Spring 2011 by The Licensing Book

Spring 2011

LICENSINGBOOK THE

BUILDING BUSINESS THROUGH PARTNERSHIPS

APPS ARRIVE! E

Our annual Tribute to Entertainment

An up-close look at video games

TVâ&#x20AC;&#x2122;s best with HBO, CBS, and A&E

Is being crazy good for licensing?

DEPARTMENTS 6

Publisherʼs Point

Stat•Shot

TOP VIDEO GAME PROPERTIES 2010 B ASED

PUBLISHER

Halo R/C from NKOK

Hot Shots/An Interview With... Michael Acton Smith, Mind Candy Six years ago, Michael Acton Smith’s round-the-world Perplex City game got plenty of press, but no revenue. He started over with an online world for his Moshi Monsters, which have blown up in popularity in the United Kingdom. With a consumer products program on its way to the states, The Licensing Book talks to the man who’s leading the charge to build a “Facebook for kids.” By Mackenzie Allison Ralph Waldo Emerson once wrote: "The key to every man is his thoughts... He can only be reformed by showing him a new idea which commands his own." This quote easily translates to the digital age. With the Internet, new ideas are effortlessly relayed to people on a daily basis. Some ideas flourish while others quickly fade. Michael Acton Smith, the founder of Mind Candy, the company behind the kid-centric website Moshi Monsters, knows both sides of the equation. With millions of users in more than 200 countries, Moshi Monsters, aimed at the 6- to 11-year-old pre-Facebook crowd, is a success, but Acton Smith took his fair share of hits before coming up with this great idea.

TLB: What gave you the idea to create a kid-centric website? Acton Smith: I'm quite a playful person and thought it would be a lot of fun. I had created a business called Mind Candy and we launched one game that didn't do so well, we had a little bit of money left in the bank and one last chance for a final role of the dice. I had seen how much kids loved technology and how much time they were spending online, which created this huge growth area that I didn't think had many properties featured well for kids. TLB: Since this is being marketed as a Facebook for kids, what measures are you taking to make it a safe environment? Acton Smith: We have almost 40 million registered users on the site, so it is a responsibility for us to look after them and make sure they are safe in our environment. We use a number of different measures: we hired the most experienced head of online safety. Our community manager, Rebecca Newton, has been working with online communities since

Spring 2011

the ‘90s and she runs a big moderation team who are all very well trained and keep an eye on the site. They do pre- and post-moderation. We also use very sophisticated software from a company called Chrisp, which analyzes all the messages sent to the site. We teach kids safe Internet practices, so one of the key things is to report anything they see or feel uncomfortable about.

TLB: Do you feel your site is preparing kids to be more savvy Facebook users later on? Acton Smith: I think we are preparing them to be more savvy Internet users. This is the world they are entering into, and it’s a world where they will spend much of their time online—for communication, entertainment, finding jobs, and so on and so forth. We think it’s a great environment and very creative, and it’s wonderful for a lot of different reasons. We don’t want children spending all their time online, but it is one important part to balance their childhood. They should obviously still be going to school, and playing outside, and doing exercise, and meeting up with their friends, but online is going to be a big part of that as well. TLB: When you mention school, do you think Moshi Monsters will parlay into an educational tool used in the classroom? Acton Smith: Yes, we have already heard wonderful stories from teachers around the world that have used Moshi Monsters as a jumping off point to discuss other stuff because the kids are so excited about the Moshi world and so connected to it. We have heard examples in certain countries that don't speak English as a native language where parents are encouraging their kids to sign up to Moshi because they became pen

pals with children in America, Australia, and England. That is an interesting way the site is being used that we didn't expect. It is a delicate balance. We don't want to be seen by kids as being too educational, because that will spook them, but we wanted to make a fun site that had educational elements rather that an educational site with fun elements.

TLB: What educational elements does the site offer? Acton Smith: The site has 35 different puzzle games. Kids come back every day and go to the puzzle palace because the games are designed as games. They are doing logic puzzles, English lessons, flags of the world, geography questions, all the fun stuff. They do it against the clock and they can compare their best score to their friends or their previous top score, and they earn in-game currency called rocks, which they can then go shopping with to customize their room and their monster. TLB: You have compared Moshi Monsters to a cross between Tamagochi and Facebook. Why these two properties? Acton Smith: I had a pet rock when I was younger in the late '70s and thought it was a fantastic idea. I had seen the success of other virtual pets like Tamagochi and Furby and thought there was an opportunity to create a new type of virtual pet that lived online that was beautifully animated and emotionally resonant. So that was the reference to Tamagochi. But then the Facebook element is that we didn't want it to be just a one-to-one relationship between the pet and the child; we wanted to introduce social elements to make it even more fun so kids show off to their friends and swap tips and strategies. TLB: What licensing deals have you signed? Acton Smith: The first deal we did was with Penguin Books in the UK and now we're with Scholastic in the U.S. We have a deal with Vivid as our master toy partner, Spin Master in the U.S., and Topps for trading cards. We also have a video game coming out later this year. Our magazine is now the largest selling kids magazine in the UK and we are about to launch it in the U.S. as well. There is an iPhone app and there is a film that we are in the early stages of planning. TLB: How close are you to your $100 million goal in gross revenue from subscriptions and merchandising? Acton Smith: We are well on track at the moment. The licensing is doing incredibly well, headed up by Derek Grenem and his team. So as things stand now we should break that target, which is pretty good for our first full year of licensing.

TLB: You mentioned that the U.S. is a large portion of the market. Where does the country measure up with total users to the site? Acton Smith: About 35 percent of all sign-ups are from the U.S., which is now just ahead of the UK, which is at about 30 percent. Australia is in third place and then we are in about 200 other countries around the world. TLB: Are there any other markets you are pursuing? Acton Smith: The wonderful thing about turning a web property is that it is accessible by anyone in the world so you don't have to dub it like a TV show. Children anywhere in the world can reach it as long as they have an Internet connection. With that said, we are currently only in English so our next big project is to localize the site in different languages. TLB: What component of the site has been the most successful? Acton Smith: I would say there are two things. One is realization of how important social tools are for kids. They absolutely love to show off and share and communicate with their friends. The second has been the little creatures called Moshlings, which are the pets of the Moshi Monsters. They are sort of like a cross between Hello Kitty and PokĂŠmon. Kids collect these little creatures and they have been a very popular part of our licensing program. TLB: Do Moshlings cross over into the licensing endeavors you mentioned earlier? Acton Smith: Yes, absolutely. There are Moshling plush toys, plastic collectibles and they are featured heavily in our trading cards with Topps. There is a whole book dedicated to them, so yes they have been enormously popular. I think collecting and nurturing are two very popular play patterns for children and Moshlings are right at the intersection of both of those. TLB: Is there anything else you want people to know about Moshi Monsters? Acton Smith: I think it is an extraordinarily exciting time to be building a web property. I've said in some of the speeches I give that I think the most successful kids' properties in the near future will originate onlineâ&#x20AC;&#x201D; so much more powerful and easier and less risk than a TV show or a film. There have been a few small ones but we think Moshi will be the first breakout hit. We still have a long way to go, but we are well on the way.

Spring 2011

APPS ARRIVE!

They’re as important to a brand as a Happy Meal, and they’re here to stay. By Bryan Joiner More kids aged 2-5 can play with a smartphone application (19 percent) than tie his or her shoelaces (9 percent). Almost as many 2-3 year olds (17 percent) can play with a smartphone application as 4-5 year olds (21 percent). —AVG “Digital Diaries” study, January 2010 Moore’s Law roughly states that computing power doubles every two years. Two years ago, digital whispers of an Apple tablet bounced around the Internet’s echo chambers. At this point last year, early adopters had the first-generation iPad, Angry Birds plush from Commonwealth Toy and loved it. Earlier this year, the iPad 2 was recently released to large enough sales figures to require a three-week backorder, and it has done so while competing with tablets from Motorola, Samsung, Blackberry, and HP. People want their apps, and they want them now. They want them so badly that in the year between last year’s Tribute to Entertainment issue and this one, apps have gone from a niche topic to one that’s front and center for those looking to make money. Some are using apps to send people to their online games, where embedded advertisements and for-pay upgrades are a relative cash cow. The app is a vital cog in the “transmedia” landscape, says Brian Laing, founder and CEO of HiveMedia, a sine qua non of participating in the mobile and digital world on a real level. “Much like we’ve got the Happy Meal, we’ve got comic books and action figures, and social gaming is another component that’s not just part of the revenue stream, it’s also a part of the promotional stream.” Apps are the fundamental link between the web and social games, because the way we consume

the Internet is changing. Babycenter’s 2011 Mobile Moms report found that smartphone-toting moms spend 6.1 hours per day on the mobile Web versus 4.1 hours on the PC-based Web. For the large number of licensors that traffic in children’s properties, including Disney and Nick, the twin titans of the industry, this is news that’s impossible to ignore. Those companies—and almost anyone who’s serious about competing with them—have set up mobile divisions to deal with the increased demand for their properties. Penguin’s Emerging Technology Group is one of these divisions, and helped the company successfully launch a Mad Libs app for the iPad last year. The interactive play patterns native to Mad Libs are the same ones that made the iPad popular, and its place as the first Penguin app was a “nobrainer,” according to Adam Royce, vice president of digital development for Penguin Young Readers Group. It also made Mad Libs an anomaly, and the process to create the first storybook app under the Penguin brand involved a longer process. The result of that process, which took three to four months, was a storybook app for The Little Engine That Could. Penguin’s target demographic for app sales are the parents of toddlers and preschoolers, which is what made The Little Engine That Could appealing; its ’50s artwork appealed to parents who were likely to have read the story as a child, and could use the iPad to bring it to their child. There are three standard modes for the storyDeadliest Catch Facebook game from HiveMedia book app: a read-tomyself mode, a read-aloud mode, and an auto play feature for the youngest children. The company isn’t sprinting into the digital future, however. Penguin has 10 apps on tap for 2011, but won’t be doing any conspicuous Penguin branding on them, and the apps won’t necessarily have a common theme or feel. “We have a vault full of amazing properties, so we can be very cautious. We’re not about the bells and whistles of the devices. It’s great if we can bring out the best features in the devices, but what’s most important to us is retaining the literary values of these properties,” says Royce. The decision on how to select a property comes down to sales. “If you look across the app store, the top apps have really strong brands attached to them, and that begs the question of how you get noticed in the iTunes Store or Google Marketplace. Once all the big brands are out there, it’ll look just like traditional publishing, and getting noticed is a challenge that I’m excited about. It’s daunting, but the opportunity is there. Look at Angry Birds; the gameplay is amazing, there’s no heritage to the brand, and it has taken the platform by storm.” Ah yes, Angry Birds. It’s the app once called the “Mona Lisa” of iPhone games by former MSNBC

commentator Keith Olbermann and which recently earned its developers, Finland-based Rovio, $42 million in venture capital funding. Released in December 2009, it has been downloaded more than 100 million times across all platforms and has been the first non-brand based app to become a breakout property itself, with a wide range of licensed products on the market or in development. A new version of the game, Angry Birds Rio, was released in March in collaboration with 20th Century Fox for the animated Rio movie. Angry Birds has clearly tapped into something special in the mobile games market. The only other game to be downloaded more than 100 million times is Tetris, which has as strong a pedigree as any video game in history. In both games, the game play is easily understood and easy to keep up with as it increases in complexity. In a blog post, “Why Angry Birds Is So Successful and popular: A Cognitive Teardown of the User Experience,” Charles L. Mauro writes that something as simple as the speed of a levelreset function has a huge effect on gamers. “Surprisingly few software developers realize that response time management is actually a resource that can be leveraged to add to the quality and depth of the engagement of a user interface,” he says. He also drops a bomb—or if you prefer, a slate-black Angry Birds bomb-bird— about the game’s popularity, with help from the Neiman Sesame’s The Monster at the End of This Book e-book Journalism Lab. “The total number of hours consumed by Angry Birds players world-wide is roughly 200 million minutes a DAY, which translates into 1.2 billion hours a year. To compare, all person-hours spent creating and updating Wikipedia totals about 100 million hours over the lifetime of Wikipedia.” Those incredible numbers explain why Angry Birds’ plush licensee, Commonwealth Toy, has focused many of its efforts on licensing for apps, including Angry Birds and Cut the Rope. “We still have our traditional plush business, but as we’ve added these brands and licenses, we’ve changed our distribution. Angry Birds products are in every country from here to Australia, and in every channel of distribution,” says Lisa Shamus, executive vice president at Commonwealth Toy. The company is creating about 25 different products for the brand, from plush to banners and flags, snow globes, and seasonal items. Mattel has signed up as a licensee (among others) for a live-action Angry Birds game that debuted at Toy Fair.

Another app that has transcended the moblie platform is Fruit Ninja, from Australian game developer Halfbrick. The premise of Fruit Ninja is simple: you use your finger as a blade, slicing whole fruits as they bound across your screen. The game was so popuar that another game maker unapologetically rode its coattails with a similar game, called Veggie Samurai. Fruit Ninja, which was the fifth-best selling iPhone game in 2010, is the one that’s having checks cut in licensing, with a program that includes Hybrid for apparel; Loungefly, Basic Fun, and Bioworld for accessories; and MJC for sleepwear. Fruit Ninja products will be distributed in Hot Topic and JC Penney, among other retailers. Outside of a select few, however, apps aren’t always a guaranteed moneymaker on their own. Sometimes they are not expected to be. When companies need help negotiating the mobile space, they come to HiveMedia’s Laing, who helps them map a strategy to thrive in the Transmedia world. Not all apps can hook people as efficiently as Angry Birds, so the buzzword here is “engagement.” While some of the brands that come to HiveMedia are using social media just to stay “afloat,” so to speak, most of them are trying to move beyond a superficial relationship with their consumers and into one where cash begins to change hands. “The partners we’re working with are using this to generate revenue, and we’re selecting our projects based on how much a fan base the brand has on Facebook, how much in other marketing efforts the brand has undertaken, and how likely that game loop is to monetize,” says Laing. Penguin’s The Little Engine That Could e-book One of HiveMedia’s most recent projects is a Deadliest Catch social game on Facebook, which will also be translated into an iPad version. Laing says that Deadliest Catch fans typically play the game for a half an hour or more per day, which is “obviously much more than the hour a week that they’d watch a new season of Deadliest Catch.” This doesn’t leave a lot of time for engagement on Deadliest Catch’s other digital locations, such as its website, but that’s the point. “A lot of times what we’re doing is pulling the fragmented audience into the social game so that we have them in one place and are engaging with them for longer periods of time. That opens the door to advertising within the social game as well as other promotional opportunities.” As the simple-yet-engrossing brilliance of Angry Birds shows, apps have the power to be moneymakers on their own. Penguin is making sure its build toward a new app-based catalogue is deliberate and steadily profitable. HiveMedia is showing where apps, other social games, and revenue intersect. Much like there’s more than one way to clear most Angry Birds boards, there’s more than one way to use apps to your advantage.

FLYING HIGH

Angry Birds is the biggest thing in the app space since... well, ever. By Bryan Joiner Just over a month ago, ThinkGeek unveiled Angry Birds Pork Rinds—a product that breaks even the most flexible curves of kooky brand extensions. The product was described as “the ultimate in high protein snacking.” The peanut had finally met its competition, and it had done so through licensing, or so it appeared until the whole thing was exposed as an April Fool’s prank. In a year, Angry Birds has gone from a little-known iPhone app to a worldwide phenomenon. Rovio, the Finnish creator of the game, has reaped the benefits of the game’s explosive popularity. It recently received $42 million in venture capital funding from two private investors on top of the profits it’s earning from sales of the game—and, yes, licensing. Most visibly, Commonwealth Toy has signed on for soft figural plush and about 24 other products. It helps that the birds, (and pig), as designed in the game, match perfectly with what you’d expect from a product line: each one a different, bold color and with a different facial expression. The plush has helped Commonwealth sell through its other products, which are being distributed from the U.S. to Australia, by hooking consumers into the brand. Commonwealth Toy hasn’t reinvented the wheel, but it has built a better mousetrap. In addition to Commonwealth Toy, Accessory Innovations, BCP Imports LLC, CSS Paper Magic, Disruptive, Fifth Sun, GBEye, LF USA, Trends International, and Mattel have signed on as licensees, among a steadily increasing number of others. And if you were really hoping for officially licensed Angry Birds pork rinds, you may be in luck. ThinkGeek is running a contest in which users can vote among its farcical April Fool’s Day products for the one they would most like to buy, and ThinkGeek will make the winner. You may yet have something new to snack on while you plot pig domination.

Tribute to Entertainment

Apps

Zinkia Entertainment Comes to iPad with Pocoyo Entertainment brand specialists Zinkia Entertainment extended its range of Pocoyo application downloads earlier this year to ensure that children, caregivers, and adults can engage with Pocoyo content from a wide range of mobile devices, at any time and any place. The strategy, which underscores Zinkia’s commitment to creating quality, multi-platform content, is paying dividends, with Pocoyo app downloads hitting No. 1 slots in a number of territories. Zinkia’s first app, Pocoyo TV , initially offered on Nokia’s Ovi and Android systems, is now also available as a global download from the Apple Store on the iPhone, iPad, and iPod Touch. The app allows viewers to watch and revisit any of the 52 episodes from the first award-winning season. Currently available in English and Spanish, Zinkia is developing other foreign language versions of Pocoyo TV which will be released shortly. In addition, Coloring with Pocoyo and Friends , launched in December on the iPad, and can now be downloaded globally from the Apple Store for the iPhone, iPad, or iPod Touch. This user-friendly application allows children to experiment with creativity as they color in their favorite Pocoyo characters without spilling pots of paint. By downloading this app, users also secure limited access to the Premium Club at Pocoyo’s virtual world destination,

www.pocoyoworld.com. Zinkia’s CEO, Fernando de Miguel, comments, “In today’s crowded market, brand visibility and product accessibility is key. Zinkia has always been committed to creating quality content for a multiplatform market and we are delighted that our multi-lingual Pocoyo apps are now available as global downloads on multiple mobile devices. We also recognize the importance of providing fresh new content and are currently developing a slate of entertaining new Pocoyo apps that will be unveiled soon.” Finally, Zinkia’s successful Pocoyize creation, which allows users to create personalized Pocoyo-style avatars of themselves, their friends, or celebrities, is available as a download for the iPhone, iPad, or iPod Touch. Completed creations can be used as profile pictures, sent to friends, or posted on social networking sites such as Facebook. Since Pocoyo first aired on the small screen in 2005, the property has evolved into a multi-platform global brand, attracting a host of prestigious accolades including BAFTA, Pulcinella, and Annecy awards. The series has been licensed to more than 100 countries worldwide, with more than 150 licensees on board.

Tribute to Entertainment

Apps

The Wildflower Group Signs Deals for Cut The Rope Om Nom’s world and introduce more audiences to our beloved physics-based puzzler,” said Efim Voinov, CTO, ZeptoLab. “We are grateful to all our fans for helping make Cut the Rope one of the most popular iOS games in history.” The Wildflower Group is currently in discussions with potential licensees for Cut the Rope board games, card games, and puzzles; back-to-school, stationery, and other paper products, including journals, stickers, posters, and calendars; sleepwear, loungewear, and boxers; publishing; food and candy; and accessories, including bags, backpacks, and jewelry.

The Wildflower Group, a leading New York City-based licensing and branding agency, will “feed” fans’ hunger for Cut the Rope, the uber-popular and multi award-winning physics-based game, which is published by leading indie games publisher, Chillingo, (a division of Electronic Arts) and developed by leading indie games studio, ZeptoLab. The Wildflower Group will develop a comprehensive new licensing and merchandising program set to debut Q3 2011. “ZeptoLab is delighted to work with Chillingo and The Wildflower Group to expand

LeapFrog Enterprises Unveils Scout’s ABC Garden App LeapFrog Enterprises, Inc. recently announced that its new Scout’s ABC Garden app for iPhone, iPod Touch, and iPad is now available on the App Store. Scout's ABC Garden app brings LeapFrog’s beloved and top-selling plush toys, Scout and Violet, to life as they help teach letters and letter sounds. Scout’s ABC Garden app encourages children to explore letter names and sounds step by step, and each child's experience is customized based on his or her name, favorite food, favorite color, and favorite animal. This personalization is carried throughout the game, delivering game content tailored to a child's individual interests. “LeapFrog is bringing everything we know about learning and fun to the app marketplace with our adorable and very successful puppies, Scout and Violet,” says Craig Hendrickson, senior vice president and chief product officer for LeapFrog. “We are taking personalization to a higher level by alerting parents when their child is learning, and giving parents the ability to share these important learning milestones with friends and family through email and social channels.” With the Scout’s ABC Garden app, kids can explore Scout’s garden by touching and triggering fun and delightful sounds and animations including interactive clouds, bubbles, ticklish gophers, and Scout and Violet’s virtual radio that plays traditional kid-favorite songs. Kids can even rub Scout’s or Violet’s belly to hear a song with their name, or grow their own letter garden.

Tribute to Entertainment

Apps

Sesame Workshop’s eBookstore App into Apple’s Top 10 Sesame Workshop, the non-profit organization that produces Sesame Street, and Impelsys has announced the launch of the Sesame Street eBookstore iPad app. The app provides access to more than 150 Sesame Street eBooks, which are also available via a subscription at http://ebooks.sesamestreet.org. The app is available for free in Apple’s App Store. Users can browse title selection free of charge. To read all eBook titles, the app invites users to subscribe to either one month of full access for $3.99 or one year of unlimited access for $39.99. Current subscribers of the Sesame Street eBookstore can use the app to access their bookshelf with an iPad and will not need to make an additional subscription purchase. The app was released in March and rocketed into the Top 10 Free Apps in the “Books” category on Apple’s iTunes store. The Sesame Street eBookstore app allows users to connect seamlessly to Sesame Street’s eBookstore to preview content, view their unique bookshelf, and download all or select books directly to their iPad, making them accessible any time, any place without an Internet

connection. eBook titles are offered in a variety of formats: • eBooks, which allow a child to read along at their own pace; • Audio eBooks, which contain story narration, sound effects, and music; • And animated eBooks, which bring beloved Sesame Street characters and stories to life in full-color animation. Sesame Street eBooks on the iPad feature options such as page flip, which allows the user to turn pages with just a swipe of the finger or a tap on the screen; and auto play, which automatically turns book pages and text highlighting, visually reinforcing the narration in audio eBooks and beginning reader skills. “The portability and interactivity of an iPad offers a new way for families to experience Sesame Street storybooks, concept books, and animated books, providing an immersive learning experience at a child’s fingertips anytime, anywhere,” says Jennifer A. Perry, vice president, worldwide publishing, Sesame Workshop.

HIT Entertainment Brings Barney and Thomas to Apps HIT Entertainment recently unveiled apps for two of its main properties: Barney and Thomas & Friends. The Barney app, Super-Dee-Duper Fun Day!, allows children to play three games: a shape-finding game, a cookie-decorating game, and “Silly Hats,” where players drag hats onto Barney’s head. The Thomas app, Thomas Tilt and Go, lets children simulate Thomas’ rolling on the tracks by tilting their devices. They can race against other engines and take four unique missions through the island of Sodor. The game features clips from Thomas & Friends. Both apps are available for the iPhone and iPod Touch.

Tribute to Entertainment

Apps

Homer Simpson Comes to TomTom

Random House

Fresh from Springfield, Homer Simpson is now making his way onto your TomTom app for iPhone for the very first time, adding the kind of humor only he can deliver as a co-pilot to your journey. Developed in partnership with Twentieth Century Fox Consumer Products (FCP), The Gracie Films Worldwide Brand Division, and Locutio Voice Technologies, the original Homer Simpson voice (recorded by Dan Castellaneta), for TomTom’s range of personal navigation devices is now available for $5.99 for iPhone in the U.S. The original Homer Simpson voice for the TomTom app for iPhone comes with all the latest maps (TomTom version 1.7), which means drivers not only receive Homer’s own special words of wisdom, such as “Woo Hoo! You have reached your destination, and you can hold your head up high, because you are a genius,” but also the latest TomTom map store onboard their iPhone.

Random House Children’s Books recently announced that the pat the bunny interactive app is now available in the iTunes store. Developed in collaboration with leading digital media agency Smashing Ideas, the universal app for iPad, iPhone, and iPod Touch is based on Dorothy Kunhardt’s touch-and-feel children’s book classic. When pat the bunny was originally published in 1940, it was groundbreaking in its use of touchand-feel elements (such as daddy’s scratchy face) and interactive features (“Now YOU play peek-a-boo with Paul”). The app extends the legacy of pat the bunny to the digital world, promoting children’s mastery of their world through simple, interactive play.

Classic Media Gets Friendly with Casper’s Scare School As part of its ever-expanding KiZoic line of all-ages titles, Ape Entertainment and Classic Media recently announced that the publisher will be adding the Casper’s Scare School property to its roster, featuring the “Official Ambassador of Halloween,” Casper the Friendly Ghost, and all of the characters from the CGI-animated Casper’s Scare School television series. Based on the film Casper’s Scare School, released in 2006, the television series first premiered in the U.S. in 2009 on Cartoon Network. In Scare School, Casper has a new assignment: to get in touch with his spooky side—or else! The school was founded more than 100 years ago to educate and prepare the creature youth of today for the difficult challenges they’ll face tomorrow. Its purpose—to turn the pupils into lean, mean, scaring machines. Well, all except for one. “Anyone who grew up on comic books is familiar with Casper the Friendly Ghost,” says Ape Entertainment founder and co-publisher Brent E. Erwin. “What Scare School does is reinvent the character for a new generation of fans, while never losing what appealed to the original readers who first fell in love with Casper decades ago.”

Tribute to Entertainment

Video Games

VIDEO GAMES Still Leveling Up After All These Years By Mackenzie Allison Video games have been around since the 1950s, with the first commercial game, Computer Space, entering the mainstream in 1971. Created by the duo that would later found Atari, this coin-operated video arcade game was by many accounts, including those of cocreator Nolan Bushnell, a flop. In the game, players controlled a rocket ship using a thruster and a pair of rotational buttons. The objective: Evade enemy fire from a pair of flying saucers and destroy them by firing missiles from the rocket ship.

By modern video game standards, Computer Space sounds simple enough, but to a 1970s audience that just wanted to go to a bar, spend a little pocket change, have a beer, and play a game, the idea was too complex. Although Computer Space failed, it did pave the way for modern gaming; and today video games are a billion dollar industry, raking in $3.69 billion in the fourth quarter of 2010, according to a recent report by video game retailer GameStop. Through licensing efforts, that billion dollar industry has linked with movies, TV shows, musicians, sports franchises, and toys, bringing even more titles to eager gamers. Video Games: Opening Up the Market “With gaming licensing five or six years ago, the only thing that was out there was Nintendo and a bit of PacMan,” Andi Riordan-Scott, president of Creative Minx Marketing, whose agency represents EA and Major League Gaming, says. “It was very specialty-market driven and a very niche business. It was never considered mainstream and you were taking an incredible risk,” she adds. According to Riordan-Scott, that all changed in 2005 with the debut of Guitar Hero. The game, which has gamers simulate playing musical instruments to popular songs, opened up the market to younger kids as well as their moms, who green-lit the game for being less violent than the first-person shooter

Spring 2011

games that were currently dominating the market. Not only parent-approved, parents themselves were playing Guitar Hero, with songs by Bon Jovi, Aerosmith, and AC/DC reminding them of their high school and college years. The initial success of Guitar Hero served as a jumping off point for other popular franchises, including Halo, Star Wars, Call of Duty, and Mass Effect. Pinning Down the Popularity In an economy where consumers are looking to extend the lifespan of their purchases, video games seem like an easy fit. ”What you found in 2008 and 2009 when things were getting really bad," Riordan-Scott says,”was that the $60 you would spend on a boxed game item would provide 12 or 13 hours worth of game play and entertainment versus $60 you would hand your teenagers to go to the movies and they’re done in two and a half hours.” With the new video game titles released this year, audiences might be spared the tough decision of whether to head to the theater for a movie or the couch for a console game. Summer Releases and Quirky Cartoon Characters Several new movie releases are finding a home in the video game arena. Disney Pixar's Cars 2 has transformed into a video game developed by Avalanche Software, the team behind Toy

Tribute to Entertainment

Video Games

Story 3: The Video Game. The international spy-themed racing game Cars 2: The Video Game, releasing this summer, allows players to choose from more than 20 different characters in a mission to become worldclass spies. The game even connects with the browser-based World of Cars Online, where players can use rewards earned in the video game to unlock items in the virtual world. The game will be available for PlayStation 3, Xbox 360, Wii, Nintendo DS, and PC/MAC. Inspired by the upcoming Warner Bros. Pictures’ summer blockbuster Green Lantern, Green Lantern: Rise of the Manhunters has players use constructs to restore intergalactic order by using the Green Lantern power ring. From the small screen, quirky Nickelodeon cartoon characters continue to hit the game consoles with new releases. SpongeBob SquigglePants, by THQ, is debuting on Nintendo 3DS this month. Fans can interact with the character in 3-D and maneuver through 100 nanogames in seven different worlds. The first-ever co-branded video game for Go, Diego, Go!, Go, Diego, Go! Mega Bloks Build & Rescue, by 2K Play, and exclusively for Nintendo DS, launched during the 2010 holiday season. It has gamers collect Mega Bloks to build construction tools and rescue vehicles so that Diego can save lost animals and build homes for them in various-themed habitats. Diego’s friend Dora celebrated her 10th anniversary last year in the form of Dora’s Big Birthday Adventure by 2K Play for Nintendo DS. Based on the 10th anniversary televised event, Dora and her best friend Boots try to find their way out of Storybook Land to make it to Dora’s big birthday celebration. Toys Take to Consoles Toys have also factored into the video game equation, with LucasArts and TT Games recently releasing LEGO Star Wars III: The Clone Wars. In the latest game, players take a look at the entire Clone War era, which runs through the feature films and animated show, Star Wars: The Clone Wars. Video game distributor Activision and Blip Toys have also

released a title based on the Squinkies collectible toys. In the game, players take on the role of Squinkies Princess and must find her lost Squinkies friends. When asked what compelled the video game company to translate the toy into a video game, Andy Koehler, director of licensing at Activision Publishing Minneapolis says it was because they have become one of the hottest toys and trends at mass market, especially among kids 5-8. It appears, with a popular property—be it a movie, TV show, or toy—if it’s hot enough, fans will follow it to any outlet. In 1971, Computer Space was a video arcade game that sat in smoky bars where a game of darts or a round of quarters were more favorable forms of amusement. Over the past 40 years, video games have evolved to include multiple players, interactive software and a link to other forms of entertainment. What was once considered too complex now wouldn't pass muster with most hardcore gamers. The game did, however, serve as the predecessor for modern gaming, so maybe it wasn't that big of a flop after all.

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Tribute to Entertainment

Video Games

Nick Takes Major League Baseball with Nicktoons MLB Launch 2K Play, Nickelodeon and Major League Baseball Properties recently announced Nicktoons MLB for the Xbox 360 video game and entertainment system from Microsoft featuring support for Kinect for Xbox 360, Wii system, and Nintendo DS. For the first time, an all-star roster from Nickelodeon’s Nicktoons series will take on players from all 30 MLB teams. Nicktoons MLB will feature a dugout full of Nicktoons characters, including SpongeBob SquarePants, ZIM, Dudley Puppy, Fanboy, Chum Chum, and Ren and Stimpy, along with players from all 30 MLB teams, including Matt Holliday (St. Louis Cardinals), Andre Ethier (Los Angeles Dodgers), Miguel Cabrera (Detroit Tigers), Jason Heyward (Atlanta Braves), Cliff Lee (Philadelphia Phillies), and Robinson Cano (New York Yankees). Custom created digital ballparks will

add new meaning to “home field advantage” and will range from the famed Fenway Park to the frigid Frosty Freeze Field. “The Nicktoons are an animated bunch and it’s no secret they have been petitioning our office to facilitate this unprecedented match up,” says Steve Lux, vice president for business development of 2K Play. “Whether an extraterrestrial from Planet Irk, superheroes who wear underwear on the outside of their costumes, or a secret agent dog, time will tell if these heavy hitters have the grit to play in the big leagues.” “Our Nicktoons stars are taking the field and plan to ‘go yard’ against the best players in Major League Baseball,” says Shaan Kandawalla, vice president of digital retail games for Nickelodeon/MTVN Kids and Family Group.

Cars 2 Revs Up

Marvel vs. Capcom Products Take Off

Disney•Pixar’s Cars 2: The Video Game is coming to major platforms this summer. Unveiled at the American International Toy Fair in New York City, Cars 2: The Video Game will allow players to jump into the Cars universe with a brand new international spy theme. The game will feature an array of Cars characters competing in actionpacked spy adventures, as well as world-class racing.

Marvel Entertainment, LLC, will create a merchandise program for the video game franchise Marvel vs. Capcom. The development of the program follows on the heels of the latest release in the gaming franchise, Marvel vs. Capcom 3: Fate of Two Worlds. Marvel has already signed on several leading manufacturers, including Mad Engine, Inc.; Philcos Enterpriser Limited; Diamond Select Toys and Collectibles, LLC; Hollywood Collectibles Group; Mad Catz, Inc.; and UDON to create an array of products that enable Marvel vs. Capcom fans to extend their experience beyond the gaming console.

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Apparel from Mad Engine

Tribute to Entertainment

Television

The Internet is exploding. Apps are here. Television is still the engine that drives the industry. by Bryan Joiner

Television is still the engine that drives The Licensing Book’s Tribute to Entertainment. The explosion in apps and social games and the continued swell in popularity of video games are impossible to ignore, but television is still the elephant in the room. Get your property on TV and it’s a likely consumer products hit; try to do it without television support, and it can feel like you’re buying a lottery ticket. The small screen is where brands become household names. That’s one small step away from household products. There’s more than one way to go about getting eyeballs on TV. You can build a brand from scratch, steward one through decades of viewers, or even resurrect one from the past. All that matters is that you do it well. Take care of that part, and translating your property into revenue in licensing is just a matter of finding your audience in the aisles; you don’t have to create your buyers from scratch. Starting on page 32, we have in-depth profiles of licensing efforts from HBO, CBS and A&E, which are building successful programs on the backs of Game of Thrones, The Borgias, and The History Channel, respectively. Here,

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we take a look at some other outlets that are making registers ring with small-screen properties. Saban The Power Rangers are back, and people are taking notice. Power Rangers Samurai is the No. 1 boysthemed action series in America and is the No. 1 series on Nicktoons, as well as the No. 1 attraction pretty much everywhere it’s featured on Nick.com. The consumer products push has a very old-school feel, with Bandai’s expansive toy line currently as the only products on the market. Plans are underway for a live touring stage show later in the year, and Namco/Bandai is developing video games for the Wii and Xbox Kinect. Additionally, two mobile apps for the brand are set to enter the market. The big surprise for Saban Brands, the owner of Power Rangers, has been the popularity of the show among female audiences, says Elie Dekel, president of Saban Brands. “In the ‘90s, we always knew we had a girl audience. When we looked at relaunching the brand, we felt that if we worked on maintaining the DNA of the show, we’d naturally draw in some girls.

Tribute to Entertainment

Television

In our focus groups, the girls were scoring in some cases as high as the boys in their desire and interest in the show. I think young girls are open to embracing female superheroes than perhaps they were some time ago,” says Dekel. That’s not the only surprise audience for the Samurai. Fans of the original show are also aware and excited about the return of their childhood heroes. “The show was the biggest thing on Earth from ’93 to ‘97/’98,” says Dekel. “We’re in that sweet spot with what was then a 10-year-old. It’s one thing if you’re reminding someone of their youth in a retro way, but people are show that has touched the spirit of so many people in tune with the fact that it’s back for its own sake.” because of the music, dance, and self-expression,” says Robert Marick, executive vice president of Fox FOX Consumer Products. Following the release of Glee The Power Rangers may have left and returned, but merchandise at Macy’s, Claire’s, and Sephora and The Simpsons stuck around for the entire party. The the release of last year’s Karaoke Revolution: Glee, is show’s 500th episode is set to air next spring, and it’s this year’s Karaoke Revolution: Glee Volume II: Road no real surprise that Entertainment Weekly named to the Regionals, which features exclusive performHomer as its No. 1 greatest charac- ances and clips. ter of the past 20 years. Fox ConFamily Guy has also pulled in big numbers for sumer Products recently FOX, with more than a half billion dollars in retail announced a deal with TomTom sales annually, and the network is hoping for similar for a Homer Simpson- success with its newest effort, an animated version of voiced navigation app, the movie Napoleon Dynamite, which will debut midfollowing the successful season in the next TV cycle. addition of Homer’s voice to GPS satellite E! systems. The Simpsons You can’t get further from Napoleon Dynamite than boasts 400 active li- the red carpet—which is likely why they both present censes, and has sold great opportunities for licensed products: Idaho kitsch products in more than 100 coun- and Hollywood glam. E! has turned to the glam angle tries for sales of more than $8 billion. (And how much with licensing for its long-running Live from the Red more would it be if all those crudely-drawn Bart T-shirts Carpet series. The product line for the brand will counted?) mimic the experience of a celebrity preparing for a If The Simpsons is FOX’s own little licensing engine, red-carpet event like the Oscars or Golden Globes Glee is its high-speed train. In two years, it has gone with Live from the Red Carpet-branded products infrom television experiment to bonafide megahit, with cluding gowns and dresses, and even self-tanning kits a consumer products program to match. “It’s really a and specialized food delivery orders.

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Tribute to Entertainment

Television

“The right fit is anything you believe mirrors the experience of a star having their once-in-a-lifetime type of night, and bringing it to the consumers in a way that makes it acceptable and aspirational,” says Suzanne Kolb, president of Marketing, News, and Online, E! and Style. The products launched in Q1 of this year in Nordstrom’s, Lord & Taylor, and Ulta, with food service through Fresh Direct. The line changes seasonally, with the sweet spot of 18-49-year-old consumers shifting whether the occasion is a prom, wedding, or benefit. “We realized everyone’s having their own version of red carpet night, so we wanted to offer something that gives it a feeling like their night is red carpet worthy. It takes a once-in-a-lifetime kind of night and wraps it up with an E! brand experience,” says Kolb. Plans are already underway for new dresses and cosmetics, and to branch into other categories, with a likely launch in Q1 of next year.

croscopes, and digital video cameras. The products are expected to hit for holiday. The Discovery Expedition line is part of the Discovery team’s efforts to target its varied audiences through branding. “Our priority has been to focus on the brands themselves, since they’re much more evergreen,” says Sue Perez-Jackson, director of licensing for Discovery Communications. “The consumer recognition is there. We have Discovery Expedition. We have Animal Planet. We have Discovery Kids.” Discovery Kids resonates with consumers despite no longer being on the air, but it has found a second life online, and the product line for the brand is expanding. Animal Planet has been doing great business in the booming pet category; Perez-Jackson says Discovery has created brand extensions for “everything under the sun.” One of the newest licensees is Kingfisher for Animal Planet-branded children’s books, and another new licensee with Awesome Paws for cat and dog accessories. The big news from the Discovery Channel proper was the launch of the seventh season of Deadliest Catch in April. The show is a hit in the social gaming space (see our apps feature on page 14 for more), and is the No. 1 property on Discovery.

iTV iTV is getting to work on three major properties in North America: Hell’s Kitchen, Kitchen Nightmares, and Coronation Street. Hell’s Kitchen is a summer ratings bonanza on FOX, with 3.6 million average viewers, 21 percent above the slot average. Kitchen Discovery People don’t just imagine themselves in high fashion Nightmares also turned in solid ratings last year, imthrough television—they also imagine themselves on proving on the Wednesday 9 p.m. time slot among the high seas, or high atop a mountain, scaling it with adults ages 18-49, 18-34, and 25-52. In Canada, nerves of steel. That’s the demographic Discovery is Coronation Street consistently performs well for the targeting with its Discovery Expedition line, which will CBC and has spawned a licensing program which inlaunch this fall with five licensees in categories includes Coronation St. premium ale from UK licensee cluding accessories, video games, telescopes and mi- JW Lees, which also provides marketing support.

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It’s SHOWTIME for CBS Consumer Products The Borgias . Dexter . Weeds . With CBS’ acquisition of Showtime, the rich get richer. By Br yan Joiner Showtime’s The Borgias has been on the air for just over a month, but reviews of the family have been written for hundreds of years, and by some of the greatest writers the world has ever known. Victor Hugo, the 19th Century author of Les Miserables and The Hunchback of Notre Dame, was not a fan, but poet Walter Savage Landor once composed an ode to a single strand of Lucrezia Borgia’s hair, calling the Pope’s thrice-married daughter “almost too august/and high for admiration.” That’s history—and drama—for you, and as the considerable drama of the Borgia family has made its way to Showtime, CBS Consumer Products has responded with an extensive line of branded products, continuing its recent push for Showtime licensing. Licensing for the network has hit a fever pitch since CBS took over its properties in the summer of 2009 and created a new style guide for existing shows including Dexter, Weeds, Californication, and Nurse Jackie. The Borgias, with its scandalous subject matter and historically and geographically pinned setting (15th and 16th Century Rome), gave CBS an opportunity to explore three different approaches, according to Liz Kalodner, president of CBS Consumer Products, focusing on “traditional,” “authentic,” and “evocative” licensing. Traditional licensing is what you’d expect: T-shirts, calendars, phones, etc. The next two are where things get fittingly interesting, for the subject matter. Authentic licensing will include 8-inch and 12-inch dolls from Madame Alexander and replicas of the costumes and weaponry that the characters use in the show from Epic Weapons. Of which, there should be no shortage, thanks to the real-life Cesare Borgia, who used deadly weapons often, and often for no more than sport, a detail that might or might not be included in the Marc Ecko-designed Facebook game for the property— but if it is, we suggest you avert your eyes, or better still, close your browser and get back to work.

The Borgias Jeremy Irons (r.) leads the Borgia family in the new Showtime drama, heavy on licensed product.

For “evocative” licensing, CBS will dive into art-based categories including housewares, home furnishings, decorative pieces, and even wine. Connecticut-based Votto Vines has signed on to create The Borgias-branded Italian wine. “We’re excited because it’s the type of property where you can take those different approaches,” Kalodner says. “That’s what makes it fun for us.” When in Rome CBS has taken the same approach to its Showtime portfolio of Dexter, Weeds, Californication and Nurse Jackie as it previously did for its Classic portfolio, offering them to licensees as a “bundle.” This lets licensees “have room to play and have a much bigger business,” and Jerry Leigh has signed on for apparel and MusicSkins has come aboard for vinyl skins. Dexter and Weeds are doing big business on their own as well. ThinkGeek has signed on for Dexter apparel, glassware, coasters, and aprons. Rizzoli will make Dexter calendars, and Hallmark will make (presumably cheery) cards. For Weeds, Global Prints has sparked a deal for posters and postcards, and Nobleworks has hashed out an agreement

Bert the Farting Hippo NCIS’ surprise stuffed breakout star is CBS’ No. 1 seller online.

for greeting cards. For those originally bundled classic CBS properties, Mattel’s Barbie Crystal and Alexis Barbie dolls from Dynasty are sold out, and Mattel has created an Ellie Mae version as well from The Beverly Hillbillies. Dynomighty has signed a portfolio deal for wallets, Westland has signed for giftware, and 518 is doing apparel and loungewear. Hungry, Hungry Consumers

NCIS is the No. 1 rated program on television as it enters its eighth season. On the show, forensic specialist Abby Sciuto has a stuffed hippopotamus named Bert, which has become the single highest-selling item at CBS.com. Bert was put up for sale after Kalodner and others saw people blogging about him, and her team realized that they have a movable product on their hands, the same as when they saw people on the Internet asking around about Survivor neck hankerchiefs. “It’s not necessarily a perfect brick-and-mortar retail item, but it’s a great online item. We try to balance the online business and the retail business. If you’re a fan of that show, you go online, you buy that item,” she says. CBS has also signed traditional deals for NCIS, including Bif Bang Pow for bobbleheads, Greenlight for die-cast, and a Pressman board game that was sold last holiday. For CSI, the proud papa of CBS primetime, the big news is a Facebook game that boasts more than two million registered players. In addition, GTech has just signed on to do online gaming. For physical products, CSI has continued to skew younger, leading Kalodner’s team land deals for microscopes, amplifying devices, metal detectors, and “all kinds of fun toys.” Additionally, there is an agreement in place with Simon & Schuster for chapter books next year, and CBS is exploring new categories including resin figures and die-cast vehicles. Finally, for 90210, bebe has released the second of four fashion collections this year featuring the show’s actresses. Things are, as they have been for awhile at CBS, looking up. “Knock on wood, the network is in great shape,” Kalodner says. “We have fewer open slots than other networks, and we are certainly busy.” Those are good problems to have.

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Captures TV Moments Through Licensing By Mackenzie Allison Owning a memento from a television program is one way audiences can stay connected to their favorite shows long after they go off the air. Apart from box sets and late night syndicated reruns, owning a coffee mug adorned with the “Bada Bing” logo—the gangster hangout and setting for some of The Sopranos most pivotal scenes—or testing knowledge of Carrie and the girls with a Sex and the City trivia game, instantly takes fans back to their favorite moments from the show. Fast-forward to the present and True Blood, Game of Thrones, Treme, and Eastbound and Down are the headlining shows on HBO, with aggressive licensing programs to match. Engaging Audiences All of these shows have the engagement factor, as Sophia Chang, senior vice president of licensing and retail for HBO, puts it. “From a licensing perspective, while every single show can do well on the network via a viewership standpoint, not every single show has a fanbase that really translates into licensed merchandise,” Chang says. In the case of True Blood, Chang says fan response to licensed merchandise was immediate. “There is an incredible level of engagement from these fans,” she adds. “They want to collect and own something that they feel is part of their favorite brand.” Premium Channel Meets Luxury Market The newest licensed product for True Blood is a line of luxury handbags, which will bear the names of the show’s main characters, by Hammit Los Angeles. This is not the network’s first foray into the luxury market, which Chang says is an appropriate fit for a premium network. HBO partnered with Cosabella for a Sex and the City lingerie line two years ago, which was sold at Bergdorf Goodman, Neiman Marcus, and other high-end retailers, as well as LA-based denim company AG Jeans for an Entourage collection.

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Game of Thrones Sean Bean plays Eddard Stark, leader of the Stark family, in HBOâ&#x20AC;&#x2122;s newest hit series.

“From a branding standpoint, Hammit seems to fit well with True Blood,” Chang says. “It's modern, but it also has an edge to it with the leathers and the signature hardware that they use. It just felt like a good partnership.” The collection will debut on July 15, a few weeks after the show’s fourth season premiere.

Orleans during the months following Hurricane Katrina. The show focuses heavily on music, with many of the main characters portraying musicians. Several real-life musicians featured on the show are also woven into the storylines, including Elvis Costello, Kermit Ruffins, and John Boutté. To give a larger glimpse into Treme’s musical segments, HBO is making complete videos of the performances available on iTunes. During the second season, performances from each episode will be released immediately after the episode airs.

Crossover Appeal, A Novel Idea True Blood is based on The Southern Vampire Mysteries series of books— giving the show a built-in fan base. The licensing program for Game of Thrones, which premiered April 17, follows HBO's model for True Blood. Like True Blood, it takes its origins Entering New Territory from a series of novels and appears On the comedy front, Eastbound & Down, starring Danny McBride and to have a similar crossover appeal. produced by Will Ferrell, is getting Limited-edition logo T-shirts and Sigil the spotlight in the form of bobbleshirts (themed shirts from the series), heads—HBO’s first foray into this were released a month before the novelty category. show premiered and had a successBased on Major League Baseball ful run, Chang says. Game of Thrones also takes its cue player turned middle school physifrom True Blood in terms of HBO’s cal education teacher Kenny Powmerchandising approach for the seers, HBO partnered with Bif Bang ries. Fans can purchase an “Item of Pow to create two talking bobblethe Week” for the show—a Eastbound and Down Kenny Powers heads, which will hit retail strategy that started with the in late July. Bobblehead Jet Ski hit vampire program. “Eastbound and Down is “We release a product based on something a comedy and it feels like bobbleheads are a visually iconic from that week’s episode,” good fit,” Chang says. But HBO fans shouldn’t Chang says. “The first week was based on the expect bobbleheads to translate throughout the house of Stark, which is the prominent house channel’s programs. “Just because a Kenny Pow(family) in the series. The item of the week in- ers bobblehead is the right thing to do, that doescludes anything from a Sigil T-shirt to a beer n’t mean you are going to see an Eric bobblehead from True Blood,” Chang continues. stein or key chain.” Although there won’t be a Tony Soprano or The products are available on the HBO website the day after each week’s episode airs Carrie Bradshaw talking bobblehead any time and remain available for purchase throughout soon, HBO is still pursuing licensees for The Sopranos and Sex and the City, as well as Enthe season. tourage, ensuring new merchandise for diehard fans and the chance to collect a few Memorable Moments Captured in Music Treme follows a series of characters in New new ones along the way.

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Tribute to Entertainment

Television

Interview: LazyTown Gets Active, Signs With Joester Loria Group Before U.S. cities began banning trans fat, and long before the introduction of Nintendo’s sweat-inducing Wii games, children’s television series LazyTown has been encouraging kids to eat healthy and to be active. After several successful initiatives in international markets, LazyTown is taking its message to the U.S and teaming with The Joester Loria Group for an upcoming merchandising program that will focus on motivating kids to live healthy lifestyles. “Goomi” Magnason recently spoke with The Licensing Book ’s Elizabeth Reid about where the TV series is now and where it’s headed. The Licensing Book: How did LazyTown get started? “Goomi” Magnason: The show was created by Magnus Scheving a long time ago, and it was all about motivating kids to make healthy lifestyle choices. Magnus had seen that there were no role models in health for kids. You had Popeye, and he ate spinach, but he smoked and hit people so that didn’t really work. What we wanted to do is make education about healthy lifestyles entertaining for kids, and the show achieved that. Now we have found the home for the show here domestically with Sprout. We’ll be going on Sprout twice a week, starting September 3. We are excited about the Sprout launch for two reasons. One of the things that we want to do as a brand is to be a tool for parents. Sprout is very focused on co-viewing. All of its advertising are parent-targeted. Sprout is now in more than 50 million homes. They have got one of the biggest VOD platforms in the country and more than a million downloads. They are averaging about 18 million a month now.

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Their website is bringing more than a million uniques a month with an amazing time of an average .4 minutes on the websites. So, their platform is great. Now that we’re getting The Joester Loria Group to repre-

sent us, we’re also working with the “Let’s Move” initiative. For us it’s different now than it was seven years ago, people are a lot more aware of the childhood obesity crisis. There’s a lot more happening in that space, and the “Let’s Move” initiative shows us that people are really paying more attention now.

Tribute to Entertainment

Television

One of the areas where we’ve success in other markets is food and specifically fruits and vegetables. Characters of LazyTown call fruits and vegetables “sports candy.” The main character gets his energy from eating fruits and veggies. We have worked with Walmart UK, which is the biggest business Walmart has outside the U.S. And we’ve worked with them for two years, focusing a lot of our attention on the fruits and veggies. We’ve been doing programs where we have up to 44 percent increase in sales in fruits and vegetables, which is quite amazing because these categories, they don’t fluctuate that much. So we have been immensely successful with that.

TLB : So what other categories are you looking at? GM: We’re looking at things like live programming. We are already working on the live program, which we hope will launch in about one year. We’re looking at apparel. Costumes are a big thing for us because having live characters on the show, kids really like imitating those, as opposed to imitating CGI or cartoon characters. Every market we have been in, we have done an amazing job with the costumes. We’re looking at food categories like water, milk, etc., and then general

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merchandise, with toys first. We’ll have a lot of focus on activity toys. It’s not common for brands to give so much focus to food, but we’ve shown in other markets that parents really like to use LazyTown to bring about behavioral changes in diet with kids.

TLB :Have you signed any deals recently? GM: We have close to 400 deals under management internationally. So, we have a lot of activity in all the major markets—in Europe, Latin America, and Australia. We just closed with Joester Loria, so we’ll be bringing out new deals here in the states. We can all also agree that a lot has happened within the past seven years when it comes to being aware of this challenge for children’s health. Magnus was a little bit ahead of his time in this regard in many markets. So, I think the stars have aligned for us in a way for that and also with the broadcast platform. These two elements are key to our success in international markets.

Tribute to Entertainment

Television

Voltron Re-forms With Classic Media, World Events Productions Classic Media and World Events Productions (WEP), a top animated television production company, recently announced new consumer products partners in the U.S. for Voltron for the relaunch of the iconic franchise. Voltron will return to defend the universe with the all-new animated series, Voltron Force, set to debut on Nicktoons this summer, with consumer products in development from The Bentex Group, Inc., via their Extreme Concepts division (t-shirts/tops) and their Dreamwave division (swimwear/sleepwear), Rubie’s Costume Company (costumes), VIZ Media (kid’s graphic novels for Voltron Force), and Dynamic Forces (new comic books and graphic novels for classic Voltron). The new partners join Mattel, which is developing master toy lines based on classic Voltron and new Voltron Force, and THQ, which will produce video games based on the Voltron franchise. “We are excited to reintroduce Voltron with top consumer products partners on board,” says Karyn Schneider, vice president, licensing at Classic Media. “With the dream team of Nicktoons, Mattel, and THQ, now joined by these industry-leading partners, Voltron’s return will appeal to fans of all ages and the franchise is poised to take the world by storm, again.” The premiere of Voltron Force this spring will be the first original franchise-related television content in 10 years. Following the premiere in the U.S., the series is scheduled to launch this year with key broadcasters worldwide.

CBS Unveils New Products for Star Trek CBS Consumer Products is warping into 2011 with a new slate of Star Trek products hitting retail during the next year. Everything from apparel, board games, character busts, and collectibles to the first Star Trek-themed Mr. Potato Head will soon be available to Trekkies across the globe. Details of the upcoming Star Trek product line include: • PPW Toys will introduce the first Mr. Potato Head toy line based on the most popular characters from The Original Series and The Next Generation. The line will be available in the U.S. and Canada. • Titan Merchandise will create busts based on characters from all eras of Star Trek’s existence that will be sold across

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North America, South America, Europe, Africa, Asia, India, the Middle East, Iceland, and the Pacific Islands. • Bandai will offer deck-building games based on The Original Series and The Next Generation in the U.S. and Canada. • USAopoly will warp the classic Monopoly board game series into the Star Trek universe with Klingon Monopoly. The iteration will be available in the U.S. and Canada. • Mighty Fine will create a line of Star Trek-inspired knit tops, T-shirts, hoodies, and fleece for the U.S. • Pez Candy will release a Pez collector’s set next year to celebrate the 25th anniversary of The Next Generation in the U.S.

HGTV HGTV will expand its collection of licensed products with the launch of the HGTV HOME brand and three new product lines in the paint, flooring and bedding categories. Sherwin-Williams will launch the exclusive HGTV HOME by Sherwin-Williams, a line of interior paint and painting supplies, available in 3,000 stores by June. Beginning this spring, Shaw Industries will launch the exclusive HGTV HOME-Flooring by Shaw in select retail outlets, and the HGTV HOME fashion bedding collection, in partnership with Victoria Classics, will become available at retail nationwide.

Tribute to Entertainment

Television

Nickelodeon Hitches a Bicycle Ride With Pacific Cycle Pacific Cycle, a division of Dorel Industries, Inc. and the manufacturer of brands Schwinn, Mongoose, IronHorse, Pacific, InSTEP, Dyno, Playsafe, KidTrax, Powerlite, and Roadmaster, expanded its license agreement with Nickelodeon. Under the new partnership, Pacific Cycle produces bicycles and tricycles for Dora the Explorer, Go Diego Go!, and iCarly, as well as bicycle protective gear and accessories for Dora the Explorer, Go Diego Go!, iCarly, and SpongeBob SquarePants. “We’re excited to be expanding our relationship with Nickelodeon into the bicycle category,” says Alice Tillett, president, Pacific Cycle. “Now, we’ll be able to provide consumers with the complete package, from the bike to the helmet to other great accessories, making sure that their kids get to enjoy riding a bike with their favorite Nickelodeon character.” The multi-year deal allows Pacific and Nickelodeon to bring a streamlined program of quality bicycles, parts, and accessories to consumers for years to come. All of the new licensed parts and accessories include the latest graphics and follow the most updated style guides, offering a consistent look and feel from bicycles to accessories. The product line includes a number of new product designs and also include updated packaging safety messaging from Dora and Diego. A new safety message is found on the litho cartons and depict Dora and Diego wearing their helmets. This initiative is unique to Pacific Cycle and Nickelodeon, as no other company in the industry includes bicycle safety messaging on their licensed products. The newest line of Pacific and Nickelodeon licensed bicycles, parts, and accessories debuted in retail stores in March.

Power Rangers emPOWER Healthy Kids

Atlantyca Ent.

For nearly 20 years the Power Rangers have entertained generations of children. Now, as part of the newest action series Power Rangers Samurai, Power Rangers emPOWER is inspiring kids to “Train Like A Ranger” to get fit and healthy. Just as the Power Rangers work together to solve a different challenge in every episode, Power Rangers emPOWER provides families with the tools they need to work together to grow healthy kids and support healthy communities. By providing an innovative and engaging platform with information, activities and resources, Power Rangers emPOWER helps viewers put the values shown on Power Rangers Samurai. As part of Power Rangers emPOWER, more than 4,700 schools nationwide took part in the first Ranger Training program, with participating schools eligible to win a donation of $10,000 and a visit from the Samurai Power Rangers. Kids are encouraged to learn the ways of the Samurai by mastering the values of patience, concentration, and discipline through teamwork, being active, and eating a balanced diet. The second cycle of the Power Rangers emPOWER Ranger Training is currently launching. Schools and nonprofit after-school programs can download Ranger Training activity kit materials, participate, and enter the next round of the sweepstakes online at empower.powerrangers.com, and a new winner will be announced in early June.

Milan-based Atlantyca Entertainment has signed Japanese publishing giant Kodansha Ltd. to a five-year deal for the release of the Geronimo Stilton Funny Tales book series throughout Japan; it was recently announced by Claudia Mazzucco, CEO. Kodansha Ltd., one of the world’s largest publishers of books, magazines and manga, and a legacy that spans more than a century, will release the first title in the series in June through its Kodansha Children’s Books division. The deal was brokered by Atlantyca’s Japan Area Manager Rosamaria Pavan and and Kodansha-Children Book Division editor Yuri Tawara

Spring 2011

Show Coverage/SURTEX

The Art of Licensing May 15-17, New York, NY Every year, artists, manufacturers, and potential licensees meet in New York City for SURTEX, the North American business-to-business marketplace devoted to the sale and licensing of original art and design—from textiles, to digital art, and everything in between. SURTEX will be held May 15-17 at the Javits Convention Center, and this year marks the 25th anniversary. Show manager Penny Sikalis tells Mackenzie Allison of The Licensing Book what to expect.

The Licensing Book: How many people are you expecting to be in attendance? Penny Sikalis: The show will be featuring close to 300 exhibitors, which is a terrific number. Several are agents and studios, which represent a good 1,000 artists, so the amount of artwork that is going to be represented is going to be phenomenal. TLB: What celebratory events and new features are planned to mark the anniversary? Sikalis: We have a party slated for the opening night, Sunday, May 15, at Battery Gardens in Lower Manhattan. We are anticipating hundreds of exhibitors and show visitors to be there celebrating. We also have the design forum, “America Embraces Design… Finally,” slated for May 17, which has a fabulous panel of industry gurus, including senior executives in the sectors of manufacturing, retail, publishing, and design, that will impart their perspective on design for the past 25 years, how it has come a long way, and where they see it going for the future. TLB: Why is the forum’s title "America Embraces Design… Finally"? Sikalis: If you look back to the years prior to SURTEX being launched, the design world in the U.S.—relating to surface design and product—was very limited and very different in the product value from the lower-end to the

Spring 2011

high-end. It was very difficult to find design at the lower, mid-price range. In the ’80s, there began to be a real interest in better design, and manufacturers from the U.S. were going overseas, primarily to Europe, and sought artwork over there. Seeing that there was a need for really good surface design here in the U.S., we launched Surtex in 1986 and a number of the first year’s exhibitors were from the U.K. There is still a pretty strong contingent of UK designers at Surtex today, and they brought great design here to the American manufacturing world, the creative folks, and the product development people. Also, when the show first began, licensing of art and design was almost unheard of. Most of the designs were sold outright and manufacturers were able to do what they wanted with those designs and the artists no longer owned the artwork; it was a whole different ballgame. Over the past 25 years the licensing way of doing business with the original art and design has grown and evolved and now over two-thirds of Surtex is comprised of companies, artists, and designers that are licensing and less than one-third are selling.

TLB: How does the U.S. measure up in this year’s event? Sikalis: The U.S. has definitely bumped up, and out of 300 exhibiting companies, 70 percent are from the U.S. and 30 percent are from overseas— a good majority of that are from the U.K. TLB: Any other news you would like to share about the event this year? Sikalis: We feel that the show is really the best place for anybody involved in the creative process. For product, it’s really the only place in North America where such a large group of exhibitors coalesces under one roof just showcasing all of their latest artwork, which will most likely be extremely saleable on future product. So for manufacturers it’s the place to be to really enhance their business. They can't miss it.

Trend Watch/Crazy Celebrity Licensing When Going off the Rails Goes Right Charlie Sheen is probably the most talked-about celebrity of the year for his (extremely) bad-boy behavior. He got fired from Two and a Half Men and burned bridges going back decades. He also signed licensing deals. By Mackenzie Allison

There is really no question about it: The general public has an obsession with celebrities. But what happens when a cloud casts a shadow over a celebrity's perfect life? Quite frankly, it just makes for a bigger story—and maybe a merchandising campaign to boot. Charlie Sheen is a prime example of this trend. The critically acclaimed star of 1980s film hits Wall Street, Platoon and Major League had a resurgence in his career with the debut of the CBS comedy Two and a Half Men in 2003. However, the actor’s bad boy antics caught up with him in February when he was fired from the show after a tirade that only the Internet age could capture so completely. Eventually, using Twitter and YouTube as his soapbox, he continued to debase his boss, show creator Chuck Lorre, to anyone and everyone who would listen. These online antics boiled over into primetime specials and tabloid television coverage. As with the rest of the country, California-based concert promoter Live Nation was listening. Sheen agreed to

Spring 2011

a merchandising and licensing contract with the company and now Live Nation is selling a number of T-shirts bearing his likeness and bizarre quotes. Sheen has even taken his act on the road with the "Charlie Sheen LIVE: My Violent Torpedo of Truth" tour. It bombed with a Detroit audience out of the gate, but other fans were more forgiving, and the show has had ups and downs through its crosscountry run. The tour wasn’t the only Sheen-backed product in the wake of the scandal. Entertainment Earth created an officially licensed Charlie Sheen talking bobblehead doll that is schedule to be released in July. The doll, called the Charlie Sheen Talking Wacky Wobbler Bobble Head, (pictured) says six phrases: • “When you got tiger blood and Adonis DNA, man, it’s like... you get with the program, dude.” • “Winner, winner, chicken dinner. I don’t think so. Winner, winner, SHEEN dinner!” • “Duh, winning!”

Entertainment Earth’s Charlie Sheen Talking Wacky Wobbler Bobble Head

• “I... I... I am on a drug; it’s called ‘Charlie Sheen!’” • “Built by trolls. Keep that in mind: phones were built by trolls.” • “Apocalypse me... the jaws of life.” Ed Lebar, CEO of Brand Asset Consulting, has studied the bad boy image and how it relates to product branding. "One reason people are drawn to celebrity is that celebrity has a lot more self power than the individual—if you are identified as a celebrity you are identified with a badge of prestige,” he said. According to Lebar, quite often consumers can view a product with a celebrity attached in two ways: aspirational or “someone like me”—meaning someone with the consumer’s same values. “Charlie Sheen has a little of both,” Lebar says. “He lives well and has incredible style. For some guys he’s wild and wooly, so they idolize him.” Lebar goes on to say that Sheen is part of a new bad boy image: He isn't a threat and his antics are amusing. The same could be said of veteran bad boy Gary Busey, who has recently licensed his voice, and Buseyisms, to Navtones.com, an independent developer of celebrity GPS apps. Busey is known for his oddball antics, which are captured in the app with such phrases as “be in the silence and let the journey be in the noise” and “don’t look into the rearview mirror to clean your teeth, or you could rear end a log truck in Oregon and remove your teeth forever.” When it comes to celebrities, the general public seems to live in the moment. Gary Busey hasn’t had a hit film in more than 20 years, but a recent stint on Celebrity Apprentice put him back in the public eye. Charlie Sheen’s antics are still fresh enough to make headlines, but inevitably a new story will eventually come along and steal his thunder. The obvious question presents itself: Is all this Charlie mania just a fad? "It's tough to say if he will fizzle out," Lebar says. "Let’s say he is a hip entrepreneur and doing this to merchandize himself. He might be able to keep it going for six months or it could die in two weeks. He is, however, doing a wonderful job monetizing his publicity."

Spring 2011

Soapbox/Joel Barnett The Opportunity of Licensing Smaller Brands Some brands are no-brainers for licensing. But you have a brain. Joel Barnett, president of Brentwood Licensing, shows you how to use it to find valuable properties that otherwise might fall through the cracks.

There are hundreds of studio brands, product brands and fashion brands with worldwide recognition, but what about the smaller brands that might not have the same brand power in all categories but in select categories create a competitive advantage and benefits to the product? The overall value should be determined in the context of your individual core competency and needs. What should you look for when determining the value of a smaller license? Key questions to ask when evaluating a new license should include the following: Are the trademarks secured and clear? Does the license fit into your portfolio? Does the license have national or regional appeal? Does the license appeal to all or specific demographics? How can the license open new markets and retailers beyond your core competency? Does it open up new distribution channels? How difficult is the license to "knock-off" in a generic manner? For art licenses, how recognizable is the artist? Does it have collectible appeal? How much art is

available? Does the art have a similar look or is it diversified? Does the artist have an interesting biography or brand name? One of the first things I do when evaluating a license is to check the trademark. This can be easily done by using the free government website and the following link: In my experience there is usually some trademark issue or surprise when I check the trademark of a brand. The other thing to check is in what categories the trademark has been filed. For example, most apparel is class 25, but eyewear and bags are another class. Most brands are not trademarked in every class, but check to see where the trademarks are and check to see if there is a conflict in the category you are licensing or other categories that might weaken the future growth of the brand. Check for similar names in your class of trade to identify any conflicts early in your evaluation of the opportunity. How does the opportunity fit into your portfolio? It is

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easy to trade dollars and bring in one license to trade-off another existing license, but if there is a void in your portfolio of licenses, a new license can provide additional business and grow your total business. This can come from age voids, demographic voids, or overall look. If you have animals, a new animal can open up new retailers and limit trade-off risks. If you are focused on character licensing, a brand may be the void in your portfolio if it fits your companyâ&#x20AC;&#x2122;s competency. Brands that have national appeal are usually more visible to many of us, but a regional opportunity, especially in an area with a strong retailer, can be very successful if your company is open to regional retailers. Even national chains will sometimes purchase regional buys which can be a different open to buy than the national dollars. Once expanded regionally, the national appeal may be more evident and appealing to the retailer. Some licenses are easier to knock-off and when purchasing the rights, one should evaluate how a buyer will perceive the value of the license. Sometimes this value comes from a large art portfolio, a strong and unique brand name that so strongly represents the brand and that puts value on the art and the brand, andâ&#x20AC;&#x201D;when applicableâ&#x20AC;&#x201D;brand awareness. Synergy with that brand in other categories with other products sold at that retailer help build the brand awareness and loyalty for the buyer.

Sometimes a small license can be a perfect fit for an item and generate a lot of revenue. For example, a sleep (nighttime) brand may be perfect for sleepwear or for a wakeup alarm clock. Start with your product and work backwards to the perfect license. Celebrity associations can provide high consumer awareness and appeal with your product and their consumer fan base. When evaluating an art license, one should make sure there is enough past art and, if necessary, the ability for new art. I prefer when the art has the same look. I find it easier to build a brand and recognition. Many artists are so creative that they design only a few pieces of art but many different looks. The story behind the artist is important, especially for collectible appeal. This helps in the selling process and the brand positioning. This can be the uniqueness of the art, the history of the artist, the past work experience of the artist, or a charity or environmental message. The lack of a strong, interesting story behind the artist or art weakens the opportunity and should be evaluated as much as the art itself. If you are visiting the Las Vegas Licensing Show in June, look around, look in the corners and look in the back. Look for the small booths as much as the big ones. The perfect license for you may not be the brand with the big bold neon sign but something a little more hidden.

Spring 2011

Another View Does Your Business Really Need An App For That? By David Mastovich Smart phones now account for 27 percent of the mobile phone market, led by nearly 50 million iPhone or Android purchases in the fourth quarter of 2010. Consumers want to be able to communicate and buy and enjoy whatever they want, whenever they want it. As a result, more than 400,000 mobile applications or apps have been developed in the last three years. So does your business need a mobile app right now? The most used mobile apps are for playing games, catching up on news, sports and weather, social networking and listening to music. But there are a number of successful business apps too. Apps can help companies: 1. Develop Their Brands—Many of the “first-toapp” companies were those with famous brands such as Nike, Coke and Domino’s. Apple pretty much created the app space. As a result, there’s a cutting edge or coolness factor associated with having an app. If your company creates an app and markets it via multiple channels, the opportunity exists to enhance your brand. 2. Please—Consumers want convenience. You can make or keep customers happy by making their lives easier. If they can learn about and buy from your company quickly and easily, you can please them. When you provide them with valuable, timely information, you keep them happy and your company (and app) becomes a part of their routine. 3. Connect—Think in terms of health and fitness apps. The user has an ongoing, positive connection with the company. You have an opportunity to achieve regular marketing touches in a non-marketing manner through feel-good connections. 4. Track and Optimize—When customers use your app, you have information to track and trend.

Plus, your mobile app helps with Search Engine Marketing in that your company name is online one more time. But before you jump on the mobile app bandwagon, you still need to consider your options. Today’s smartphones have capabilities nearly to the level of desktops and support both regular websites and mobile versions. As a result, you might be able to achieve your goals in a more cost effective way by creating a mobile version of your website. Some companies require more capabilities for mobile than their regular website offers. But for many others, simply developing the mobile version of the website will suffice or be even better than the app. If you have weighed the benefits vs. the overhead costs of developing the app and decided it is time to move forward, remember to make it about them—your current and potential customers: • Begin by identifying the “who,” as in “Who is the target market for the app and why would they use or need to use it?” • Provide fresh, updated content that adds value for users. The more time-sensitive, the better. Announce specials and provide new information. • Remember it is about convenience for them. Make their lives easier and become part of their routine as much as possible. Build an app for each mobile phone platform so it is available for anyone that wants to use it. • Make sure the app does something and isn’t just a mobile website. Otherwise, why make the bigger investment? • Get the word out about the app. Tell current and potential customers about it and give them a compelling reason to use it. Utilize multiple mediums like email, text, Twitter, your website and others to reach them. Your business may or may not need a mobile app today. But you definitely need to analyze the opportunity and enhance your mobile presence now and in the future.

About the Author: David M. Mastovich, MBA is President of MASSolutions, Inc. With a core philosophy of integrated marketing, MASSolutions focuses on improving the bottom line for clients through creative selling, messaging and PR solutions. In his recent book, Get Where You Want To Go: How to Achieve Personal and Professional Growth Through Marketing, Selling and Story Telling, Mastovich offers strategies to improve sales and generate new customers; management and leadership approaches; and creative marketing, PR and communications ideas. For more information, please visit massolutions.biz.

Final Point/From the Editor Why create knockoffs when you know you’re going to get caught? The (usually bad) economics of unlicensed goods. By Bryan Joiner

Unlicensed goods are hardly a new phenomenon. For as long as there

the toys off the market.

have been licensed products, manufacturers have produced unlicensed

Why did MIC try to manufacture the bootleg Facebook toy while si-

goods. The question of “why” goes beyond trying to make a quick buck.

multaneously promoting it on its Facebook page, after the Apple inci-

Sometimes it’s for publicity. Sometimes it’s out of laziness. Sometimes

dent? The simple answer is publicity. The chances that two of the world’s

it’s because of a legal gray area.

largest companies would li-

In every case, we can see why

cense out the likenesses of

licensing is important.

their founders to a small

Recently, China-based Made

manufacturer are almost nil.

in China (MIC) Gadgets was is-

The chances that these large

sued a Cease and Desist order

companies would sue them

for creating an action figure of

out of existence are small,

Facebook founder Mark Zucker-

but real. This balancing act

berg without his permission.

behooves the rogue manu-

The “Poking Inventor” figure

facturer to make unlicensed

featured Zuckerberg standing on

goods that will gain wide-

a platform next to the Facebook

spread publicity that can’t

“f” logo holding a thumbs-up

otherwise easily be bought.

sign with the word “Like.” When Facebook’s lawyers got

Mark Zuckerberg, founder of Facebook (l.), wasn’t happy with MIC Gadgets’ “Poking Inventor” action figure (r., photo from MIC Gadgets)

wind of all this, they quickly dis-

As perverse as it is, this seems like a calculated step toward making legal licensed

patched an order for MIC Gadgets to cease production, and MIC quickly

products, by MIC Gadgets showing off what it can do for some of the

complied. But the real kicker is this: They knew it was coming.

most famous faces on the planet.

In February, MIC sold a “Pineapple CEO” doll for $89 that poked fun

Until companies make manufacturers really pay for this type of in-

at its easily identifiable target: Apple CEO Steve Jobs, dressed as a ninja

fringement it will continue. But as Crate and Barrel recently learned,

due to his onetime attempt to smuggle throwing stars out of Japan.

it’s not good to test the waters with an unlicensed good if you have

Then, as in the Facebook case, a Cease and Desist order from Apple took

a reputation to lose.

Spring 2011

the Barack Obama “Hope” poster image on its products. Fairey doctored an Associated Press photograph to create the poster, and has argued that it was done under fair use guidelines. The AP did not agree. The recent settlement dictates that Fairey will not use another wire service photograph without permission, and the AP has dropped similar copyright infringement claims against retailers who sold Obey’s tees. Now for the happy news: the two sides have agreed to go into business together, with Fairey creating T-shirts from officially licensed AP images. The lesson is: Licensing exists for a reason, and it works. Tweak the system and you might get some publicity. Abuse it and you might get a smackdown. Use it in new and creative ways, and you might make it better for everybody.

After years of litigation, the AP and artist Shepard Fairey have reached a settlement that will allow Fairey to sell products using licensed AP images.

The retailer received its own Cease and Desist letter from hotelier Ian Schrager in March. Schrager’s hotel lobby designs have given rise to the idea of a hotel as a boutique destination, and a Crate and Barrel sofa in the vein of those designs was called “Ian’s Leather Sofa.” More pointedly, Crate and Barrel upholstery buyer Becky Weber told the Associated Press that “The Ian Leather Sofa pays tribute to Ian Schrager, who pioneered the concept of hotel lobby as ‘club.’” Shortly thereafter, Schrager issued the Cease and Desist letter. It seems unlikely that Crate and Barrel will scrap the sofa or be able to officially license Schrager’s name. Licensing is sometimes invisible, but sometimes it’s very visible, and the Schrager/Crate and Barrel case would have been a visible application of it. There is no reason for Crate and Barrel not to have licensed the Schrager name if they were planning on creating a furniture line that paid homage to him. Now they are stuck. Sometimes, though, when licensing disputes arise, solutions can be found that benefit both parties. The Associated Press and artist Shepard Fairey recently settled a years-long lawsuit that stemmed from Fairey’s Obey Clothing line using

Spring 2011

Of Counsel/With James Kipling On the Duration of a License and the Importance of Negotation Licensing 101, Part 60 Duration of License

Alternative Approaches

One of the central elements of any license agreement is the duration

As a hypothetical, let’s assume that the licensor won’t move from

of its term. Since each side to a negotiation seeks to minimize its risk,

$100,000 per year in minimum royalty guarantee for the desired rights

the greater the uncertainty that is involved in a license, the more dif-

or from three years for the term of license.

ficult the negotiation of its term likely will be. Depending upon whether the property is a new introduction or an established ever-

The “Success” Scenario:

green, the parties may disagree on whether

Both parties know that the licensee is will-

the term should be brief or lengthy, fixed or

ing to undertake significant initial risk be-

subject to extension or reduction, and if the

cause it has faith in the property. Assuming

latter, on what basis.

that the licensor is inclined to be reasonable, it should be willing to give the licensee

Too Short? Too Long?

the opportunity to extend the license if it

Unless each party’s expectations for success

proves successful.

approximate reality, one or the other of them likely will regret the deal it has struck. If the

First / Last?

deal requires a minimum royalty guarantee

The licensor might offer a first right of ne-

for each year of a license, the licensee will

gotiation to extend beyond the initial period,

want the opportunity to shorten the term if the property becomes a

but a circumspect licensee will recognize this would put it into a po-

disappointment in the marketplace. If it’s a big winner, however, the

sition of having to negotiate against its own success. That is, if its

licensee doubtless will want to extend its rights. The licensor may

products have sold well, another potential licensee is likely to offer a

have the opposite interest in either scenario. If a property takes off,

premium in order to step into our licensee’s shoes and partake of the

the licensor may wish an early opportunity to auction the licensee’s

fruits of its efforts without having taken the risk. Even if the licensor

rights to the highest bidder, but if it is not successful, the licensor will

suggests incorporating a matching right into the license, the premium

not be interested in shortening the term if that means reducing the

offered by the third party might be beyond our licensee’s means and

guaranty.

cost our licensee the opportunity to enjoy its own success.

Spring 2011

Pre-Set Threshold

hastily. The licensor will want to assure itself that it will receive at

Normally, it would be preferable to the licensee to establish condi-

least the minimum guarantee for the initial term. The licensee will be

tions at the outset upon which the agreement could be renewed. The

searching for an inexpensive opportunity to depart from the relation-

parties might agree up front to set a specific minimum guarantee for

ship. Particularly, if a license involves an unproven property (or an es-

an extension period, or alternatively to define a formula by which the

tablished property, but applied in unproven product categories), some

minimum can be objectively determined, should the licensee elect to

form of exit strategy should be near the top of the licensee’s list of

extend. (For example, the renewal-period minimum guarantee could

objectives during the initial negotiations.

be based on an agreed multiple of the actual royalties earned during

Referring to our example of a three-year term and $100,000 mini-

the initial term.) However defined, if the licensee were willing to pay

mum, one exit concept could be a right of the licensee to cancel the

the minimum for extension, it would

third year by giving notice of early

have the option to do so.

termination and paying a buy-out fee in an amount somewhat less

Multiple of Initial Term Royalty

than the third-year’s minimum guar-

From the licensor’s perspective,

anty (e.g. $25-$50,000). If the licen-

these approaches might be palat-

sor is willing to consider this

able in concept but might require

alternative, it likely will insist upon

safeguards against making renewal

a substantial lead-time for the exer-

too easy for the licensee. For exam-

cise of the buy-out, in order to have

ple, if the renewal is based entirely

an opportunity to replace this li-

on guaranteeing that the licensee

censee with one who is more en-

will exceed in the renewal period some multiple of the total royalties

thusiastic about the property. If the licensee negotiates for and

earned during the initial term, the licensee could qualify very cheaply

exercises such a buy-out option, it will have reason to congratulate

if it has been relatively unsuccessful but nevertheless wishes to ex-

itself for its diligence, if not for its initial evaluation of the property.

tend.

****

Aggravating the licensor’s regret in that situation would be greater

Regardless of the mechanism chosen for extension or early ter-

success of the property in product categories other than those of our

mination, the efforts of each party to risk-adjust the deal during ini-

hypothetical licensee, implying underachievement by the licensee.

tial negotiation in order to make it mutually palatable is certainly

Therefore, the wise licensor will seek to condition any such option to

warranted.

extend on some threshold performance achievement—for example, the option could be conditioned upon the licensee’s exceeding the min-

The “Disappointment” Scenario:

James Kipling is a veteran of more than 20 years representing licensors and licensees in negotiating entertainment, sports, artwork, brand, invention, and technology agreements. He is Of Counsel with Wood, Herron & Evans LLP in Cincinnati, Ohio, and can be reached at (513) 241-2324, jkipling@whepatent.com. Copyright: ©2011 James M. Kipling All rights reserved.

If the property fails, everyone will be reading the license agreement

Images courtesy sxc.hu users “iprole” and “lockstockb.”

imum guarantee during the initial term by some multiple (rather than simply a multiple of actual royalties generated during the initial term) in order to qualify for the right to exercise the option.

Spring 2011

Directory of Properties, Products and Services

STATEMENT OF OWNERSHIP, MANAGEMENT, AND CIRCULATION: REQUIRED BY 39 U.S.C. TITLE OF PUBLICATION: THE LICENSING BOOK. PUBLICATION NO. 716-730. FREQUENCY OF ISSUE: BI-MONTHLY. NUMBER OF ISSUES PUBLISHED ANNUALLY: 7. ANNUAL SUBSCRIPTION PRICE: $48. COMPLETE MAILING ADDRESS OF THE HEADQUARTERS OF GENERAL BUSINESS OFFICES OF THE PUBLISHER: 307 7TH AVE, ROOM 1601, NEW YORK, NY 10001. FULL NAMES AND COMPLETE MAILING ADDRESSES OF PUBLISHER AND EDITOR: PUBLISHER, JONATHAN SAMET, 307 7TH AVE, ROOM 1601, NEW YORK, NY 10001; EDITOR IN CHIEF, BRYAN JOINER, 307 7TH AVE, ROOM 1601, NEW YORK, NY 10001. OWNER: ADVENTURE PUBLISHING GROUP, INC., 307 7TH AVE, ROOM 1601, NEW YORK, NY 10001.

EXTENT AND NATURE OF CIRCULATION: Avg. No. Copies Each Actual No. Copies Single Issue Issue During Preceding Published Nearest to Filing 12 Months (6 issues) Date Total No. Copies Ligitimate Paid and/or requested Distribution 1. Outside Counrty Paid/ Request Mail Subscription 2. Sales Through Dealer and Carriers, Street Vendors, Counter Sales, and other Paid or Requested Distribution outside USPA Total Paid and/or Requested Circulation 1. Outside Counrty Nonrequested Copies 2. Nonrequested copies Distributed Outside the Mail (include Pickup Stands, Tradeshows, Showroom, and other sources) Total Nonrequested Distribution Total Distribution Copies Not Distributed Total Percent Paid and/or Requested

2nd Shift....................................................................62 A&E Television Networks.................................31, 32, 33 Atlantyca Entertainment ..............................................57 CBS.........................................................................1, 2 Elvis Presley Enterprises...............................................55 Fremantle Media Licensing Worldwide .........................43 Gateway Licensing .....................................................62 GM Licensing.......................................................59, 62 Harris Sachs ..............................................................62 HBO..........................................................................41

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14,485

13,862

13,041

12,877

13,139

12,902

210

251

788

400

998

651

14,137

13,553

348

309

14,485

13,862

93%

95%

LazyTown Entertainment..............................................64 LIMA .........................................................................63 Moshi Monsters............................................................5 Precious Moments.........................................................7 Skechers ..............................................................19, 45 Striker Entertainment...................................................27 Surtex........................................................................49 The Toy Insider ...........................................................37 Trau & Loevner ...........................................................62 Universal Studios........................................................11