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Kidult Spending Power Tipped to Shift Focus of Licensed Toys Sector

Given they have way more disposable income than most children, kidults – toy-loving adults – could trigger a major change in strategy for many businesses active in the licensed property market, as well as in the wider games sector.

Photo: Godzilla: King of the Monsters and also fairly highly-ranked in the world of licensed merchandising.
Godzilla: King of the Monsters and also fairly highly-ranked in the world of licensed merchandising.
Photo: Godzilla: King of the Monsters and also fairly highly-ranked in the world of licensed merchandising.
Godzilla: King of the Monsters and also fairly highly-ranked in the world of licensed merchandising.

Increased purchasing on the part of kidults – adults who buy toys as opposed to buyers of adult toys – was one of most widely-discussed issues at this year's Licensing Expo, with the growing influence of social media commentators another development that preoccupied exhibitors at this annual Las Vegas event. It was also widely acknowledged that, while passing fads grab the industry headlines – Feisty Pets supplanting Grumpy Cats as this year's must-haves, for instance – it's still the well-established brand-owners that are making the royalty-derived big bucks.

Overall, in 2017, the global licensing business grew by 3.3%, reaching a total value of US$271.6 billion, according to the Global Licensing Industry Survey, an annual review commissioned by the International Licensing Industry Merchandisers' Association (LIMA). In the same year, the royalties accruing from licensed merchandise and branded services rose by 2.6% to a total of $14.5 billion. In two somewhat less surprising findings, the US remained the largest market for brand-licensed products, while Disney, the multi-headed Californian cross-media and character property giant, continued to be the largest licensor.

While it's Disney and its fellow megabeasts that continue to dominate the sector, there are also signs of significant growth in several niches, including art and publishing. In addition, there has also been robust expansion in the music and celebrity-associated sectors, areas where online opinion-leaders have made a particular impact.

Merch Collab

At the show, though, it was still the industry giants that were grabbing the most attention, not least Amazon, with the world's favourite online shopping site choosing to use the event as the launch pad for its new Merch Collab service. Introducing this new facility, Nicholas Dennison, the company's Vice-president, said: "We believe this is something that will maximise choice and cut product development time, while bringing together brands and more than 150 artists to create licensed products for exclusive sale via Amazon".

More specifically, according to his presentation, Merch Collab will allow brand-owners and retailers to draft style guidelines, based on which Amazon's chosen creatives will then submit ideas for approval. In the best case scenario, this could see a new product go on sale online just an hour after the brand-owners and gatekeepers had given it the okay.

One brand-owner to welcome this new service was Veronica Hart, Senior Vice President of Consumer Products for CBS, the US TV network that counts Star Trek and Twin Peaks as two of its most-licensable assets. Emphasising the importance of being quick to market, she said: "For brand owners, the importance of Merch Collab is that it allows us to monetise at the very peak of any property's popularity."

Bird Brainwaves and Lolly Lolly

While new technology and emerging trends have both proved powerful growth-drivers, many at the show were still firm believers that there is still far more to be mined from a number of old favourites. Indeed, nostalgia is currently big business in the licensing and merchandising arena, with Mickey and Minnie Mouse turning 90, Tetris celebrating its 35th year and even Angry Birds, a relative newcomer, heading for its 10th anniversary.

In the latter instance, Simo Hamalainen, Senior Licensing Vice-president for Rovio, the Finnish company behind the Angry Birds brand, believed the franchise still had much to offer as it continued to expand well beyond its original video game base. Looking to the future, he said: "Right now, we're in a very good place and we have the strongest content roadmap we've ever had. We're currently preparing for next year's Angry Birds 2 movie, planning a long-form animated series, new games and even an unscripted TV show."

Photo: They’re birds. They’re angry. And they’re back in cinemas.
They're birds. They're angry. And they're back in cinemas.
Photo: They’re birds. They’re angry. And they’re back in cinemas.
They're birds. They're angry. And they're back in cinemas.
Photo: Chupa Chups’ brand diversification is pants.
Chupa Chups' brand diversification is pants.
Photo: Chupa Chups’ brand diversification is pants.
Chupa Chups' brand diversification is pants.

Similarly rejuvenating itself as a key anniversary approaches was nearly 60-year-old Chupa Chups, with the venerable confectionery brand announcing a slew of new deals at the show, including ventures into onesies, scented candles and doughnuts. Emphasising the importance of diversification, Marta Ballestros, Licensing Manager for Parfetti van Melle, Chupa Chups Milan-based brand-owner, said: "We feel that there're still many opportunities to transfer the essence of the Chupa Chups brand into other sectors, areas where we can add credibility and boost innovation."

Slightly older, a lot larger and considerably tougher on the digestive system, Godzilla – the giant, Japanese sea monster – turns 64 this year, with Toho, its Tokyo-based brand-owner, looking to expand its licensing program and demographic reach prior to next year's cinematic release of Godzilla, King of the Monsters.

Explaining his company's current approach to the brand, Keiji Ota – who rejoices in the title of Toho's Chief Godzilla Officer – said: "Globally, we aim to offer products that hit multiple price points, from mass-market toys and novelties to larger, higher quality figurines and collectibles, while ensuring that we work with the major retailers around the world to maintain global distribution. A key part of our strategy will also see Godzilla highly-visible in the run-up to the 2020 Tokyo Olympic Games."

Bigger Kids, Larger Spend

Given its assured place in the nostalgia landscape, Godzilla-related merchandise will have a clear appeal to the ever-growing number of kidults. Overall, this sector of the market grew by 8% last year, according to research conducted by the New York-headquartered NPD Group. Its findings also showed that millennials (those born in the period 1977-95) accounted for almost half the spend in this category, while Generation X (1965-76) spent 28% and Boomers (1946-64) 24%.

The emergence of this particular purchasing demographic was directly addressed during one of the event's many seminars – The Shape of Toy Retailing in a Changed World. Outlining its significance, panel member Stephanie Wissink, the Managing Director of Jefferies, a New York-based investment bank, said: "Potentially, this phenomenon has wide-ranging implications, with the greater spending power of adults set to shift the emphasis of the whole industry."

Drilling down into this new demographic, Frederique Tutt, NPD's Global Industry Analyst for the toys sector, said: "Adults are not only buying games and drones, but also collectables, especially those relating to a number of pop culture icons. Rather than this representing a nostalgic trend, I believe it is more a way of escaping from everyday stress.

"Those manufacturers and retailers that can meet the evolving needs of these particular purchasers should be assured of sustained growth in what is, otherwise, a hugely-competitive sector. This is equally true whether the brand in question has a strong nostalgia appeal or whether it is more of a contemporary pop-culture icon."

Photo: The 2018 Licensing Expo: Even the queue for the loo is far from dull.
The 2018 Licensing Expo: Even the queue for the loo is far from dull.
Photo: The 2018 Licensing Expo: Even the queue for the loo is far from dull.
The 2018 Licensing Expo: Even the queue for the loo is far from dull.

The 2018 Licensing Expo took place from 22-24 May at Las Vegas' Mandalay Bay Convention Center. The event attracted more than 20,000 visitors.

Anna Huddleston, Special Correspondent, Las Vegas

Content provided by Picture: HKTDC Research
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