Licence to grow

Is India’s licensing and merchandising industry finally ready to take off?

Licence to grow
Market observers are hopeful that as technical innovations start lowering the entry barriers, more players will throw their hats into the ring.

Two announcements this month have brought life back into the long-slumbering licensing and merchandising market in India. First jewellery brand CaratLane said it had collaborated with Japanese cartoon character Doraemon to launch a line of gold jewellery for children. Then toy manufacturer Funskool India announced it had acquired the licence to manufacture and distribute cartoon character Chhota Bheem and seven other action figures from Green Gold Licensing and Merchandising India, which is engaged in creating animation content, licensing and merchandising and movie production and distribution. “This deal means the beginning of “acche din” (good days) for homegrown animation characters,” says Ashish S K, founder, Punnaryug Artvision and chairman- FICCI- AVGC-XR Forum.

He has reason to be optimistic. Despite being around for decades the licensing and merchandising sector in India is still considered to be at a nascent stage. As per Licensing International, India ranks 18th in the world with $1,864 mn at retail and a 0.6% share of the global market. The global licensing industry was estimated at $292.8 bn in 2019 at retail, and it is growing at 12% annually. Walt Disney is the absolute master of the game and it has very successfully used its characters for secondary commercial exploitation by creating a global franchise for them. It has over 3,500 licensees globally, close to 200 of them in India alone. A leading character licensor in India, Disney’s business is aligned around four brands – Disney, Pixar, Marvel and Star Wars and offers products a cross segments such as toys, fashion & home, food, health & beauty, stationery and publishing.

Smita Maroo, senior vice-president, animation, kids digital and licensing and merchandising, Shemaroo Entertainment, explains why growing the market in India has been a “complex job filled with challenges”. First, the uptake of branded merchandise is limited to big towns and cities, with the potential customer base extremely price sensitive. Second, customer awareness is so low that there is little distinction between original merchandise and copy — one reason why piracy is rampant. That apart, the market remains a highly fragmented and unstructured market. The biggest bugbear is the absence of a structured royalty system that makes it unviable for the many hopefuls.

Morale booster

Market observers are hopeful that as technical innovations start lowering the entry barriers, more players will throw their hats into the ring.

Till now, the biggest base for licensing has been entertainment, with toys and school stationary being the highest selling categories. Jiggy George, founder, Dream Theatre, says it is great to see Chhota Bheem evolve and be distributed as action figure toys. The property was launched almost 14 years back and was the first one to capture the imagination of the audiences. The extension into toys/action figures has been long overdue and has probably been necessitated by the growing challenges faced by importers of Chinese toys.

“India has two of the three tick marks for a great licensing business. Entertainment is really affordable and accessible today. Pre-school brands like ChuChu TV have just come and been built out of YouTube. So, the barrier of entry has gone down. However, retail so far was not sophisticated. (In the West it is more organised which means less piracy and more royalties.) As these two factors change, India will be ready to explode since we already have a consuming class,” George adds. Ashish of Punnaryug Artvision agrees. It is about time the licensing and merchandising model followed by Indian firms became institutionalised, he adds.

Maroo maintains there is a lot of scope for players to scale up because there are quite a few Indian characters that can be leveraged without much hassle. “The digital boom we have seen in the last couple of years will boost the industry multi-fold. With Metaverse and Web 3.0 the potential in the coming decade is huge,” she notes.

Shemaroo recently introduced activity books, story books, and back-to-school products with popular the Bal Ganesh character and has even extended the brand through its recent character licensing deal with Creative Galileo from Singapore for its kids’ e-learning app.

Much depends on a licensor’s long-term goal for its character – if the licensor is looking to build a brand, or is willing to invest in marketing and creating the demand for its products, the whole category will gain in the process.

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