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ARTICLE

Matt Nuccio. "Licensing: Then and Now."

Royaltie$, June 2009

Well another licensing show is now upon us. This time around we’re all at the Mandalay Bay Convention Center in Las Vegas, Nevada. A new location means that we are no longer subject to the humid New York City June weather. It also means that there will be no more long waits at the Javits Center’s cab lines. Don’t get me wrong, I’m a New Yorker, I love this place. Great shopping, awesome site-seeing and a myriad of clubs, restaurants and bars for everyone’s tastes. But it was a good long run in the good ol’ big apple. Good or bad, all things must pass. Times have changed and Las Vegas seems to be a very fitting answer for our ever-changing industry. Good bye humid New York City June, hello dry desert sun.

The licensing show is here.

Just as Las Vegas (Spanish for “The Meadows”) has grown up from its days as a small railroad town into a modern metropolis of gambling, shows and shopping, so too has the licensing industry evolved. The licensing industry has gone from small little endorsement deals into a billion dollar industry. Today’s market environment is adorned with licensed properties such as Dora the Explorer, Jeep, Swiss Army, Disney Princess, Nascar, Coca Cola and Thomas and Friends, and that is just to name a few. Licensors provide style guides that dictate how products may look and how packages will display them. In today's marketplace the right license can be the difference between an item becoming a close-out or a massive super blockbuster hit. Licensing can now propel an item by umbrellaing its marketing dollars across many categories and advertising mediums such as television, radio and print. As a result, license properties can sometimes demand hefty percentages of profit and large dollar advances and guarantees. And that’s basically how things are done today, but it wasn’t always that way.

A long time ago, way back in the 1970's, licensing was a very different animal. Back then, licensing was seen as a joint venture between the licensor and licensee. It was a way for a licensor to further promote their movie, television show, or whatever property they were pedaling. Believe it or not it wasn't an uncommon practice for a second and, sometimes even, a first tier license property to be given out to a company free of any charge… it was simply written off as a form of advertising. The more the exposure a license had the more revenue a licensor could count on from record sales, movies or whatever the line’s main focus was. It wasn’t uncommon for you to see several characters from different licensing companies on the same exact piece of package art. In the early 1970’s Mego toys, the then kings of action figures, displayed both DC and Marvel Comic characters on the same package at the same time. In today’s market this would be considered a licensing sin punishable by death (aka contract cancellation). But times where different then. It wasn't until a little toy company in Cincinnati, Ohio, Kenner Toys, had a massive success with a then unknown property that things changed rapidly, almost overnight, into the business we all know today.

Kenner Toys had acquired, almost by default, the Star Wars license. Interestingly, no other toy company wanted to even touch the Star Wars at the time. Previously, Star Trek had been a major flop as a toy line, and toy companies saw too many comparisons between the two properties (mostly because of the fact that they both took place in outer space). Star Wars was rejected by every major toy company that it was presented to.  Meanwhile, companies like HG Toys, who also turned down the Star Wars license, were manufacturing dress-up sets for 4 year olds and up, based on R rated films like Alien and Serpico... go figure. But after Star Wars everything changed. Licensing matured quickly as the television and film industry realized that there were hefty dollars to be made at retail. They wanted in and got in.

And so today, licensing is king. My, how the times have changed. Welcome to Vegas baby.