Home Fashion Character Licensing Influencing the Kidswear Industry

Character Licensing Influencing the Kidswear Industry

By  
SHARE

Today, it is not surprising to find kids glued to the idiot box for several hours at a stretch. The influence of cartoons on kids today is tremendous. Hence, there is little wonder why the marketplace is brimming with merchandise related to cartoon characters. Where bags, shoes and other fashion accessories have taken a leap jump in character licensing, the category of kids’ apparel is lagging a wee bit behind barring the character of .

To set the context of the story, let us begin with the basics of decoding the term ‘character licensing’. The use of fictional characters or real-life personalities forms the basis for character licensing. The concept of character licensing in India is not in its teething stage but the entire industry is not as widely evolved as it has in the US and Europe. Going back in time, the idea of character merchandising sprang from Walt Disney Studios, which created a separate department to license the rights to use its popular toon characters such as Mickey Mouse, Minnie and Donald on various consumer products.

The trend seen back then was that of popular cartoon characters being licensed by the creators to various licensees to use on their merchandise. It is a common sight to see kidswear with Thomas and Friends and Peppa Pig in the UK and US but in India, the dominant characters for kidswear remain Mickey Mouse, Ben 10, Chhota Bheem and Doraemon. Beyond that, we have not seen much of character merchandising as far as apparels is concerned.

The India Story

Abhishek Maheshwari, VP and Head – Consumer Products, Disney India shares a page from the history of Disney’s journey in India, “Disney has been a pioneer in the country when it comes to character licensing and merchandising. We started the business unit in 2005, and since then have expanded our categories to the existing six right now, which include toys, fashion, stationery, , publishing and food health and beauty.

There is certainly a positive change that has come about over the years in understanding and accepting the licensing business model, which was at its infancy at that time.” Maheshwari points out that globally, licensing and merchandising (L&M) is a sizeable business. is the largest character licensor in the world with US$ 45 billion in character merchandising retail sales in 2013. India’s L&M industry is still in a nascent stage but the segment is poised to grow signifi cantly in the coming years. He adds, “Character and entertainment brand licensing are amongst the largest segments of the licensing business, and probably the part most recognised by consumers worldwide. This category of licensing encompasses properties and characters emerging from films, television shows, games and online entertainment.”

Talking about Chhota Bheem, which is a leader when it comes to character merchandising in India, the journey began with giving birth to the Indian superhero cartoon character Chhota Bheem. He shares, “As a child, I was fascinated by the characters of Mickey Mouse, Superman, Batman, etc. I would turn to my father and request him to take me to meet these characters. However, much to my dismay, he would turn down my request every time saying that all my favourite cartoon characters lived in the US.

Back then, my innocent mind made a decision – to have an Indian superhero. This was something that was always there in my subconscious. Life moved on. I went ahead to get a degree in software engineering and worked in the US in the early 2000 as a software engineer. But then my calling was elsewhere and I decided to earn myself a degree in animation from San Francisco University. I returned to India and eventually after facing rejections for almost three years, my superhero Chhota Bheem was on air!” Today, Chilaka’s Chhota Bheem has not only managed to create a storm in the cartoon world but even in the world of retail, Chhota Bheem’s merchandise is a hit. He went ahead to set up Green Gold stores and he has a strong franchise network selling exclusive Chhota Bheem merchandise. Green Gold set up its licensing and merchandising division in 2008. The growth rate witnessed by the company is close to 200 percent year-on-year (YOY).

Genius was one of the first companies to sign up as a licensee when Disney India’s consumer products business started its operations. According to Bansri Manek, Head – Business Development, Genius Leathercraft, “It has been a strong and fruitful association with Disney India all these years.” In the kids segment, the brand currently is the licensee for Mickey and Friends, Disney·Pixar Cars and Disney Fairies. Talking specifi cally about character licensing for apparels, , CEO, Suncorp Exim highlights an interesting point related to return on investment (ROI), “I have worked on licensing in kidswear for the last seven years.

Kidswear licensing is tougher as compared to other agendas, primarily due to the miserably low billing value. Therefore, with the current retail scenario, it is now even more difficult to cover the costs by any retailer specialising in the lifestyle segment. In the same pretext, exclusive brand outlets (EBOs) are not viable for kids’ licensing market.” Innerwear as a category within kidswear has been witnessing a change where branded innerwear is stealing the limelight. It is interesting to see that many brands in the innerwear category too are opting for character licensing.

Taking us through the dynamics as witnessed by this category, Mithun Gupta from Bodycare International (for his brand Proteens) shares, “Kids’ innerwear segment has witnessed a sea change in the last four years. Back in the year 2010, the kids’ innerwear market was not so trendy and stylish. However, the trend has changed now, with innovations in shape, look, feel and appeal. Today, the innerwear designs are highly influenced by animation characters and a lot of experimentation is being with them in terms of colours and fabric.”

At a recently held conference, , MD, , which is in service to provide management and development of the Oxford University’s brand licensing and retail programme shared, “The size of the consumer product licensed merchandise market in India was estimated at US$ 135 million and the sales are expected to rise over US$ 500
million in another five years.”

Forming Associations

When association between a licensor and the licensee takes places, it is imperative that there is synergy between the character and the merchandise. Also, it is important to realise that characters do not help build a brand. It is important for the brand to fi rst create an identity of its own. As Jiggy George, Founder and CEO, Dream Theatre points out, “Licensing is all about building brands, but in India, majority of them get it wrong because they want to start with licensing without building brands.”

As per Martin Brochstein, SVP – Industry Relations and Information, LIMA, the business of licensing and branding is all about emotions, where a licensor leases rights of brand extensions to a license manufacturer evolving an expectation of performance and a sort of emotion. He pointed out that in India, majority of the licenses fail to meet the terms and conditions of the work procedure laid in the agreements even before the start of the deal. Hence, this calls for an outside expert, who is skilled to commercialise the potential of a character, brand or design concept and with the help of his network those concepts in deals.”

Maheshwari says, “The licensing business model is predicated on fi nding the right licensing partner. It is a symbiotic relationship where the licensor and the licensee’s success are intertwined. The right licensee brings on board a wealth of knowledge in a specific product domain, which helps translate characters into compelling products. We work closely with licensees, particularly in product design and marketing, to leverage creative expertise and knowledge.”

Maheshwari minces no words when he says that it takes years of content through television, movies, and digital platforms to build a relationship with a fan. There is a trend of merchandising around movies which has come about nowadays; this is a good start point to build new characters but merchandising should be seen as a long-term proposition. He adds, “To deliver on the Disney brand promise, we ensure that we work closely with licensees particularly in product design and marketing to leverage creative expertise and knowledge. Affi nity towards characters and franchises is not built overnight.”

Revealing the plan of action adopted at Genius Leathercraft, Manek shares, “Genius develops the designs based on style guides for the season. Disney brings in their global expertise on how to best synergise designs across various categories while we add our experience in the bags market and the current trends in the Indian scenario. This synergy helps us create and provide our fans with the very best in bags that they like to carry and have fun with.”

On the financial and legal agreement, the trend is towards royalty system, where royalty is charged on every product sold. As pointed out by Maheshwari, more than often the deals are based on revenue share, MG or flat fee.

Preferences

In terms of any regional differences observed in choice of characters, Manek says, “Given the diversity that exists in our country, choices are bound to differ. This is not so in terms of characters, but in terms of the treatment of the character on the bag and the size of the bag! Typically, in north India larger sizes (18”/19”) are preferred as compared to west and south where the mid-size (16”/17”) has more takers.”

At Disney, the business is aligned around four brands: Disney, Disney·Pixar, Marvel and Lucasfi lm and offers product range that cuts across ages through more than 3,000 stock keeping units (SKUs). Some of their popular characters with kids include Mickey & Friends, Disney Princesses, The Avengers, Cars and Spider-Man.

Law & Order

It is interesting to note that there is no special law in India to deal with any issues related to character licensing. Hence, any concern is dealt with taking into consideration Constitutional Law, Trademark Law and common law principles. Intellectual property (IP) rights such as trademark, copyrights belonging to others are used by the producer of goods or services in case of character merchandising. Any unauthorised use amounts to infringement and could lead to legal consequences.

Piracy is an issue that is not just restricted to movies and books but has crept into character licensing too. It is not uncommon to fi nd Batman and Superman t-shirts floating in the market at roadside stalls. And it goes without saying that these are not officially licensed. Maheshwari elaborates, “It is an issue at ground level that the entire industry and even any company with intellectual property face. At Disney, protecting the integrity of the products that consumers buy is of utmost importance to us. We continue to work with industry bodies and the government to take strict antipiracy action against wholesalers and retailers who manufacture and sell counterfeit products.”

The business of character licensing in India for kidswear is not at its best at the moment. Considering that kidswear as a category itself is not well developed in India, it will take a long time before we see more of fruitful associations. This perhaps explains Green Gold launching their own line of merchandise for their superhero Chhota Bheem and his friends. From what we notice, there is enough potential in the market for character licensing for kidswear, but it is for kidswear brands to be ready and take the plunge.