North American Licensing Revenue Drops for Third Year

As the annual Licensing International Expo in Las Vegas kicks off, an industry group reports a 1.9 percent decline in 2010 to $5.07 billion, after an 8.7 percent decrease a year earlier, but cites positive signs.

North American royalties from the sale of licensed merchandise dropped slightly in 2010 to $5.07 billion, the third consecutive year of declines, amid continued weak consumer spending, according to annual data from the International Licensing Industry Merchandisers’ Association (LIMA).

The total licensing revenue haul was down 1.9 percent from $5.17 billion in 2009, which had been the result of an 8.7 percent decline and followed a 5.6 percent decrease in 2008.

Before the three year downward streak, the licensing revenue figure had risen steadily since LIMA started collecting the annual data. This is its 13th annual survey.

LIMA only reports industry figures once a year, but senior vp Marty Brochstein said industry momentum has improved since late last year, even though he wouldn't go as far as promising a rebound to growth this year.

"All of the things being equal, things are heading in the right direction," he said. "This business doesn't exist outside the general realm of business, but it has been coming back a bit. There are some positive indications."

In a statement, LIMA also cited "positive retail results" at the end of last year and survey responses that indicate "a more positive business environment" as reasons for optimism for 2011.

Among key categories, characters - made up of film, TV and other entertainment characters - declined a better-than-average 1 percent to $2.38 billion in royalty revenue and accounted for 47 percent of total licensing revenue.

"Sales of things for kids tend to hold up a bit better amid weak consumer spending," Brochstein explained. Walt Disney's Toy Story 3 was among the properties that did well in this segment.

Music was the only category that reported an improvement in 2010 as it was up 4.5 percent to $115 million in licensing royalty revenue. LIMA said the gain was "a result of strong sales of music merchandising tied to concerts and events, as well as revenue from online and mobile devices."

Brochstein cited Justin Bieber as one of the music acts that have done well in terms of merchandising.

"It used to be that a music tour would support an album release," he explained. "Because of the recorded music weakness, it is reversed now, and management teams are looking to maximize revenue."

Meanwhile, fashion licensing revenue dropped 2.1 percent to $690 million last year, and sports revenue - from merchandise tied to leagues and athletes - declined 2.2 percent to $645 million.

The latest data was released as the LIMA-sponsored Licensing International Expo 2011 in Las Vegas kicked off. "The LIMA 2010 royalty revenues survey underscores our industry’s continuing strength and resilience against a backdrop of unsteady retail sales,” said LIMA president Charles Riotto. "Despite a 1.9 percent decline last year, licensed products clearly hold an appeal for consumers."


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