TV Kids Licensing & Merchandising Trends Special Report

LICENSING & MERCHANDISING TRENDS www.tvkids.ws

BRAND LICENSING MIP JUNIOR & MIPCOM EDITION

SPECIAL REPORT

OCTOBER 2009

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TV KIDS

Backing Up

Brands Against the backdrop of a cautious L&M market, rights-owners are employing a variety of strategies to extend their top brands into the retail sector.

Gilbert backpack inspired by TV-Loonland’s Little Princess.

By Mansha Daswani More than 4,000 executives are expected to attend Brand Licensing Europe (BLE) in London this month.A sister event to Licensing International Expo, which takes place in the U.S. every June, BLE has been steadily increasing its attendance figures over its 11 years in operation.That is no surprise, given that rights-owners across the board are anxious for new revenue sources in an ever more crowded marketplace. And this is certainly true in the kids’ business, where creating multiple touch-points for children, from apparel to toys to video games and more, is the ultimate goal.

The licensing-and-merchandising sector, like every industry, has been hit by the global economic downturn.

But,“the good thing about being in the kids’ business is that even in these hard times, when parents are cutting back, typically [spending on] the kids is the last thing they’ll cut,” says Kirk Bloomgarden, the executive VP of worldwide consumer products and marketing at the Cookie Jar Group. “There’s always an expenditure to bring happiness to children.”

Bloomgarden concedes, however, that there are challenges in the marketplace. Licensees and retailers, he notes, are “playing it safe.”

This is a view echoed by Roz Nowicki, the executive VP of marketing and licensing at 4Kids Entertainment.“Many potential brands never see the light of day at retail, as less space is being dedicated to toys and licensed products.”

“It’s harder to get a new product range financed,” notes Bernd Conrad, the head of licensing and merchandising at TV-Loonland, pointing to the contraction in the British retail sector—Woolworths is just one big-name U.K. retailer that succumbed to the downturn this year.

In this climate, the best way to secure prime position with retailers is by offering up a tried-and-tested property.

“With retailers continuing to be challenged with their margins and the limited shelf space they’re devoting to

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TV KIDS

Figure it out: 4Kids’ Yu-Gi-Oh! heads into its tenth anniversary in 2010 with a full consumer-products line, including figurines.

licensed goods, classics are the place to be,” says Bloomgarden.

Cookie Jar certainly is in that space, largely as a result of serving as the global licensing agent for the perennial favorite Strawberry Shortcake.“That’s a brand we’ve been working on for a number of years,” Bloomgarden says.“It’s over $3 billion at retail now since the relaunch in 2002. It’s a classic evergreen in the girls’ aisle. It has over 500 licensees worldwide.”

A significant new initiative for the brand this year is a line of merchandise from Hasbro, Speeding up: Keefe Entertainment is employing a new model for including strawberry-scented play sets, vehi- the rollout of its new brand Z~Force. cles and dolls.“We’re attacking all categories around the world where Strawberry is ingrained and The series launched on TV in 2006 and has since successful. France is our biggest European market. signed up a roster of licensing partners that includes Brazil is our biggest Latin American market. She’s Martin Yaffe (master toy) and Panini. really global.”

Another key property for Cookie Jar this year is Caillou, MAKING AN IMPACT its well-established, book-based preschool show. “We At 4Kids, meanwhile, the company is gearing up to celhave a whole new toy line set to launch in Europe. ebrate the tenth anniversary of the popular Japanese We have a new television series in production, the fifth franchise Yu-Gi-Oh! in 2010.“The classic brand surges series in the cycle.We’re continuing to invest in the again with growing card sales, additional licensees and franchise’s growth,” Bloomgarden says. Caillou has ben- new episodes,” says Nowicki.“It’s still performing well efited from global exposure, having aired, and continat retail, and we will be looking for new partners to uing to do so, in markets around the world. celebrate its anniversary.”

“International properties are the thing,” says Conrad Categories that are still open for Yu-Gi-Oh! include at TV-Loonland, which holds the worldwide TV, DVD novelties, apparel, accessories and confections, to comand merchandising rights to the book-based property plement video games from Konami and toys from PlayLittle Princess, which was recently renewed for a third mates, among other products. season by Five’s Milkshake! in the U.K.“It’s our key goal Nowicki is also looking forward to the continued rollto support our partners, whether the broadcasters, out of Dinosaur King products, with Playmates toys and video distributors, licensees and retailers, with interna- Upper Deck trading cards already having struck a chord tionally focused brands. In times of globalization, it with fans of the series.“We will be looking to fill open becomes more and more important to launch a suc- categories and ensure all territories are covered,” Nowicessful kids’ brand. Little Princess, for example, is on air cki says.“The show is currently top-rated in key territories.” in more than 180 territories.”

While “classic,” “evergreen” and “established” are certainly buzzwords of the moment, there is still room for the introduction of new properties.“On the entertainment front, the evergreens will have benefited over the last 18 months or so,” says Julian Day, the VP of U.K. licensing at Ludorum. “But going forward, I’m convinced that retailers are going to want some new blood

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TV KIDS

Industry veteran Peter Keefe is looking to bypass the traditional model of waiting one to two years for a new series to establish itself with audiences before launching a retail program. His venture, Keefe Entertainment Group, is drumming up interest in the Z~Force property via the “happy idea virus.”

The animated boy-skewing brand is based on the Chinese zodiac and allows kids to identify with the characteristics of each sign.“Z~Force offers a mythology that empowers [ordinary kids],” Keefe explains.“So if you’re born in the year of the tiger, you have all the tiger traits and characteristics and you have a secondary animal based on your month of birth and your third is based on your birth hour. You’ve got all this wonderful alterego stuff and you don’t need anyone else to play with.”

A NEW MODEL

Halo effect: Mondo aims to sign up licensing partners for Angel’s Friends while at BLE.

in their ranges to make their shelves more appealing to consumers coming in with the confidence to spend that little bit extra.”

CHUGGING ALONG

Ludorum will be talking up two brands at Brand Licensing this year, one a well-established British property, Dennis & Gnasher, and relatively a new one, Chuggington. For the former, Ludorum is looking to sign up publishing, home entertainment, gift and apparel categories for the core boys’ 5-to-10 demographic, with the series slated to premiere on CBBC in the fall. In the case of the preschool property Chuggington, top extensions will include toys, publishing, home entertainment and apparel, to be available at retail to coincide with the show’s second season on CBeebies.

RC2/Learning Curve holds the master toy license, and Parragon has been appointed long-term publishing partner in a number of territories.

Cookie Jar, meanwhile, is already starting to have conversations with the licensing community about its new Doodlebops animated series, which is in production for a 2010 premiere.“Typically we go out [to the marketplace with licensed product] after the show has aired,” says Bloomgarden.“There is usually a lag there, but there is awareness of Doodlebops from the original [live-action] series, so that’s something we’ll be gauging per market as we go forward.”

“One of the things we’ve said to broadcasters is, our Z~Force launch model flies in the face of traditional wisdom,” Keefe continues. “We’re using commercial TV to drive and carry children to the website, rather than it being the other way around, and once they’re at the website they can download videos, buy a T-shirt or an amulet showing what their power animal is, but there’s no retail involvement.”

To drive awareness of Z~Force, Keefe bought airtime on a host of U.S. kids’ channels this September, with the backing of Animation Development Company.

“What’s unique is the launch pad—we’re saying, let’s just go to the kids and get their attention.We’re not putting out a 26-episode series hoping that we get a good time period and that a network person doesn’t ditch it after week two because the lead-out show was weak.We’re not hoping that kids will happen to watch at 11 o’clock on Sunday morning.We’re going to make sure that everyone has a chance, over four to six weeks that the spots will be airing, to say,What is this?”

With a fan base created from the website,Keefe says,the company will then have a better platform with which to approach licensing partners.“Let’s say a trading-card company says, I see you’ve sold 50,000 downloads in your first month and you’ve had a million unique visitors all over the world, this clearly is a concept that has a commercial value.That can catapult us forward into whatever the next step is.”The next step, Keefe says, could be an animated feature, or a full series to be delivered in 2010.

Rights-owners agree that having a strong online presence is crucial for building any viable kids’ brand today.

Indeed,TV-Loonland’s Conrad cites the importance of the web in building interest in Pat&Stan. The 39x7minute series has just begun rolling out to broadcasters worldwide, and the L&M roster already includes Bandai Europe for toys,among other partners.“Licensees,retailers and customers are concentrating more on properties that have some track record,” Conrad notes. “This can be

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TV KIDS

Breaking through: Rainbow has a host of licensees on board for its boyskewing Huntik: Secrets & Seekers.

[something with] a publishing heritage, such as our Little Princess, but also a [brand with] huge Internet exposure, which is the case with Pat and Stan and their performance of “The Lion Sleeps Tonight.” [It was] the tenth-mostwatched YouTube video back in 2006 and boasts more than 22 million views to date.”

WEB SAVVY

Online destinations have been integral to the rollouts of most new kids’ properties today. Italy’s Rainbow S.p.A., is building an MMORPG [Massively Multiplayer Online Role Playing Game] for its series Huntik: Secrets & Seekers. Other categories for the boy-skewing property include toys, publishing, trading-card games and 3-D figurines. Rainbow is also continuing to invest in its girls’ hit Winx Club, with a new line of fashion dolls launching in the fall, on the back of the debut of an MMORPG for the series. Another key brand for Rainbow this year is PopPixie, with Bandai already developing a toy line. Publishing, apparel, fashion accessories and video games will also be part of the mix.

“Rainbow’s philosophy has always focused on the creation of integrated projects: not only TV series, but multiplatform brands that are able to build enduring success in toy, publishing, apparel, DVDs, and all other key licensing categories,” says Iginio Straffi, the CEO of Rainbow.“The [key] is to create properties covering all media, from TV series to live shows and theatrical movies, in order to give to the licensees broad, allencompassing support.”

Another Italian-based company, Mondo TV S.p.A., is making its first major inroads into the licensing sector with Angel’s Friends, a new series that launched on Italia 1 in Italy and Telecinco in Spain this fall. According to Micheline Azoury, an international sales executive at Mondo who will be representing the company at BLE, Angel’s Friends—co-produced with Play Entertainment— benefits from its vast array of characters, angelic and devilish. Key categories include fashion and accessories, to begin with. Spin Master has signed up for toys, and Mondo has a pan-European deal with Giochi Preziosi for toys and stickers.

Ultimately, rights-owners need to be “focused in terms of the breadth of licensing programs, necessitated by limited slots at retail,” says 4Kids’ Nowicki.“Licensors and agents, now more than ever, need to ensure the brand has a point of difference that can break through a very cluttered environment.”

Ludorum’s Day is confident that Brand Licensing Europe will see a greater openness on the part of the licensing community.This year, he notes,“has seen many licensees being very cautious, renewing solid bankable business and giving many new propositions a wide berth.

Brand Licensing should prove to be interesting as, I believe, many licensees will realize that they’re potentially under-prepared for 2010. Even though business at Licensing International in Vegas in June appeared to be healthy, many licensees were holding back. BLE represents an opportunity for them to play catch-up with the confidence that 2010 will be less turbulent.”

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TV KIDS

Clearly, one of the most important experiences, if not the most important experience for young people, is television and the associated online and multiplescreen viewing that they engage in.We wanted to find a partner that felt the same way and could help us propel our strategy forward, to take advantage of the vast array of brands that Hasbro has and bring those experiences to consumers in a broad and deep way.

TV KIDS: And you found that partner with Discovery.

GOLDNER: Exactly. David Zaslav [Discovery’s presi-

dent and CEO] is a tremendous partner whose team is top notch.They have incredible reach with more than a billion subscribers worldwide. Hasbro has a similar reach, albeit in a more traditional way with toys and games.Yet every one of the consumers that experiences our brands is very interested in and actually seeks out those brands in other formats—whether it’s digital gaming, television, motion pictures, or in new and innovative toys and games and retail experiences.

TV KIDS: My 11-year-old just downloaded Scrabble

onto her iPod touch!

The Power of Play

Hasbro’s Brian Goldner Nearly everyone is familiar with Monopoly, Twister and Transformers—all popular brands from Hasbro. Not everyone knows that Hasbro, today a leader in the toy industry, was founded in 1923 by the brothers Henry and Helal Hassenfeld as a textile company. It then expanded into pencils, school supplies and doctor kits, its first toys.

Before long it had provided children around the world with Mr. Potato Head, G.I. Joe and My Little Pony. It then acquired The Milton Bradley Company and Playskool and branched out into movies and television. Hasbro’s president and CEO, Brian Goldner, who is giving a keynote address at MIPCOM, wants to make sure the company is reaching children across all platforms.

By Anna Carugati

TV KIDS: Earlier this year you announced a jointventure channel with Discovery Communications.

Why was this such an important step for Hasbro?

GOLDNER: First, to provide some context, Hasbro has an amazing array of brands that have been enjoyed by generations the world over.And as consumers seek out ways to experience those brands on multiple platforms, any time and anywhere they want, we felt the need to provide those experiences to consumers.

GOLDNER: That’s it and here is what’s so nice about

that. Our teams are not taking the Scrabble board game and [transposing it] to an iPhone or to an online space or to a television series.That’s not it at all.These brands have such a clear essence, and consumers really understand how to play them and enjoy them, that they are willing to have multiple experiences around the core essence of those brands. Scrabble on the iPod touch is not the same experience as taunting each other over the board game!

TV KIDS: But the traditional board game remains popular, too.

GOLDNER: “Play” is such an important word for our company, for our brands and really for the future of society. As the world gets more challenging, people are seeking out these wonderful play experiences, and who better to provide them than a company with hundreds and hundreds of brands that have been enjoyed by consumers. And these are good-for-you brands. They have taught young people about math and negotiating with real estate in Monopoly, and about word games with Boggle and Scrabble, and about good versus evil with Transformers, which teaches kids great lessons about heroes. So we feel that we come at this from a really good place.We’ve been very careful to be great brand stewards for so many generations; we wouldn’t do anything going forward that wouldn’t be consistent with [the quality of these brands].

TV KIDS: What is your strategy for Hasbro Studios and how much output do you expect each year?

TV KIDS

GOLDNER: Certainly in the first couple of years we will have to provide an array of programming to our network domestically, but also create enough of a pipeline of properties for the international market.

Initially we will develop dozens of shows and produce at least ten. And they might not all be Hasbro shows, in fact, we are talking to a number of creative studios about other great brands and ideas, but they will be predominantly [based on] Hasbro brands. That would represent roughly five to eight hours a day of original programming over two to four years.

It really comes down to great characters and great stories around our brands. If we can tell those stories as imaginatively as we have done in the motion-picture business and in TV historically, we’ll be in a very good position.

TV KIDS: How important are international markets?

GOLDNER: They are critical.They represent the fastest

growth for our company across every platform. In just the last 12 months, we’ve opened offices with our own marketing and sales personnel in Brazil, the Czech Republic, Russia, Poland and China. We are opening offices either this year or next in Romania and we will continue to put our own Hasbro personnel on the ground to ensure that the brand stories we are telling are being fully executed in each market around the world.

TV KIDS: Hasbro’s financial performance has been

good despite the poor economy. What have been some of the brands that have helped you in these tough times?

GOLDNER: First I would say it’s a tremendous expertise across our team that has really enabled us to do well.

It is a true lesson in everyone pulling together in the same direction. Having said that, over the last couple years we have reorganized the company around brands rather than around categories of manufacturing, and there are some global core brands that we have identified, such as Transformers, Littlest Pet Shop, Monopoly, My Little Pony and Magic:The Gathering. Nerf and FurReal Friends and Baby Alive are growing brands within the company.

Our girls’ business has grown tremendously; our boys’ business continues to be a leader with Transformers and G.I. Joe and other brands. And we are really starting to reimagine our games business. Making a strategic alliance with Electronic Arts contributed significantly to our results, as did the motion-picture business, which allows us to participate in all kinds of consumer products as a result of telling a new story in movies. All of

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that reimagination allows us to be compensated fairly, and our shareholders to be compensated for the value of our brands.

TV KIDS: It’s challenging to engage our multitasking

kids these days—they are everywhere simultaneously!

GOLDNER: It’s really true. It’s an interesting fact that

young people today consume 8.3 hours of media in just over 6 hours. This is what I refer to as children “bending time”—by enjoying multiple experiences with brands at once and they are moving very fast.

There are truly no barriers to movement across these platforms. In fact, most of the time, young people are the ones bringing new technologies into the home and teaching the rest of us how to use them.We have to recognize that young people are digitally native, that they are actually the early adopters and they are much more articulate about the brands that they enjoy and it would be a serious misstep if we were not providing them great experiences for our brands across platforms.

Power punch: Transformers is among Hasbro’s most lucrative brands.

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PROPERTY PROFILE

Chuggington ORIGIN: The series is based on an original idea.

DISTRIBUTOR: Ludorum CREATOR: Ludorum EXECUTIVE PRODUCERS: Charlie Caminada, Rob Lawes, Dick Rothkopf and Don Toht DIRECTOR: Sarah Ball COMMISSIONING BROADCASTER: CBeebies TV SHOW: There are 78 10-minute episodes in total.The

second season, of 26 10-minute episodes, is launching at MIPCOM. It is currently in production and will be available for broadcast in the summer of 2010.The series is produced in 3-D CGI animation and targets preschoolers.

DESCRIPTION: Chuggington II is a follow up to the original series and expands on the strong themes of adventure, humor and life lessons established in series one.

The second series sees the introduction of brand-new characters, including Hoot n Toot, a brother and sister ‘push-me-pull-me’ engine. Hoot n Toot join trainees Wilson, Brewster and Koko as they learn to ride the rails.

Chuggington fans can also look forward to meeting one of the fastest steam trains created when Speedy joins the Chuggington cast. Chuggington II also introduces new wagons and rolling stock, including snow ploughs and a rubbish wagon, as well as brand-new machines. The excitement and adventure of urban life is a central theme as viewers are introduced to the city of Chuggington.The Chuggers must negotiate their way through city rails, which are woven and incorporated into every building and even the underground.

TV SALES: Chuggington has already been sold to more than

165 countries around the world.A major all-rights agreement was announced in March to license Chuggington to Fuji Television in Japan. Other key territories, in addition to the U.K.with CBeebies,include the U.S.(Disney Channel’s Playhouse Disney block), Germany (SUPER RTL), France (TF1), Australia (ABC) and Canada (Treehouse).

MAJOR TOY LICENSEE: Chuggington licensed product

will be available from spring 2010. RC2/Learning Curve holds the global master toy license.

OTHER PRODUCTS: Parragon has been appointed as a long-term publishing partner in all English-speaking territories (except the U.S. and Canada) and in Germany, Scandinavia and Benelux. Chuggington’s first DVD release, Let’s Ride the Rails, was released by 2Entertain in the U.K. in March and is the number one selling preschool title of the year so far.Two further titles will be released in the U.K. this fall. In the U.K., there are more than 25 licensees covering all key product categories.The major licensed product international rollout begins in the spring of 2010.

STRATEGY FOR ROLLOUT: “Our strategy has been to create a series which has a first-class creative execution, raising the bar in every aspect and standing out in an otherwise highly competitive marketplace,” says Charlie Caminada, the COO of Ludorum. “By doing so, Chuggington has attracted the attention of leading broadcasters, consumer-products partners, home-entertainment and multimedia partners in key markets around the world. The strategy has always been to build a long-term franchise and that means getting the creative right and only working with first-class partners such as, for example, our licensees, whose own strengths in design, retail and marketing are second to none.”