Licensing

Merchandise sold in France originating from licenses totally just over €3.4Bn last year, accounting for about a sixth of all consumer spend. This is comparable to the UK market (estimated at £2Bn by NPD License Tracker) but above that of Germany. French consumers are susceptible to licensed products and, despite the stereotypes, are open to commercial innovation using well known images and personages. After all, the French are the largest consumers of Disney Merchandise in Europe. Like elsewhere in Europe, licensing is dominated by consumer products, with clothes top of the list followed closely by toys, video-games and sporting goods.

Any licensing deal is only as good as the contract establishing it. Even after finding the “right” licensor, deals must be detailed and clear in order to work in the long term with established reporting channels. We would recommend working closely with legal specialists to help set up the licensing agreement and regular, annual, audits of both the licensees’ books and an examination of the royalties to make sure the licensing agreement is adhered to.

Note: there is an annual Licensing Forum held in Paris (the 3rd one is on 16 May 2006). Contact us for more details.

The Football World Cup is the prime sporting event of 2006, watched by up to a quarter of the world’s population. Since the 1998 World Cup, the “business” of football has taken off and licensed merchandise now represents billions of Euros. In 1998, the World Cup spun off 300 licensees and 450 licensed products, generating $1.2Bn in retail sales. The figures for 2002 were similar (280 licensees, 500 products and $1.5Bn in sales). This year should follow a similar pattern.

FIFA announced that for the 2006 Cup, it expects to generate turnover of €1.7Bn with TV rights alone representing €1.2Bn. The remaining €500m is expected from the 15 fifteen official partners. These figures do not take into account revenue generated by the 6 official suppliers, nor the various licenses.

The toys and games market in France totalled €1.79Bn last year after boasting a 6.2% increase in value (+10.5% in volume). This admirable growth was largely driven by licensing. In 2005, licensed products accounted for 25% of all toys sold in France. Demand for licensed toys was driven by major film releases (‘Star Wars lll’, ‘Batman Begins’…) and by manufacturers apparently widening and diversifying their product range. Top of the licensed toy range were old favourites WInnie the Pooh, Dora the Explorer, Star Wars, Batman and Noddy, according to NPD Licensing Tracker.

Last year benefited from a range of new product launches. New technologies and greater electronics continued to dominate toy and game innovation and electronic games continued to be the market segment leader. However, according to French retail monitor LSA, the strongest growth was posted by the construction and figurine/universe segments.

Hypermarkets continued to lead in the sales of toys and games although specialist retailers are narrowing the gap. The two distribution channels are also pursuing opposite strategies. The promotional sale campaigns undertaken by the hypermarkets resulted in an average 7.5% drop in prices, according to LSA, but a subsequent +13.5% jump in volume. In contrast, the specialist retailers raised their prices by an average of 3.4%. The number of specialist toy outlets also continues to mushroom, with an additional 400 outlets added in 2005. In total, specialist toy retailers saw an average 4.3% decline in volume but an 8.2% increase in value sales last year.

Licensors can expect to see a variety of The Little Prince merchandise as he celebrates his 60th birthday this year. A full-length animated film is also in the pipeline. Babar the Elephant should also be heavily represented in the toy and games sector in 2006-07 as he celebrates his 75th birthday.