How Will The Licensing Business Evolve?

As technology impacts more businesses and traditional business models, guessing what the licensing business will look like 10, 20 or 30 years from now is an interesting topic to ponder. If you take movies, music or taxis for example, you see immediately how technology has fundamentally changed these forever. Where you used to purchased DVDs and CDs in a retail store in a physical format, you now stream it all via Netflix and Spotify. Where you used to call an operator to book a taxi and then wait, you now simply book an Uber from your iPhone with a wait time of literally minutes and you can see the progress in real time. These things will never go back to the way they were thanks to technology. Esports is another development, as a result of technology, which has the potential to affect actual physical sports as well. It costs an extraordinary amount of money to run a car racing team but it costs very little to race those same cars in a simulator with players from all around the world, and people now pay to buy tickets and watch them race in sports arenas!

Reviewing the statistics from 2015 through to 2021 in relation to e-commerce and how much it accounts to total global retail sales is interesting, as it does not seem to be as dramatic as you may think. E-commerce accounted for a 7.4% share of total global retail sales in 2015 and is projected to increase to 17.5% by 20211. That equates to 10% of growth over a 6 year period, which as a stand alone figure does not seem as extreme as the effect it has had on traditional bricks-and-mortar stores. For example, Big W announced in April that they would close 30 stores in Australia to make sure they remained in business2. It is probably a case of getting ahead of the trend and addressing these things before they become a major problem. I am sure that Blockbuster thought that streaming movies would impact the business but not completely eliminate it. You can still buy DVDs (think JB HI-FI) but the majority of these sales are by enthusiasts who collect movies, the general population chooses to stream with physical sales of DVDs declining by 48% since 20143.

If we look at the licensing business it is a little different, with The Annual Global Licensing Survey (by Licensing International) reporting a 3.2 percent increase (US $280.3 Billion) in global retail sales of licensed products over the previous year. The interesting observation here is that the major growth in licensing is coming from corporate brands, fashion and sports. If we look even further it is clear that new and innovative ways of licensing intellectual property are emerging, such evidence can be found by looking at clip licensing and the value it brings to both the brand owner and the client. We are also seeing different applications of licensing in areas such as hotels, sports teams and live events with the Peanuts Hotel in Japan, the Thor (Marvel) inspired guernseys worn by the Western Bulldogs in round one of the ALF season and the upcoming Sesame Street Circus Spectacular by Silvers. There are clearly many opportunities in the market but many of them are now emerging from non-traditional licensing opportunities.

So what will the licensing industry look like in the future? Who knows? Traditional products will still exist but I suspect a lot more collaborations will be seen (think KAWS X Sesame Street) and more and more nostalgic references will be seen as well (think Matchcourt High Remix Beavis & Butthead Shoes). One thing that is for certain is that it will be impacted significantly by technology and the products and services that can be offered outside of traditional character and entertainment licensing deals. Corporate brands and fashion are certainly two areas where significant opportunities are becoming realised and seeing how it plays out in the age of YouTube, streaming content, social media and the internet will be fascinating.

Article written by Matthew Bugg for The Bugg Report and originally appeared as a Friday Feature article here.