NPD Column What’s the licence opportunity?
In this month’s column, Jez Fraser-Hook, executive director Toys, Nursery and Licence at NPD, takes a look at the licensed side of the UK toy industry.
UK’s Licence Tracker Service). This compares with the total toy market value of £3bn in 2012. But this value for licensed goods represents under a quarter of all spend on this age group, with just over £10.4b being spent, according to the most recent data available. So does this represent an opportunity to grow the licensed portion, or is the licence market at its peak? Compared to 2010, there has been some decline in the licence business of approximately -8% over the two years, the overall trend of which can be largely attributed to the success of Toy Story in 2010 and no one strong licence since. However, from most recent information, the decline in licensed goods has slowed, helped not only by the Olympics last year but also the likes of Moshi Monsters penetrating most product categories extending predominantly out of Toys a couple of years ago and into Publishing, Clothing and School Equipment, to name but a few. It’s no surprise that Moshi Monsters has been the strongest growth licence amongst the larger licences over the past year, and had it not been for the Euro Championships last year boosting football-related product sales, Moshi would be higher up the rankings than its current seventh position. But for it to be of larger value than successful perennial stalwarts as Thomas & Friends, Star Wars and Peppa Pig is no mean feat, and Mind Candy should be applauded. Latest figures show that Moshi Monsters represents 3.5% of all licensed product spend by the 14-and-under age group compared to the aforementioned three licences taking around 3% of value spend each.
L Whilst licensed sales are split 54%/46% in
favour of Boys, the purchasing habits between the two genders is fairly significant. Boys are unfortunately known to be less loyal and this continues to be demonstrated in the purchase of licensed goods by the fact that the larger licences, other than football-related product, command around 5% each of all value spend, be it Batman, Ben 10 or Star Wars. Compared to their female counterparts, the licensed product market for Girls, being the more loyal
32 Toyworld
icensed products for kids is big business. In fact, spend on licensed goods to 14-year-olds and under in Great Britain is somewhere in the region of £2.3b (sourced from NPD
Licensed Sales By Category, Kids 0-14 Yrs Old NPD License Tracker Service
Video Games Publishing Accessories
Electronics School Equipment
Footwear Greeting Cards Clothing DVD Toys Health & Beauty
The NPD Group, Inc. | Proprietary and Confidential
Source: UK License Tracker Service
gender group, extend 11% of their spend to the Disney Princess licence followed by Barbie and Hello Kitty at just under 10% each. Hence, the top three licences account for around 30% of value spend on girls 14 and under compared to the same percentage being split across the top six licences for boys. Moshi Monsters, however, has managed to penetrate the girls market more so than within the boys market, currently taking over 5% share of spend across all licensed categories. Is the licence market centralised on key categories for the 14 and unders? Certainly Toys represents a significant portion, accounting for over a third of licensed product value sales, as shown in the accompanying chart, whilst DVD, Clothing and Video Games continue to play a significant part in this market place. With each of these three categories accounting for 13%, these four categories take ¾ of value spend. However, when looking at opportunity it’s not just size that is important. Publishing is another key category within this market place and, while around half the value of the clothing category, has been seen to be one of the strongest
growth categories of late. For licensors it’s important to look at the complete picture and ensure penetration in each of the categories that make sense to their licence. Thinking about the largest category, Toys, and extending it to all age groups, is there similar opportunity across Europe? Like the UK, Italy and Spain are pretty much in line with the percentage of sales that are licensed, upwards of 28%, whilst Germany and France are lower due to the influence of more branded products being more important in these markets. That said, from NPD’s Toy Consumer Panel service in these five countries, it’s evident that the opportunity is there within toys alone, and accounting for over €2.5b in 2012 being spent, spread across many categories from Dolls, Action Figures, Building Sets and Outdoor products. In summary, there is plenty of opportunity
to develop licensed product to be successful, be it within certain categories or certain age groups. However, being sure to have exposure in more than just the key categories can help seek out the extra value for consumers and value for the industry pockets.
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