1 February 2021
Why Brand Licensing is becoming ever more important for heritage organisations
By Liz Bowers, Senior Consultant
The closure of museums, galleries and other heritage venues for much of 2020 has wiped out their biggest income sources – admissions, exhibition ticket sales, shop and café income and revenue from corporate hospitality and events. Business areas that do not rely on visitor numbers have therefore become ever more important this year. One of these is brand licensing.
Like any good partnership, licensing collaborations should be mutually beneficial. The Licensor receives royalties on product sales without the financial risk of product development and manufacture, as well as increased brand reach. The Licensee gets image assets and subject expertise, access to new audiences and alignment with a trusted or desirable brand which should increase product sales. Both parties can also combine their marketing and PR efforts and social media reach.
Heritage licensors are examples of evergreen properties – trusted brands that won’t go out of fashion. With extensive archive material and compelling stories to tell, heritage licensed products can give a retailer added value and that all important point of difference. More than ever people want to support charities or causes with their purchases.
The global licensing industry was worth US$292.8 billion[i] in 2019, and although dominated by character and entertainment licensing, it was encouraging to see that the fastest growing licensing sectors last year were Art (+10%) and Non-Profit (+18%).
Impact of COVID-19 on the licensing industry
Although the full effects of COVID-19 will not be clear for some time, the licensing industry adapted pretty quickly. Despite the inevitable casualties on the high street, delays to manufacturing and supply chains and some caution amongst licensees about taking on new brands, encouragingly, many licensees remained optimistic for business recovery and continued to progress ranges even if they had to delay product launches. Retailers and licensees that have survived so far have adapted by increasing their online business, concentrating on products that are in demand, switching their supply chains including to more UK manufacturing and engaging positively with customers through email and social media to engender brand loyalty.
Many product categories have seen growth this year, including food, sports clothing and equipment, loungewear and nightwear, home and garden products, DIY, greetings cards and stationery, arts and crafts and toys and games.
Lockdown has seen the resurgence of all sorts of hobbies that can be enjoyed at home, resulting in strong growth of categories such as stamp and coin collecting, model making, craft activities, board games and puzzles. Home schooling has driven demand for fun, educational content for children’s magazines and games. The global video game market is forecast to be worth an eye-watering $159 billion[ii] by the end of 2020 and unsurprisingly has seen extraordinary growth during the lockdown. For some of these specialist hobbies and activities, where consumers want accurate, authentic products, heritage organisations can provide that all important expertise and brand endorsement.
Heritage brand licensing will also benefit from some of the consumer trends which have emerged or accelerated this year. These include the increase in online shopping, the importance of purchasing from trusted brands due to the need for assurances about quality and safety, the increased desire to buy ethical and socially responsible brands, a willingness to spend more money on sustainable brands and a desire to buy UK manufactured goods.
The licensing industry started 2020 with a strong, profitable business model, and it is confident that it will weather the current storm. Arts and Heritage licensing has seen positive growth and looks set to become more desirable as licensors look for ‘evergreen’, trusted brands which consumers want to support. For cultural organisations, licensing revenue can be a valuable income stream at a time when every penny counts.
[i] Licensing International’s Global Licensing Survey, June 2020 https://licensinginternational.org/news/global-sales-of-licensed-goods-and-services-jump-4-5-to-us292-8-billion/
[ii] Newzoo’s Global Games Market Report, May 2020 https://strivesponsorship.com/wp-content/uploads/2020/07/Global-Games-Market-Report-2020.pdf
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© Naomi Korn Associates, 2021. Some Rights Reserved. The text is licensed for use under a Creative Commons Attribution Share Alike Licence (CC BY SA)
Disclaimer: The material in this blog post is for general information only and is not legal advice. Always consult a qualified lawyer about a specific legal problem.