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Character Sale

Jun 9, 2003  •  Post A Comment

In a reversal of the typical strategy used to create merchandise based on its characters, Nickelodeon plans to sell products based on a character not from a television series but from a video game.
The cable channel at this week’s Licensing Show in New York will introduce product licensees to Tak, the main character from the video game Tak and the Power of JuJu, who Nickelodeon officials hope will follow “Rugrats” and “SpongeBob SquarePants” to become their next superstar.
The game, which comes out later this year, is the first product released under Nickelodeon’s partnership with game development company THQ. Tak is a young shaman’s apprentice in ancient times who does battle with an evil sorcerer bent on destroying Tak’s village. Nickelodeon officials say plans are under way to develop a television series based on the video game.
The decision to license merchandise based on a video game character rather than waiting until Tak’s television debut reflects the evolving tastes of children, said Leigh Anne Brodsky, Nickelodeon’s senior VP of consumer products.
“For the last several years, we’ve done a lot of research with kids, and the thing that continued to grow and pop up next to TV was gaming,” Ms. Brodsky said. She is betting that a strong response from the gaming community combined with youngsters’ interest in video games will translate into strong sales. “The smart strategy is that if you have a pre-sold audience and you have knowledge there is a need for the product, chances are you will have better sell-through,” she said.
Such thinking reflects the licensing world’s new reality: Brand recognition alone is not enough to guarantee strong sales.
Indeed, with the economy limping along and thousands of products competing for limited space on the shelves of retailers, licensors such as Nickelodeon are pulling out the stops to come up with the next hot product that can cut through the clutter, licensors and licensees said.
The stakes are huge. Revenue from merchandising sales has become a major contributor to the bottom lines of the networks’ corporate parents. At Nickelodeon, for example, Nick Enterprises, which includes the cable channel’s consumer products unit, generated $2.6 billion in retail sales in 2002.
What’s more, as retailers become more sophisticated in their analysis of things like sales-per-square-foot, they are holding merchandisers’ feet to the fire and are quick to remove from the shelves products that aren’t working.
“I think it’s symbolic and indicative of a whole sea change,” said Richard Collins, CEO of Big Tent Entertainment, which owns among its stable of TV series “Miffy & Friends” on the Noggin channel. “There are not a lot of licenses that are cutting it at retail. This has been a long time coming but as the economy has slowed, it has precipitated the [question], `Do we need all these licenses?”’
Owning the product and the distribution has proved to be challenging as well. Two years ago, Warner Bros. shut down its domestic retail chain following lagging sales. The Walt Disney Co. now is exploring either closing its stores or selling them to a third party due to poor performance.
`Cohesive Scenes’
For its part, Warner Bros. learned a lot through its retailing experience, despite closing the stores, said Karen McTier, executive VP of domestic licensing. “The studios were a great showcase for our brands and really helped to highlight what could be possible by putting together cohesive scenes and a great shopping experience,” she said. “I miss it for that.”
Disney officials did not return calls for comment.
In many ways, the new retailing reality reflects an increasingly savvy customer with an attention span that is shorter than ever. “Mickey Mouse is well and good if you are 30, but it is not very meaningful to a 10- or 14-year-old,” said George Whalin, president of Retail Management Consulting, which provides retail analysis. “The lifetime interest in some of these characters is much shorter today than it was at one time.”
While Mickey, Minnie, Goofy and friends will continue to delight generations of little children, especially those caught up in the theme parks or watching the cartoons, the market clearly has changed. Kids today, even at a young age, are raised on TV and want more edge in the characters, according to Fred R. Paprin, principal of The Wildflower Group, which holds the license to the ’80s sitcom creature Alf. “Today’s kid is hipper and getting older younger,” Mr. Paprin said. “Brands and fashion sensibilities mean more today.”
These new market conditions remind licensing industry players of the importance of introducing products that resonate with the target audience. Discovery Communications has found success by merchandising products based on the successful TV series “Monster Garage” and “Trading Spaces,” both of which have books tied to the series coming out in November.
“Both are high-profile and successful brands on TV, so from a licensing standpoint it makes our job easier when we are able to translate those properties into merchandise,” said Sharon Markowitz Bennett, senior VP of strategic partnerships and licensing for Discovery’s consumer products division.
Experts also say there’s a greater need than ever for licensors, licensees, manufacturers and retailers to become partners from the moment an idea is conceived to when it is placed on the shelf. “If you get too precious with your own brand you lose touch with the [customer],” said Warner Bros.’ Ms. McTier. “You have to align yourself with your partners and choose licensees that know what is happening at retail. We rely on their expertise.”