The View from Peter Holly

With a population of over 83 million, Germany is the fifth largest economy in the world with GDP per capita of over $50,000. Of course, as with every other market, the pandemic has impacted on consumer spending in general and, of course, the licensing industry. On the following pages, we take a look at the German market and highlight some of the companies and properties.

GERMANY

Total Licensing spoke to Peter Hollo, who runs Licensing International in Germany, and is also owner of the TOYS & GAMES Report, a high profile management consultant and a true insider in terms of the business. Peter gave us his personal thoughts as to the coming year.

We are not doomed!

“At this time of the year I usually get asked, what will happen next? In the licensing business or in all the other projects I am part of. Well, the simple answer is, I don´t know. Because if I knew, I wouldn´t be writing this column or working hard for a living. I would send greeting cards from my private island and sip on a Bloody Mary! But lightness aside for a moment, 2021 will be tough. It will be tough for licensing in Germany and in any other German market and probably in almost any other country in the world. In my view 2020 has only been the overture to a mighty storm hitting us all in 2021. Why do I use these dramatic words? I will explain to you. Are we inevitably doomed? No, we aren´t. We will fight and we will win, but there will be casualties. Most of us went into 2020 with full naivity and innocence. We had heard that there was something going on in China …well, it was their own business …and it suddenly struck us. And it took months for the public to understand how threatening it all was. But we did not only start 2020 with innocence, we started with money in our pockets and with (licensing) agreements that were signed way before Covid. Today licensors or agents, or anybody who owns an intellectual property, does this, generally, with emptied pockets, because they had to respond to the unpleasant situation financial situation in 2020 and had to sell something in a situation, that didn’t look too promising. Even the industry’s majors have to accept that it’s no longer big against small. It’s fast and flexible against slow. I don’t think it feels too comfortable owning theme parks or cruise ships that currently gobble up ‘everything’ you do well in other fields of your business empire. In Germany we have the comfortable situation (I´m sure some will argue), that the German government supports businesses with massive payments (which next generations will have to repay) and with a temporarily change of the insolvency law and regulations. Some companies might be in insolvency already under the usual law, but are not obliged to file this. But this will hit us in 2021, when this goes back to normal. We will very likely be facing an insolvency wave of never before seen dimensions, in almost every part of the economy. Not especially in licensing. But we will feel it. Either directly or indirectly. Because we are a part of a deeply interrelated economic ecosystem. So? Not everything is awesome in Germany? First of all we are Germans, this means there never ever is anything we would refer to as awesome - quite okay is the best you can get. This separates us from the Americans, where everything is awesome, or even more. But as I said before, this does not mean that we are inevitably doomed. There are industries in Germany that are working quite okay/awesome! Anything that is connected to toys, games, home-decor and others, basically every industry, who sells cocooning as an idea. If you sell board games or puzzles, 2020 and 2021 will make you smile. And this is such a big opportunity for the German licensing industry. Find the right markets. Adapt your portfolio. Discuss, evaluate and execute new strategies, new franchises and new properties. This crisis challenges every single company and every single person working for it. It’s disruptive power is so outrageous, that it will change our market forever. And you either go with the flow or you will be swept away forever. I admit, this is difficult and will require guts and resilience. But there is simply no alternative. Sticking to the good old times and hoping they will come back might be an entrepreneurial death sentence. If you are not one of the very very lucky ones, who can simply lean back and watch. There’s always an exeption to the rule.