. It’s expected the newly merged company will sharpen its focus on brands, not only by building out branded rides but by partnering with IPs for merchandise as well as food and beverages, said Jim Seay, President of ride developer Premier Rides.

“Once that deal is completed you will have this large organization that will have a sizable portion of the regional theme park business and it will be run by people who have respect for IP,” said Seay in noting that several executives that are expected to head up the combined company have previous experience at the former Paramount Parks, which was acquired by Cedar Fair in 2006. At the time, Cedar received a 10-year license for Paramount Parks name and a four-year license for the Nickelodeon brand..

In addition to theme parks, formats like hotels and walk-through attractions are poised for significant expansion this year. This will build on several recent walk-through launches, including the Moana-inspired Journey of Water at Walt Disney World; the reimagined Swiss Family Robinson-inspired Adventureland Treehouse at Disneyland; and Illumination’s Villain-Con Minion Blast at Universal Studios Florida.

“The consumer is going to be looking for experiences rather than things to buy and that creates opportunities,” said George Wade, President of consulting firm Bay Laurel Advisors. “This year is going to be one of experimentation in terms of engaging guests.”

Focus on Fashion  

Uncertainty will likely be the watchword in the fashion industry this year, driven by issues around inflation and consumer confidence.

Yet despite the challenges in apparel, global sales are expected to increase 2-4% due in large part to luxury goods, according to McKinsey. Luxury apparel sales are projected to rise 3-5%, the firm reported.

The increases will also be driven by collaborations designed as much for marketing as sales. These partnerships also support brands’ efforts to forge an emotional connection with consumers as part of long-term brand building. Notable collaborations last year included H&M and French fashion brand Mugler, Louis Vuitton and streetwear label KidSuper, and Crocs with both McDonald’s and Doritos.

Many companies are also extending owned brands into licensing. Footwear supplier Ground Up International, for example, launched late last year its first non-licensed footwear with Uplift kids’ fashion boots. It has plans to expand Uplift into adult sizes and is developing versions with licensed brands, said Layna Patel, VP of Licensing at Ground Up. Prior to Uplift’s launch, Ground Up relied on entertainment brand licenses, eight of which were introduced in the past year.

“What we are trying to do is get feedback and then build out the line from there,” Patel said. “We are looking at a lot of categories right now and what makes the most sense and how we can continue to expand the business.”

Retailers, however, are expected to focus this year on buying deeper apparel assortments from a narrower set of brands and suppliers are responding with a similar strategy. PVH Corp. sold off its heritage intimate apparel brands (Warner, Olga, True&Co) in November and is sharpening its focus on the Calvin Klein and Tommy Hilfiger brands.  Some retailers are running somewhat counter to this trend in reducing reliance on a single brand. Footlocker, for example, has been scaling its reliance on Nike at the same time as it expands shelf space relative newcomers like On and Hoka.

“Against the current macro backdrop in the wholesale channel, we feel that it’s critically important to avoid having too much inventory in the market,” PVH CEO Stefan Larsson said.

Scoring Big with Sports Licensing

Growth in sports licensing this year will largely be informed by athletes, teams, and leagues continuing to stretch the boundaries of their brands. This includes a focus on fashion and lifestyle collaborations, like the National Hockey League (NHL) collection launched by Japanese streetwear brand Bape and apparel supplier Mitchell & Ness late last year.

There are also significant opportunities around several sports that gained new audiences in recent years—including Formula 1, rugby, and pickleball—as well as through mergers like Worldwide Wrestling Entertainment (WWE) combining with Ultimate Fighting Championship (UFC) or the potential merger between the Professional Golfers Association (PGA) and its rival, the Saudi Arabian Public Investment Fund’s LIV Tour.

And then there is the hot button issue of Name, Image, and Likeness (NIL) licensing for collegiate athletes. It was once viewed as prime material for licensing, but short collegiate careers combined with a transfer portal that allows players to switch schools has slowed progress in signing long-term licensing deals. Promotional opportunities remain fertile ground for NIL, however.

“Many retailers aren’t that interested in taking inventory of existing college players’ products given the transfer portal,” a college licensing director said. “There are so many variables with NIL and most of that business will likely be done going forward through customization and print-on-demand.”

The Summer Olympics in Paris will also be a massive opportunity for the industry in 2024. While advertising for the event has already begun, products aren’t expected to hit store shelves until a few months in advance of the games’ opening in July.

Making the Most of Museums

Many museums moved into a broader range of products that were designed as much to raise their brand profile as they were to drive revenue, and that trend is expected to pick up speed this year as the institutions continue to make licensing central to their marketing strategies.

The Metropolitan Museum of Art, for example, expects to land partnerships in the Middle East and enter the eyewear, fine jewelry, and tableware categories based on its collection of 1.5 million pieces of art, said Josh Romm, Head of Global Licensing & Partnerships at The Met. Last year, the museum made moves in premium furniture, licensed Pac Sun for apparel, and gained distribution through The Container Store.

“Licensees and consumers have proven to be receptive to the positioning and artistic value of museum IPs across a broad range of categories and demographics,” Romm said.

The Victoria and Albert Museum (V&A) has 90 licensing agreements, including a deal with the Sanderson Design Group for bedding, window blinds, rugs, and wall art that debuts this year. Many of the licensed collections are designed to attract young visitors, dovetailing with plans to open the V&A East Museum in 2025 in Stratford, U.K., an effort that will target 16- to 24-year-olds.

Then there is the Van Gogh Museum’s recent collaboration with the Pokémon brand, which runs through January 7. As part of the collaboration, several Pokémon artists created six paintings based on Vincent Van Gogh’s work, including the Pokémon Sunflora hidden in a version of “Sunflowers” (1889).

“Museums have become more ambitious and creative in their licensing programs, moving far beyond the expected usage of art assets on products,” Romm said. “This positive trend should be sustainable well into 2024 and beyond.”

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