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COMMENTARY: Expanding Brands From Blockbusters

 

The_Lego_Movie_posterBy Jackie Breyer, editorial director, The Licensing Book

I recently took my daughter, Lena, to the preview for The Lego Movie. It was very entertaining for both the adults and the kids in the audience, and when we got home the first thing Lena wanted to do was play with Legos. Well played, Lego, well played. I am certain that the next time we go to the toy store, there will be Legos in my shopping cart.

Ask a kid, “If you could have one new toy, what would you choose?” Depending on the child, his or her toy of choice might be Transformers, Barbie, Monster High/Ever After High dolls, Skylanders, My Little Pony, Legos, or Hot Wheels. All of these items have something in common. They are all successful properties launched by toy manufacturers. They all have some form of entertainment attached—movies, TV shows, webisodes, video games, and apps—but the main component of the property is the toy itself.

The biggest toy manufacturers—Mattel, Hasbro, Lego, and Spin Master—can really be considered entertainment companies first and foremost (and really, what are toys if not entertainment?). Hasbro, which has always been in the entertainment business with its cartoon lineup, took it to the next level when it launched The Hub Network in 2010, and has had varying levels of success turning some of its biggest toy properties into movie franchises. The next installment of the Transformers franchise, Age of Extinction, will be in theaters on June 27 and will surely give a boost to the toy line and the licensed products as well.

Not only are these properties driving demand for toys and saving manufacturers big money on royalties, but, as the property owners, they are making money in the form of licensed bed sheets, backpacks, pajamas, and even toys made by other toy manufacturers.

As manufacturers continue to expand their proprietary entertainment properties, often—but not always—successfully, how will traditionally licensed toys be affected? Today, 30 percent of all toy dollar sales and 25 percent of units are in licensed products. However, some experts anticipate a decline.

It is expected that the leading toy manufacturers will continue to put emphasis on building their own brands, allowing them more control over their products, and putting more dollars in their pockets. We may even begin to see some decline this year, but I don’t expect licensed toys to become insignificant anytime in the near future. As long as there are companies with irreplaceable content, such as Disney and Sesame Workshop, licensing will remain a critical part of the toy business.

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