Plugging in: Video game properties make a play for kids licensing

With video game hardware and software sales sitting at a cool US$21.33 billion in 2008, and a console or Nintendo DS occupying the spare time (not to mention hands) of most kids over eight right now, it's not surprising that industry IP owners and creators are making a serious play for traditional licensing territory currently dominated by character- and entertainment-driven properties. In fact, a video game-filled interactive section is gracing the floor of Licensing Show for the first time. Several game publishers, including giant Electronic Arts, are exhibiting in one area in the hopes of convincing licensees and retailers that the next licensing hit need not come from a movie or TV show.

The move no doubt reflects the influence of video gaming on the daily lives of kids and young adults. Recent NPD Group report Kids & Digital Content III, for example, looked at the use of entertainment content on consumer electronic devices amongst US kids two to 14 and found that while video game consoles are employed to screen other forms of entertainment, a full 85% of users still got their game on. The study also found that 82% of kids between the ages of two and five are playing games on digital devices.

Moreover, the Entertainment Software Association and NPD reported that family-friendly video games - rated E for Everyone and E10+ by the ESRB - accounted for more than half of all game sales in 2008, making it the most popular genre. Coupled with a

19% gain in video game industry revenues in 2008 over 2007, the flagging fortunes of key kids licensing category toys, and the sheer amount of time kids spend immersing themselves in their fave games, merch programs based on bestselling interactive IP are poised to gain some ground. But it's likely that video game licensors are going to face an uphill battle in the marketplace as notoriously risk-averse retailers are still tied to traditional measures of an entertainment property's chance for success - ratings and box office take. With that in mind, let's take a look at what the licensing hopefuls are planning.

Game on
San Anselmo, California-based licensing agent Dimensional Branding Group is definitely looking to tap into a presumed wellspring of brand love for Sony PlayStation's portfolio of properties. The hardware biggie appointed DBG as its North American rep and the agent's CEO Larry Seidman and EVP of licensing Marsha Armitage-Bristow are confident PlayStation brands are among the most stable in the rocky economy. Take LittleBigPlanet, for example, which launched in November 2008 on the PS3, and has been garnering attention outside the core gamer world. Aside from winning overall game of the year at DICE, and the Interactive Animation award from Cartoons on the Bay this past spring, DBG has been fielding licensee interest in the game's main character - cheeky, cute and customizable Sackboy.

Already licensees have brought merch targeting kids eight and up to retail, including IV Gear and ODM (apparel) and Mezco (figures, plush, magnets, backpack ornaments, stickers, model kits), and DBG is looking to expand the lines of toys, apparel, publishing and collectibles. It's also planning to play on the kid-appeal inherent in the Loco Roco and Ratchet & Clank franchises, the latter of which already has nine titles to its name.

But contending with retailers is a different story, and over in the UK, Target Entertainment has been tackling that terrain with its recent pick-up of the Sony PlayStation brands across the pond. Head of licensing Samantha Kelly says even though the video game market was up 23% in the UK last year and more than 83 million software units were sold during the same period, she finds herself spending time easing retailers into uncharted waters. To that end, Target held a launch event for prospective retailers this past April in Sony's New York head office that also included potential US and UK licensees. "We opened it up by saying there's nothing to be scared of where gaming is concerned because their initial reaction was to run," she says, noting it's not an area that's traditionally licensed. It was too early to divulge partners at press time, but Kelly says several interested licensees have already approached her for a planned spring 2010 product rollout, and her category priorities include apparel, gifts, collectibles and posters.

It's worth noting that the economy isn't helping interactive licensors to forge inroads with retailers, either. Asked whether or not retailers would be open to these new business opps, LIMA's SVP of industry relations and information Marty Brochstein says, "Intellectually, yes. But given the economy and paucity of shelf-space, the reality is that it's probably tougher now than it has been in the past." Even though retailers are generally playing it safe and going with what they know instead of taking a chance on some unknown property, Brochstein adds that everyone's still searching and holding out hope for The Next Big Thing.

"I think the delineation between what's a video game property and what's a traditional entertainment property is blurring somewhat," notes Brochstein. "Most of the big successes of this business have come in at least somewhat under the radar, so there could be that thing that breaks that barrier," he says. "It hasn't happened yet, and to some extent, I'm surprised it hasn't."

DBG's Seidman, however, remains optimistic, noting that large retailers like Best Buy are dedicating more space to interactive products. "All the video game merch is at the front of the store now, whereas two or three years ago, it was a much smaller section and not in a prime location," he says.

While DBG is making its case for new Sony IP, Capcom will be touting the evergreen potential of its 20-year-old title, Street Fighter. As one of Capcom's best-known brands and one of the most successful fighting game franchises to date, Street Fighter has sold more than 25 million units worldwide.