Why Entertainment Licensing is The Toughest Gig in Show Business

Bill Patterson
By Bill Patterson

Licensing | Brand Protection | Royalty Protection

Entertainment_Licensing_Blog_PostWhat is a brand’s return on investment for its licensing program? In most cases, there are virtually no hard costs for the licensor: the brand merely grants authority to various licensees and associated vendors to execute on a licensing agreement, and the brand receives a percentage of the generated revenue in exchange. In other words, the brand achieves revenue after expending virtually no up-front costs. So, while the ROI can’t be quantified in normal terms, it’s clearly an attractive result even if the program generates only modest revenue..

 

However, the entertainment industry can be one of the most challenging markets in which to license products. Consumer demand for entertainment properties can shift dramatically and rapidly, catapulting from mediocre interest to fanatical obsession almost overnight. It is not uncommon for popular video game characters to dominate in the marketplace for a few years, only to be replaced by new characters shortly after.

Some entertainment properties are less volatile than others: estate licensing relating to stars from yesteryear can be quite stable, since they have withstood the test of time and their place in the hearts of an admiring public is unlikely to change. Elvis’s megawatt aura never seems to fade, but living entertainment entities can and do experience rapidly shifting consumer perception and demand.

When an entertainment property begins taking off, that brand needs licensing solutions that can be executed early, at high quality, and that can scale rapidly to match consumer interest. By the time an entertainment property achieves great popularity, if a brand hasn’t already implemented security and licensing programs, it may already be too late to effectively prevent counterfeits, and it may be too late to capture much of the potential market that the rise in popularity represented.

While searching for a licensing partner, look for a provider that can provide licensing and security services worldwide. Demand for entertainment properties crosses international borders quite easily because that is the nature of media and audiences, and it is often the objective of many entertainment contracts. Unfortunately, most licensing vendors tend to specialize in local or regional services, and only a few are equipped to deliver support that matches the international reach of a brand’s fan-base. Your licensing services provider needs to be able to cross international borders just as easily as demand for your entertainment properties crosses borders.

Many entertainment companies are multi-hundred-million dollar or even multi-billion dollar enterprises, and they need to know that the licensing services provider they partner with has the assets and capabilities needed to handle the demands of large-scale, international licensing and product security needs. In these cases, it is not sufficient for a licensing provider to simply handle all of their operations out of a single office in the U.S. A licensing service provider should be equipped to ship their secure labels and other products out of the U.S., the U.K., Hong Kong, and other locales where products are needed, and should be capable of handling vendor transactions in U.S. dollars, Euros, Pounds, Yen or other currencies. International, enterprise-scale brands need licensing solutions providers that can handle the load.

Because these markets are volatile, it is crucial that your licensing program strike while the iron is hot. To fully achieve that potential requires highly proactive customer service: frequent and anticipatory communication with licensees to ensure they are on track in terms of their licensing agreements, they are stocked with necessary inventory, and they are keeping their manufacturing and distribution process humming.

If your entertainment property is surging in popularity, your worst case scenario happens when you are purchasing security labels and other licensing products slower or faster than the market demands. Either scenario creates cost inefficiencies and fails to maximize potential revenue. On-time production of licensing materials and delivery precisely when licensees need them is one of the strongest drivers of licensing effectiveness and maximum profit.

It is important to distinguish between mere “order entry” processes—taking an order on the phone—and true customer service, which involves keeping open lines of communication between the licensing vendor and licensees. Your licensing services partner should be an expert at proactive customer service to ensure that all the pieces of your licensing engine are operating in sync and at maximum potential.

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Licensing, Brand Protection, Royalty Protection

 
Bill Patterson

Bill Patterson

Like you, marketing and sales executive Bill Patterson is passionate about telling a good story. That’s especially easy with over 17 years of experience at OpSec Security where he has been an integral part of the Marketing and Sales management team. Prior to his current role as Vice President, Corporate Marketing and Strategic Accounts, Bill was the Vice President of Global Licensing with responsibility for OpSec’s top licensing clients. After receiving his bachelors and masters degrees at Virginia Tech, his 25-year career has spanned the industries of home improvement retail, direct marketing agencies and video gaming with responsibilities including advertising, marketing, direct-mail, communications, loyalty programs, branding and sales management. As a nearly lifelong Marylander, all you need to get to know Bill is some wings, crabs and Old Bay.

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