You can’t miss them if you’re doing your Christmas shopping: all kinds of licensed toys deck out the shop windows of department stores and online shops. In Germany, this segment still has a lot of potential.

Whether it’s the Paw-Patrol Advent Calendar, the Millennium Falcon from Lego Star Wars, or the Frozen Castle, the licensed toys business is a million-dollar hit. This year, licensed products were worth 20% of the total German toy market. In 2007, it was 16%. According to market research institute the npd group, Batman, Cars, Ghostbusters, Fireman Sam, and Trolls are currently very successful licensing themes.

For the corporations, licensed toys are important profit drivers. In 2016, Hasbro’s sales in the “girls” category soared by 50% to 1.19 billion dollars thanks to products based around Disney Princess, Disney Frozen, and Dreamworks Trolls. The Walt Disney Company is the leading licensor worldwide. According to License Global, the group received $56.6 billion in 2016 in licensed merchandise across all product categories. That’s a plus of 4.1 billion euros, which was also due to strong themes such as Star Wars, Finding Dorie, Captain America, and the Jungle Book.

Companies keep quiet about licensing costs. With MasterToy licenses, a company can sell a brand across all product groups. Depending on the theme, this permission can cost hundreds of millions of dollars. A sub-license authorises the marketing of certain product groups, such as toy cars, T-shirts, or puzzles. It’s a profitable business. Euromonitor International estimates the worldwide turnover in licensed toys to be around $21 billion, and forecasts growth of 14% by 2020.

The German licensing market has some special features: According to Euromonitor, customers are more reluctant when it comes to licensed toys. It often takes longer here until a license prevails. In addition, German parents often buy classic conservative toys. That’s why companies usually have to make greater efforts and drive marketing campaigns to raise awareness of a theme. In the last quarter of 2016, 15% of all TV advertising expenses (26 million euros) were used to promote licensed toys. Compared to other countries, there are not that many top sellers in Germany. But if a topic is successful, then the German fans remain loyal to it for a long time, and the license holders can generate sales over many years. An example is Bibi Blocksberg. The little witch has been thrilling her fanbase for decades. This year, Bibi & Tina was named License Theme of the Year by the LIMA – Licensing Industry Merchandisers’ Association.

So, there is still room for improvement in the German license market. While licensed toys make up one-fifth of total industry sales in this country, their share in other European countries is around one-third. The Kids License Monitor also points out that, according to research conducted in August this year, the full potential of many licensed themes is not being exploited. For example, 85% of the surveyed children like Ice Age, but only 58% own an Ice Age product. Concerning a large proportion of the licensed themes on the market, the experts conclude: “Although the topics are extremely popular with children, this is not sufficiently reflected in the number of licensed products that the children own.”

The manufacturers want to change this situation, and to benefit more strongly from the popularity of the licensed characters. More and more companies are expanding or rebooting their license business. Lego has long focused on licenses with kits around Star Wars, Cars, Disney Princess, and so on. Shortly before the theatrical release of Star Wars: The Last Jedi, the company released seven new Star Wars kits. With its long-running Lego Ninjago, the group also profits in other segments. Blue Ocean is the master publisher of the Danish Lego Group and publishes the Lego Ninjago magazine, which was the number-one children’s magazine in the second quarter of 2017 with over 220,000 copies sold.

Star Wars

Another strategy is to focus on the issue of granting additional licenses. This year, as a licensor, brand owner, and master toy manufacturer, Mattel expanded its portfolio of licensed products for Bob the Builder to include other licensees. License partners include Smoby, Ravensburger, Sony Music Entertainment, and the Simba Dickie Group. A transnational agreement has been signed with the Simba Dickie Group as the main toy partner. Uwe Weiler, COO, Simba Dickie Group, says: “This partnership will strengthen the success of Bob the Builder in the toy industry, which we’ve been witnessing for two years with the Bob the Builder RPG category. Now, as a Master Toy Partner, we look forward to working with Mattel and developing other categories.” The Simba Dickie Group has thus strengthened its extensive range of licensed products. The company offers more than 1000 licensed products, including successful characters such as Fireman Sam, Cars, Minions, and Frozen.

Playmobil is brand new to the licensing business. With its premiere this year, the company responded to the growing demand for and growing market share of licensed products. Press spokesman Björn Seeger draws a first conclusion: “In 2017, with the license themes DreamWorks Dragons and Ghostbusters, we succeeded in integrating two successful brands with a high entertainment factor into our system play world. The brand experience around Playmobil has thus become broader and more diverse, with new bridges into the digital world of many children. When deciding on a licensing theme, there is no simple formula. We carefully consider whether a license fits Playmobil, the traditional products, the brand philosophy, and the target audience. All the right factors must be there. We remain true to the principle of anchoring ourselves firmly in children’s worlds of experience. Ghostbusters, Dragons, and other Playmobil heroes are intended to be an impetus for children to develop their own ideas and let their imaginations run wild. We want to inspire children with our system world in general – that also is the yardstick by which we measure potential new license themes.