• by Sarah Mahoney  @mahoney_sarah, June 11, 2008

When it comes to toy and games, licensing--using consumers' favorite characters or brands to differentiate a product--still rocks. But a new industry report says that in other categories, the weaker economy has slowed marketers' enthusiasm for licensing deals. Overall, marketers in North America paid $5.98 billion in 2007 for licensing rights, down slightly from $6.04 billion in 2006. Sales of licensed products are estimated at $187 billion worldwide.

 

The Licensing Industry Merchandisers' Association (LIMA) says that licensing revenue from TV and movie characters gained 1.2% in 2007 to $2.7 billion. But revenues slipped in almost every other category, with the biggest losses in music, down 5.3%; nonprofits, down 4.4%; and trademarks and brands, down 2.7%.

Even sports declined, falling 1.2%. "Certainly, the current soft economic conditions in North America have contributed to the relatively flat performance in 2007, following three consecutive years of growth," LIMA says. (The association is in the midst of its annual trade show in New York, hosting more than 25,000 marketing, retail and licensing executives from around the world.)

Licensing continues to be a significant sales driver in both toys and video games, reports NPD Group. In dollar sales, almost half--44%--of all video game software sales come from licensed video games. In the last 12 months, that means licensed video games generated $4.2 billion in sales--chief among them Madden Football, Pokemon, Mario Brothers and Transformers, says the Port Washington, N.Y-based market researcher.

Licensed toys, which typically account for 27% of total dollar sales for the toy industry, generated $5.8 billion in sales in the last 12 months, led by such powerhouses as Barbie, Dora the Explorer, Cars, and Thomas and Friends. Typically, toy marketers have used licensed products to increase revenues: NPD reports that the average retail price of a licensed toy is about 48% higher than a non-licensed one. And a few categories are extremely character-dependent, such as action figures, vehicles and building sets.

The same characters dominate sales of children's clothing, NPD says. For the most recent 12-month period, Disney Princess, Cars (The Movie), Spiderman, Winnie The Pooh & Friends and Dora The Explorer led in dollar sales.