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Licensing has become one of
the most powerful marketing and revenue tools used today and
Licensing industry worldwide is estimated at USD187 billion.
Retail sales of licensed merchandise in the US and Canada
in 2007 reached USD71.25 billion. The licensed product market
in Western Europe has been estimated to be worth in excess
of USD26 billion. The potential for India to be benefited
harness from the Licensing industry is huge.
India and China account for
37% of the world's population--with more than 650 million
children under age 15 and a mere 1% of global sales of licensed
products.
Kids is not more Kids Business:
As I always maintain
: Kids is no more a Kids Business – It’s a serious one “ .
One of the largest markets in India today is that of Kids,
which has shown a drastic growth in the recent years. From
being a small segment targeted by a few companies, Kids business
has turned into a full-fledged industry.
Kids are no longer oblivious!
Better education levels, media exposure, rising affluence
levels and increasing interaction with technology are all
resulting in kids being much more informed than their adult
counterparts. “Kidfluence” is the direct or indirect influence
kids have over family’s purchases today. Kids have moved from
pester power wielders to influences to emerge as consultants
with most children having expertise across categories.
Increased exposure to entertainment
and media industry has originated a nascent yet thriving commerce
called as “Licensing and Merchandising”. It very closely defines
and relates with the Consumer Products and Promotions for
Kids.
What is Licensing ?
License is granting
a right to use the IPRs to a third party under contractually
agreed conditions. It enables well known imagery from films,
cartoon characters, books, comics, sports events etc. to be
used on a product to both increase its consumer appeal and
provide a distinct point of differentiation and a unique selling
point from other similar products. The use of well known imagery
is often enhanced through huge advertising campaigns often
associated with films or sports events, enabling licensed
products to ride on the back of increased awareness.
Changing facet of Licensing
and Merchandising:
1903 - Helen Beatrix
Potter designs a Peter Rabbit doll.
1904—Buster Brown comic strip
character licensed for line of products.
1924—LITTLE ORPHAN ANNIE comic
strip becomes radio show “by Ovaltine”.
1928—Walt Disney introduces
MICKEY MOUSE. First license agreement signed with Waldburger,
Tanner in Switzerland for Mickey & Minnie handkerchiefs.
1929—Disney creates “Steamboat
Willie” and licenses rights.
1930’s—child star Shirley Temple
licenses SHIRLEY TEMPLE dolls.
1932—Disney hires Kay Kamen
(the “Father of Modern Licensing”) and establishes licensing
program with MICKEY MOUSE.
1936—First Red Ryder BB Gun
Licensed Movie stars HOPALONG CASSIDY and TOM MIX licensed
for toys and premiums Western Television series DANIEL BOONE,
DAVY CROCKET and ANNIE OAKLEY spawn host of products BATMAN
and “Batmania” rule the screen…..and the toy stores.
1955—Playboy grants license
for first “Bunny” cufflinks.
United Features Syndicate develops
licensing programs around comic strip characters PEANUTS and
GARFIELD.
1961--Disney acquires rights
to WINNIE THE POOH and a licensing legend is born.
Late 1970s—American Greetings
develops Licensing Program around Holly Hobby Character.
1977—Star Wars Released—Master
Toy License granted to Kenner Toys. A new day in licensing
begins.
1982—Licensing Industry Association
(“LIA” formed).
1988—Barney Television series
launched — spawns new wave of licensed products.
1989—The Simpsons goes on air
and a Licensing Program is born.
Harry Potter books & motion
pictures create their own industry.
1999 — Pokemon, a Japanese
hit, introduced into the United States.
The Mega-Motion Picture Rules
—Spider-Man extraordinarily successful.
Why Licensing
Licensing can benefit a manufacturer
in the following ways:
- Expand your product portfolio
- Drive new revenue streams
- Recognized as more Organized
Player
Following are the ways the
Licensors can benefit : -
- Fastest approach to make
serious money
- Increase the brand's global
awareness and enter new markets
- Inspire customer loyalty
and build brand equity
- Fuel valuable promotional
and retail partnerships
- Make your brand more lifestyle
orientated
Why Licensing In India?
- Over
1 Billion reasons… India’s population is 1.1 billion
- 31.2% of the population
is below 14
- 337 Million under 14
- Retail is India’s Largest
Industry
- Unprecedented growth of
large malls and hypermarkets!
- Unprecedented economic and
personal income growth
- English is the most important
language in business, politics
- 130 million children television
viewers
- Kids TV viewer ship has
doubled over the last three years
- Fast food sector growing
rapidly. 37 % of Indians eat fast food at least once a week.
(Compared to 35% in US.)
Indian Scenario
Owing to the budding stage
of retail outlets and the small and sceptical nature of the
companies for Licensing and Merchandising, the L&M Industry
figures in India are roughly at USD 450 million.
Though it forms almost 1/41th
part of the total Licensing Industry world-wide, the L&M
industry has shown drastic growth in the past five years by
showcasing a steady growth rate of 14-15%.
Almost with all the forms of
licensing being practised here, character licensing forms
the largest of all of them. The Kids Licensed Merchandise
is around USD 140 million i.e. almost 1/3rd of the total licensing
industry.
The children's entertainment
market is fast gaining pace in India, and apart from television
and cinema, kid's centric broadcasters are channelizing their
energy towards building a strong foothold in the licensing
and merchandising space. The emergence of organized retail
in India has set this process in motion and is laying the
foundation of a new era for kid's entertainers.
Character Licensing under kids’
genre is mainly of cartoon characters, which according to
industry is roughly USD 80 million.
It’s estimated that with the
growth of retail in the coming years, the Licensing Business
is bound to grow at a rate of 15-20% per annum, as against
the current 14-15%
Categories of Licensing
Character Licensing
Out of the above specified
categories Character Licensing is the most popular form. The
largest category, character licensing generates over USD42
billion in annual global retail sales. Countless classics
celebrate milestone anniversaries this year and next, including
Inspector Gadget (25), Angelina Ballerina (25),Veggie Tales
(15), Cabbage Patch Kids (25),Casper the Friendly Ghost (turning
60 in 2009), Barbie (50 in 2009)and Teenage Mutant Ninja Turtles
(25 in 2009).
Character licensing can be
defined as the adaptation or secondary exploitation, by the
creator of a fictional character or by a real person or by
one or several authorized third parties, of the essential
personality features (such as the name, image or appearance)
of a character in relation to various goods and/or services
with a view to creating prospective customers, a desire to
acquire those goods and/or to use those services because of
the customers’ affinity with that character.
A licensing Contract
Licensing & Merchandising
activities are always linked and bound with a set of contractual
terms and conditions.
Entities included in the
Contract
Licensor: He’s the one
who owns the IPR/character. He grants the rights to a company/organization
for manufacturing and marketing Merchandise or running a Promotion,
in return of Royalties and such other License Fees.
Licensee: Is the one,
who Manufactures and Markets the Merchandise by using the
IPR bought from the licensor, for a particular tenure according
to the terms and conditions of the license contract.
Licensing Agent: Like
us – Spacetoon, comes in handy to help determine for Licensor
and Licensee right partners and thereupon hand hold to help
launch the Brand / Product in the region. It’s a sensitive
situation as both Licensor and Licensee rely on this entity
for brand enhancement, brand protection, maximizing revenues
for both, and maintaining cordial relationship between both
the above parts.
Various systems of remuneration:
flat upfront fee, unit-based royalties, and profit-based royalties
etc...
Key Elements in the Contract:
Scope of the license
Exclusivity/ Non-Exclusivity
Tenure
Minimum Guarantees & Royalties
Scope of use (manufacture /
distribution)
Territory
Channels of Distribution
Right/No Right to sublicense
Representations and warranties
Validity of the IPRs.
Indemnification (limitation
of)
Enforcement of the IPRs against
third party infringers
Liability of the licensor
Standing to sue of the (exclusive)
licensee.
Control over licensee’s accounting
methods (for purpose of checking the amount of the royalties)
Control over licensee’s use
of the IPRs with respect to: Quality of the products sold
under licensor’s IPRs
Prohibition to misappropriate
licensor’s IPRs
connect@animationxpress.com
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