Merchandise Licensing to Continue as Part of Marketing Programs

Licensing continues to be a marketing workhorse for many companies. Retailers typically purchase licensed products from a wholesaler which may already have an agreement in place with the licensing company. As sales occur, the licensing company gets both an upfront royalty and an ongoing percentage of sales, not unlike a business franchise. Products that displayed or represented licensed characters or ‘entertainment properties’ generated $11.12 billion in 2009 sales.  The king of licensing revenues, Disney, controlled nearly half of these revenues.

However the licensed merchandise market extends beyond characters and into several other entertainment-​related industries when it came to 2009 retail sales:

  • Celebrities $4.65 (billion)
  • Entertainment $11.12
  • Estates $2.25
  • Music $2.15
  • Publishing $4.3
  • Traditional Toys/​Games $1.25
  • Video games $450 million

Between 2008 and 2009, sales in every category dropped according to The Licensing Letter (TLL).  It’s too soon to tell how 2010 will play out but analysts note that merchandising opportunities for new feature film properties remain low because retailers and manufacturers do not want to invest in non-​proven entities.  TLL analysts believe growth in the market will come from film sequels and TV series that have lasted at least two years.

Proof of this trend is found in the licensing program launched by Disney as its new movie Alice in Wonderland is set to open in theaters across the country.  Many believe the Disney brand is powerful enough to ensure success even if the characters in Alice in Wonderland have remained relatively obscure until now. So, well-​known retailers such as Sephora and Bloomingdale’s will sell licensed jewelry, apparel and novelties connected to the movie’s characters.

[Sources: Proven Properties Dominate Entertainment Licensing in ’09, Entertainment Marketing Letter 2.15.10; Disney Launches Designer Alice in Wonderland, Company Release, Licensing​.org, 1.28.10]
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.