LICENSING SHOW 2012 46 May/June 2012 Big bets Launching a licensing program is always a gamble. Despite the research, time and effort that goes into building a modern brand plan, no licensor can say it has mastered the art of creating sure-fi re retail hits. But they keep trying. This year, we’re taking an in-depth look at three high-rollers bound for Vegas. BY GARY RUSAK
It’s impossible to predict with unerring accuracy what property will strike a chord with its targeted demo. After all, consumers are the ultimate arbiters of what IPs win and lose after they enter the retail market. And for all the carefully cultivated winners, how many surprise hits (Angry Birds) and unexpected misses like 2009’s boys IP Chaotic have popped up on the licensing landscape in the past decade? Ultimately, licensors and their partners have to chant, “No snake eyes,” roll the dice, and hope for the best. Appropriately for this high-risk business, its predominate annual get-together takes place in Las Vegas, a desert oasis built upon the proceeds of countless lost wagers. At Licensing Show this year in the hotly contested boys action space, it looks like licensors and licensees— which, in the case of the all-important toy category, are increasingly one in the same—are making fewer but much larger bets than they have in the past. We’re going to take a look at three of the big ones set to take over the show fl oor this year, assess their strategies and get analysts to weigh in on just what’s at stake. Jakks Pacifi c is rolling the dice on its fi rst homegrown IP, Monsuno The insurgent: Monsuno The value of new boys action IP Monsuno to Malibu, California-based toyco Jakks Pacifi c cannot be overstated. The company has been fi ghting an uphill battle to ward off aggressive takeover bids for more than two years. And while buoyed by a good long-term and lucrative licensing relationship with Disney, it seems that the toymaker needs more to survive in its current form. “I think over time, a toy company learns that the value from producing toys sits with the license holder,” says Edward Woo, senior research analyst for the Irvine, Californiabased Ascendiant Capital Markets who covers the industry. “When you see that you are writing a check to a licensor every month, it hurts.” Woo explains that all licensees need to protect themselves from the sudden loss of big moneymaking licenses— witness the turmoil faced by Oak Brook, Illinois-based RC2 upon losing the rights to Thomas the Tank Engine wooden toys when Mattel acquired the property’s owner Hit Entertainment at the beginning of the year. “No one wants to wake up one morning and fi nd out that you won’t be able to sell your biggest hit anymore,” Woo contends. With this climate in mind, Jakks endeavored to develop its own multi-platform property, with all the associated risks and potential rewards, for the fi rst time in 2009. And it has high hopes for the resulting Monsuno—the company is hungry to harvest the spoils of a homegrown hit. “Jakks is in a fi ght for its life right now,” states Gerrick Johnson, a BMO Capital Market analyst who tracks the toy industry, referencing the fallout of a stale takeover bid made just last September by L.A.-based venture capital fi rm Oaktree Investments. “It hasn’t had a big property in a long time,” he adds. “This is defi nitely something it’s looking forward to turn around.” Three years ago, the upper brass at Jakks gave EVP Jeremy Padawer, who would become co-inventor, co-creator and executive producer of Monsuno and its related TV series, a mandate to expand the company’s IP holdings beyond toy-only brands like Spynet. After an exhaustive search, he discovered the toy tech that spurred the creation of the entire IP. “It was inspiring,” says Padawer, describing the mechanism that drives the toys and forms the heart of the play pattern for Monsuno. In short, the spinning toys call to mind a combination of Bakugan, Beyblade and Pokémon. Players are in competition with each other through opposing spinning fi gures. When the spinners collide, a fully articulated fi gure emerges. A variety of gameplay relates to the TV series that is derived from the simple concept. “We worked from there to create the shorts treatment and develop the story and mythology,” he adds. Armed with the concept, Jakks entered into a partnership with three other companies to handle categories outside its core toy expertise. So Japan and L.A.-based Denstu May/June 2012 47
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