Licensed Merchandise Sales Hit $262.9B in 2016, Boosted by 'Star Wars'

Daisy Ridley with 'Star Wars' toy - P 2017
Courtesy of LIMA

Global retail sales rose 4.4 percent as entertainment and character licensing — also helped by 'Batman v. Superman,' 'Trolls,' and 'Paw Patrol' — continued to lead while offers for women became a bigger focus.

Global retail sales of licensed merchandise rose 4.4 percent to $262.9 billion in 2016 — up from $251.7 billion the previous year — according to the third annual Licensing Industry Merchandiser's Association's Licensing Industry Market Sizing Study.

The organization said results were fueled by movie-based merchandise from the likes of Star Wars, TrollsBatman v. Superman: Dawn of Justice and Finding Dory, as well as Nickelodeon's Paw Patrol and Pokemon.

The results of the survey, produced for LIMA by Brandar Consulting, was released ahead of the Licensing Expo, which kicks off in Las Vegas on Tuesday.

Entertainment/character licensing overall remained the top licensing property type, accounting for $118.3 billion, up 4.5 percent from 2015, and contributing 45 percent of global sales of licensed products at retail, the same share as in 2015 when the amount had reached $113.2 billion.

"One of the drivers of this growth is movie tie-ins," said Marty Brochstein, senior vp industry relations and information at LIMA. "In 2015, Star Wars was really a fourth-quarter phenomenon, while last year it had a full year while bridging The Force Awakens and Rogue One."

According to research firm NPD Group, Star Wars was the largest property for the toy business last year. LIMA doesn’t measure individual properties, but Star Wars did very well in a wide range of merchandise categories, according to Brochstein

Asked about unexpected licensing hits of 2016, he said: "Each year there are also surprises that drive the market, like Frozen did when it launched. Last year's surprise hit was Dreamworks/Universal's Trolls. The combination of a good movie and really strong marketing made this one of the bigger launches of the year." 

What about entertainment hits outside of film? LIMA mentioned Nickelodeon's Paw Patrol as one of the TV successes in licensing.

And it isn't only movies and TV that drive entertainment. "The launch of Pokemon Go was a global phenomenon," said Brochstein. "While there wasn't much licensing directly with the game, the excitement helped Pokemon products across the board and made it one of the stories of the year." He added: "I think that the mania surrounding Pokemon Go took everyone by surprise, and that translated into vastly increased business for all things Pokemon."

An increased focus on women is also a licensing business trend that came more into focus last year. "There’s definitely more attention being paid to, and product being developed for, females of all ages," Brochstein noted in discussing licensing business trends. "Female empowerment has become such a big driver in today's society and that has led to some very exciting growth opportunities. Even though Star Wars is leading the way in this area with Rey, candidly, the property probably would have done just as well. However, we are seeing this way beyond Star Wars with Wonder WomanDC Super Hero Girls, innovative preschool television programs and much more."

Behind entertainment/character licensing, corporate trademarks came in second again with $54.6 billion, up from $52.8 billion. That accounted for 20.8 percent of the total. Fashion with $31.1 billion, or 11.8 percent, and sports with $25.3 billion, or 9.6 percent, down from 9.9 percent, followed.

Among product categories, apparel led the way with 14.9 percent of total global licensed retail sales, followed by toys and fashion accessories.

The $262.9 billion in worldwide sales in licensed merchandise in 2016 translated to $14.1 billion in royalties, up 1.3 percent. The growth was driven by higher retail sales, partially offset by a 3.5 percent decrease in the weighted average industry royalty rate from 8.5 percent to 8.2 percent, according to LIMA.

"The 2017 survey reinforces the positive momentum of licensed products worldwide and across all categories, especially the large and growing entertainment/character sector," said LIMA president Charles Riotto. "This year’s results also speak to the impressive reach and strength of licensing initiatives in growth markets around the world, contributing to the continued vitality of the industry."

The U.S./Canada remains the largest market for licensed merchandise and services, with revenue accounting for 57.9 percent of the global total, up slightly from 57.7 percent in 2015. The Southeast Asia and Pacific region was the fastest-growing of all areas worldwide, with 6.8 percent growth that saw it reach 3.4 percent of global licensing revenue.

Brochstein said that studios' tentpole strategies are also affecting the licensing business. Brochstein noted "how good companies have become at 'eventizing' their consumer products along with the content." He explained: "Disney's Force Friday was a driver in this area, but we are seeing it happen across the board."

For example, Hasbro is launching its first Hasbro Con later this year, Transformers just had Transformers Week, and Wonder Woman Day is coming up on June 3. Said Brochstein: "All of these events are big drivers of merchandise."