Is it that simple?

Brand-product partnerships have been a cornerstone of marketing strategy for many years, leveraging strong brand recognition to enhance product appeal. This practice, known as licensing, has grown into a global industry now valued at over $356bn and covers Gaming, Social Media, Music, Fashion, Sports, Toys (which has seen a decline as companies and consumers shift their focus to digital) and much more. Its primary function remains twofold: boosting sales and generating additional revenue for both the brand owner and the licensee.

Throughout this year, we’ve engaged in discussions with publishing industry leaders to gain valuable insights into the evolving challenges they face and their adaptive strategies. A clear trend has emerged from these conversations: the era of simple, regionally confined licensing agreements is largely over. Before we get into why, let’s look at a few statistics from Licensing International’s 2024 Global Licensing Industry Study, to get a sense of just how large the segments of the industry are, for some context:

The study found that:

• The Entertainment/Characters segment grew 6.9% to reach $147.6 billion in revenue. In this segment, Anime, Video Games, and Social Media accounted for 38% of the licensed revenues in 2023. Recently launched titles, characters, or brands accounted for 22% of the entertainment segment while evergreen titles, characters, or brands accounted for 73%.
• Top performing property categories in 2023 included Music (+16.4%), Fashion (+7.5%), and Sports (+5.6%).
• Top performing licensed product/service categories included Music/Video (+16.3%), Location-Based Entertainment/Themed Attractions (+13.5%) and Video Games (+11.0%).
• The biggest decline in a product category was in the licensed Toy segment, which saw revenue fall -3.5% in 2023. It was clear that beloved brands inspired purchases, however, as the Toys/Games market overall actually declined -4.5%
• The eCommerce retail channel for the licensing industry expanded again in 2023 to reach a 37% share of global licensing sales.
• Several regions reported above market average growth rates in 2023, including North Asia (+9.3%), ME/Africa (+7.5%), South Asia/PAC (+7.4%), and Eastern Europe (+7.1%).

The size and breadth of the industry is significant and (mostly) growing. This has meant the landscape of licensing has undergone a profound transformation, evolving from localized agreements to intricate global partnerships. Our discussions with industry experts have consistently highlighted several key factors driving this evolution:

• Digital Revolution: The advent of e-commerce and digital platforms has revolutionised product marketing and sales channels. This digital shift has necessitated more sophisticated licensing arrangements that seamlessly integrate both online and offline presence.
• Market Globalisation: The increasing interconnectedness of markets has propelled brands to extend their reach internationally. This expansion has fuelled a rise in cross-border licensing agreements, enabling companies to penetrate new markets and diverse consumer bases.
• Global Brand Cohesion: Modern companies prioritise maintaining consistent brand identity across various markets. This focus has led to more comprehensive licensing deals that align with overarching global branding strategies, replacing fragmented regional approaches.
• Heightened IP Awareness: A growing recognition of intellectual property rights has resulted in more nuanced agreements. These contracts now emphasise brand protection and ensure compliance across multiple legal jurisdictions.
• Product Diversification: As brands expand into varied product categories, licensing structures have become more complex. These arrangements now facilitate collaborations with multiple partners across diverse industries.
• Synergistic Marketing: Contemporary licensing often incorporates collaborative marketing initiatives. These joint efforts, spanning multiple regions, add another layer of complexity to licensing agreements.

In essence, licensing has evolved from simple, geographically confined arrangements into multifaceted, strategic alliances that reflect and respond to the intricacies of our modern global marketplace.

In the forthcoming follow-up to this insights piece, we will look at how businesses are adapting to facilitate this change.

Come back soon to discover what we have learned.

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Martin Tripp Associates is a specialist executive search consultancy. We work globally across the media, information, technology, video games and entertainment sectors, and with some of the world’s biggest brands on communications, digital, marketing and technology roles. Feel free to contact us to discuss.