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Licensing Business for Entertainment Industry Grows 4.3% to $51 Billion in 2013

Biz expected to grow over next two years with 'Star Wars,' 'The Avengers 2,' 'Jurassic World, Batman, Superman, The Simpsons, 'Ghostbusters,' Disneyland anniversaries

The overall licensing industry grew for a third straight year in 2013, generating nearly $115.8 billion in retail sales in the United States and Canada, an increase of 3.3%.

As a result, property owners earned $5.7 billion in royalties, another 3.3% gain, according to the International Licensing Industry Merchandisers’ Association, which kicks off its Licensing Expo in Las Vegas on Tuesday.

The character, corporate trademarks, sports, fashion, and collegiate categories accounted for 94% of the overall licensing revenues in 2013, LIMA said.

The entertainment industry has long driven the licensing biz, accounting for almost half of total revenues. Among studios, the Walt Disney Co. dominated again, surpassing $40.9 billion in global retail sales for licensed products last year. Warner Bros. typically generates around $6 billion.

Disney is only expected to continue to see its share grow further as it readies to release new “Star Wars” movies and build a larger merchandising push around the sci-fi property.

Merchandise featuring film and TV characters, as well as celebrities, accounted for $2.66 billion in royalty revenues and an estimated $51.44 billion in retail sales, up 4.3% from 2012, LIMA found. Royalty rates are generally higher in this category compared with others, accounting for 47.2% of total industry revenues.

“It’s a healthy increase that’s driven by the big films,” said Marty Brochstein, senior VP of industry relations and information for LIMA, who also cited gains in the children’s television market, especially at channels like Disney Junior, which has built a robust licensing business around its shows and characters early on.

At the same time, TV for older audiences is also showing gains with hits like HBO’s “Game of Thrones,” which launched a line of beer, and AMC’s “Breaking Bad” in 2013.

Products tied to not just Disney and Lucasfilm’s new “Star Wars” trilogy and spinoffs, but also Marvel’s “The Avengers: Age of Ultron,” Universal’s “Jurassic World,” and Warner Bros.’ “Batman v Superman: Dawn of Justice” and following “Justice League” movies are expected to boost interest in film-based products over the next two years.

But so are anniversaries like “Ghostbusters'” 30th, “Gone with the Wind’s” 75th, and “The Simpsons'” 25th. Disneyland also turns 60, while Hello Kitty is celebrating 40.

The dead celebrity category is also expected to continue to grow with products featuring Elvis, Steve McQueen and Michael Jackson.

Meanwhile there are also some notable newcomers to the biz, including “Sharknado,” which will get a major licensing push from Discovery Channel during “Shark Week” in August.

“When it’s on the shelf, licensed merchandise is a billboard for the property,” Brochstein said. “You have to think about licensing as part of a marketing campaign. Licensing is about emotion and when you have something the consumer considers valuable, that’s wonderful.”

That’s become a particular problem among toymakers. The toy industry continues to be impacted by digital technologies, with apps launching new brands that toymakers are now forced to react to with their own products.

“There’s only so much time and disposable income that kids and their parents have,” Brochstein said. “There’s been a phenomenon of kids getting older younger. They’re playing with traditional toys at younger ages and giving them up earlier than ever before. The good news is they’re very much involved with entertainment properties on a whole different level, with digital helping cement their relationship with brands on a creative and emotional level.”

Licensing royalties in the second largest category — corporate and brand names — were estimated at $965 million in 2012, representing around 17.1% of industry revenues, and an estimated $22.5 billion in retail sales, or 19.4% of the overall licensed retail business. Home improvement and home decor are expected to drive that area in the coming years.

Fashion is the third largest category and saw royalties rise 2% to $770 million to account for 13.7% of total revenues. The category generated retail sales of $16.9 billion in 2013. Beauty products, especially perfumes and fragrances, apparel and accessories are expected to drive gains with retailers looking for more exclusives in their stores.

The sports biz, with leagues accounting for a majority of the category’s licensing revenue, saw royalities rise 1.9% to $698 million, translating to $12.8 billion in retail sales. Teams were able to sell more products through their own retail stores, but analysts believe sports properties could grow their licensing revenue by connecting through the health food, beverage, travel and women’s markets.

And colleges generated $209 million in royalties from $3.9 billion in retail sales, mostly through licenses to apparel manufacturers or retailers, although office products, travel bags and automotive products have seen growth.

LIMA’s Licensing Expo takes place June 17-19 at the Mandalay Convention Center, where Dreamworks CEO Jeffrey Katzenberg will deliver the event’s keynote address.

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