This week The Licensing Letter’s editor-in-chief Gary Symons joined Richard Gottlieb of Global Toy News for a chat about the toy licensing industry.
For those who may have missed the news, TLL and Global Toy News entered into a partnership recently, sharing news of interest to the readers of each publication. Check out the home page of TLL’s website, and you’ll see we carry articles from the globaltoynews.com site every day through an RSS feed.
But this week Global Toy News was focused on the many changes at The Licensing Letter over the past year, and on how the toy licensing industry prevailed through the pandemic and the recent logistics crisis.
You can the interview as it appeared in Global Toy News HERE, or read the interview below.
By Richard Gottlieb
Publisher of Global Toy News and the Toy Intelligencer
The Licensing Letter is a must read for anyone interested in, as the title implies, licensing. Launched in 1977, it has become a bible for those who wanted the latest information on who is doing what with brands, character licenses, and more.
The Licensing Letter may be 44 years old, but it is certainly not sitting back on its laurels. In October of 2020, the company behind The Licensing Letter, Plain Language Media, decided to up The Licensing Letter’s game by hiring the highly talented and experienced Gary Symons.
Gary has been an award-winning investigative reporter for The Canadian Broadcasting Corporation, a successful entrepreneur, and a software and tech designer. He has done a lot and knows a lot. Here is my interview.
RICHARD: Gary, you are the Editor-in-Chief at The Licensing Letter. Prior to this position, you were an investigative reporter, an entrepreneur, a software and tech designer, and a corporate consultant. You have been a busy guy. How have those prior positions, and the experience you had fulfilling them, influenced you in your new role?
GARY: I think the experience as an investigative reporter gave me the ability to always dig deeper, and go beyond the surface of the stories we cover every day. At the Licensing Letter, while we cover the day to day news, our bread and butter are the special reports that go to
our subscribers, and they expect us to provide in-depth reports on the most important trends affecting our industry.
My experience in tech and later as a financier and consultant gave me a much better appreciation of how a business is actually run, and you can’t really know that until you’ve run a business yourself. Also, while I didn’t do much work in the area of brand licensing, I did
negotiate a lot of deals in technology IP licensing, and I think that knowledge carries over into our industry, just knowing how these deals are structured. It’s especially important right now as the brand licensing industry gets more and more into the technology sphere, through video games, cryptocurrencies, NFTs, and the latest major trend, the development of the metaverse.
RICHARD: Can you tell us a bit about the history of The LicensingLetter, and what direction are you taking it as it moves into the future?
GARY: The Licensing Letter was founded in 1977, and was really the first publication about the brand licensing industry. For many years, it focused on providing statistical data that could inform the decisions of leaders in our industry.
In the late 1990s the company put up its first website and went digital, but for many years the company remained primarily a print publication, and I think that really did hurt the company’s fortunes as more readers went online.
The Licensing Letter was then purchased by Plain Language Media, which owns a number of other niche publications, and last year the company decided to go in a more journalistic direction. I was hired in October last year with a brief to greatly increase the number of
stories we publish online, to grow the monthly publication as well, but also to help widen the scope of The Licensing Letter.
In the past year we have hugely increased the number and type of stories we cover on the website. As well, we now send a daily email newsletter to our 27,000 subscribers, and that has really driven a lot more traffic. We now have a daily open rate of around 33 or 34 percent, which is quite high for any publication.
The monthly newsletter is also much larger, and this month we hit a new record of 42 pages with no advertising. As well, we’ve changed the way we write our Special Reports. While we still do the big data stories, based on our surveys and other research tools, we now provide a lot more analysis of breaking trends in the industry.
For example, before anyone else was writing about licensing and the metaverse, we brought out a large, in-depth Special Report that showed how the metaverse would very quickly become the largest growth area for the entire licensing industry. So, we now go far beyond the statistics of what’s happened in the past, and we now look to the future and write about opportunities or threats that will face our readers in the months or years to come.
But maybe the biggest change is what we’re doing over the coming few months. The Licensing Letter has always earned its revenue solely from subscriptions, but as of this month we are now adopting a hybrid revenue model, which includes various forms of marketing and advertising for our clients.
For example, in the most recent edition, you’ll see we have two enhanced listings in our Deal Sheet from Brand Central. This is just the first step in providing our clients with better ways to get their message out directly to our readership.
RICHARD: How big is the toy industry as a source for intellectual property?
GARY: The toy industry is absolutely huge in licensing and IP. In 2020 global toy revenue hit roughly $95 billion, but that doesn’t tell the full story anymore, because toy companies have changed the way they play the game.
These days, most of the big toy companies now think of themselves more broadly as play and entertainment companies. Rather than just sell toys that are often based on other people’s IP, they now create movies, TV shows, music, and video games based on their own IP.
For example, take a look at Mattel’s Barbie line, which has spawned all sorts of movies and TV shows. Or look at Spin Master’s PAW Patrol series of toys, that are now best known for their TV series, the upcoming film, and even video games.
These days, toys are created with a story behind them, and they are launched in such a way that they create a network of media assets.
RICHARD: How big is the toy industry as a source of royalties paid for those who license intellectual property?
GARY: This is the more traditional model that we talked about, and it too is a massive source of revenue. A great example is LEGO, which is very smart about creating building sets based on films, TV shows, video game characters, and so on. LEGO’s most popular sets are typically based on Marvel and DC characters, video game characters like Super Mario, film franchises like Star Wars or Harry Potter, and so on.
The other thing about LEGO is they’ve been incredibly smart about doubling down on their licensing deals by creating their own films based on LEGO versions of other IP. The best example is the LEGO Batman movie, but if you look at all the movies, TV specials and TV series LEGO has done from other company’s IP, the list is incredibly long.
So, companies working with LEGO, and other toy companies in general, are these days earning revenue from multiple streams; not just toys, but also from events, theme parks, movies, and more.
RICHARD: There is, to say the least, a great deal of turmoil in the world. How is licensing as an industry adapting, and what do you see ahead?
GARY: Turmoil? What turmoil?
Yeah, just kidding. It has been a rough couple of years for so many of us. We face the worst pandemic in over a century. We have political turmoil all over the world, and particularly right now in the United States. We’ve really seen major impacts from disasters related to climate change. Our logistics network globally is in a complete shambles, so yes, it’s a very tough time to be in business.
But despite all that, many areas of licensing have done surprisingly well, and the toy industry is a great example. When the pandemic hit and all the theatres shut down, it really did seem that the toy industry would really suffer, but in fact, the opposite happened.
Consumers moved to streaming services, so while the big blockbuster movies didn’t come out, you had very popular TV series showing up on Prime Video, Netflix, HBO Max, and of course Disney+.
Just think of the Mandalorian series, for example, and how much that one show has translated into all kinds of toys. At the same time, consumers and their kids needed some way to entertain themselves, so that meant people spent more money on higher end toys with a lot of repeat play value.
So, while some industries like movies, restaurants and travel really suffered, the licensing industry as a whole has overall just shifted to those areas that have done well, like housewares, toys, outdoor equipment, and exercise equipment. Now, instead of someone going on a trip to Europe or Hawaii, they went and bought a couple of kayaks and went on a staycation close to home.
The licensing industry is very well developed and the companies are incredibly good at shifting gears and predicting trends, and for that reason most of the licensing companies that I deal with have done pretty well, given how many dislocations we’ve faced in the overall economy.
RICHARD: You just wrote a major report about the Metaverse, which is the second you’ve done this year. Why do you think the Metaverse is so important for the licensing industry?
GARY: Well, basically, we are looking at the third phase of the development of the internet, and some people call the metaverse by a different name, as Web 3.0.
The first phase was mainly getting information online, and connecting us all through the web and through email. The second phase was the mobile internet, which also made social media so
pervasive in our lives. And right now, the overall value of the internet as a sector is about $15 trillion, with a T.
The next phase of the internet is bigger than all of that. Web 3.0 will basically see two things happen. First of all, we as people will now enter a three-dimensional, digital world, where we’ll be able to walk around and interact with the avatars of other people. So, in the very
near future, you’ll go to a virtual office, and after work you might go to a virtual fitness class, and on the weekend you might shop in a virtual shopping mall, or go to a concert in a virtual arena. This will all happen through Virtual Reality technology.
But at the same time, things from that digital world will start to show up in our real world, and that’s already been happening with Augmented Reality games like Pokemon Go.
So again, in the very near future, you’ll start seeing digital people and creatures starting to appear in shopping malls or retail stores through Augmented Reality glasses. And as that happens, this digital world will grow over time to be much bigger than the current internet, and some people say it will become bigger than our entire physical world.
Within this metaverse as it’s now called, the licensing industry will be incredibly active, because all of the IP that’s been created will now appear in these digital worlds. So, you might be able to chat with a Marvel superhero in a virtual toy store, or interact with video game characters at a concert event, and all of these millions of interactions in the metaverse will have a licensing agreement behind them, and they’ll generate licensing royalties.
I
t’s hard to wrap your head around, but I believe the metaverse is by far the largest opportunity the licensing industry has ever seen, and within the next 10 to15 years it will surpass film, television, publishing, and video gaming combined as a source of revenue. And
the reason I say that is all of these other sources of licensing will soon exist inside the metaverse.
Richard: I always lke to close with this question: Do you have a toy in your office? If so, what is it?
GARY: I do have one toy, and it’s a little stuffed toy Triceratops that we bought for our kids when they were small children. They had literally hundreds of stuffies because all our relatives would buy them presents, no matter how much we said enough! Stop!, but they hada name for every single stuffed toy they owned. But this one, named Toby, was always one of their favorites, so it’s in my office right along with the photos I have of my family.
Click Below For Access to TLL’s Second Special Report on the Metaverse