Property Damage: Licensing Industry Feels the Gloom, Too

Politicians stumping for high office aren’t the only ones talking about the sluggish economy, through-the-roof gas prices and the mortgage meltdown. It’s top-of-mind with property owners and their licensing partners as the annual Licensing International Expo (better known as the Licensing Show) opens this week in New York before its cross-country move to Las Vegas next summer.

The toy business, thought to be somewhat recession-proof, has been hit by higher costs for essential materials, manufacturing and shipping, along with recalls that continue to take a bite out of marketers’ revenues. Consumer spending is down, especially for discretionary items, and retailers are more cautious than ever about taking risks on licensed goods, often preferring their own private label products. (As a result, the International Licensing Industry Merchandisers Assn. is reporting that manufacturers in North America paid $5.98 billion for rights and royalties in 2007, which was down slightly from the previous year.)

That makes shelf space even tougher to come by than usual, said licensing industry executives.

“Buyers are being careful and making decisions later,” said Leigh Anne Brodsky, president of Nickelodeon & Viacom Consumer Products. “They still have to bring consumers something new, and they’re looking for partners to bring excitement to create that retailtainment.”

The environment has caused her team to “redouble our efforts” to get in front of retailers more often to tout events like SpongeBob SquarePants’ 10th anniversary, and Dora the Explorer’s live action movie set for 2010. They’re also customizing their approach to each retail chain, offering exclusive product and tailored ideas aimed at making them stand out, an approach that many property owners said they’re taking these days.

The current environment necessitates that a lot more thought go into each stage of licensing.

“If people are going to buy one toy instead of five, I have to figure out how to be the one,” said Christina Miller, vp-consumer products at Cartoon Network Enterprises, where the focus will be on Ben 10: Alien Force and the channel’s other boy-skewing properties. “The product, the marketing, the price