TRENDS AND POTENTIAL BUSINESS OPPORTUNITIES IN THE GLOBAL LICENSING MARKET

1. TRENDS AND POTENTIAL BUSINESS OPPORTUNITIES IN THE GLOBAL LICENSING MARKET CHARLES M. RIOTTO PRESIDENT International Licensing Industry Merchandisers’ Association (LIMA) WWW.LICENSING.ORG

2. Definition Of Product Licensing Licensing: The contractual right to use protected materials (Copyrights and Trademarks) owned or controlled by a person or company (Licensor), in return for consideration (financial), most often expressed in the form of royalties (payments) made by the user of such protected materials (Licensee).

3. 6. Food & Beverage 7. Home Decor 8. Housewares 9. Health & Beauty 10. Stationery Apparel Toys & Games Software & Video Games Accessories Gift & Novelties Top 10 Product Categories

4. Licensing Categories CATEGORY% OF U.S.MARKET Entertainment / Character 44.4% Corporate Trademark/Brand 18.1% Fashion 13.7% Sports 13.7% Collegiate 3.4% Art 2.0% Others 3.8%

5. U.S. MARKET STATISTICS2006 TOTAL RETAIL SALES: $108 BILLION**Source: LIMA U.S. Licensing Industry Survey

6. U.S. MARKET STATISTICS2006 TOTAL RETAIL SALES: $108 BILLION**Source: LIMA U.S. Licensing Industry Survey

7. WORLDWIDE LICENSING MARKET2006 TOTAL ESTIMATED RETAIL SALES: $187.4 BILLION* *Source: Global License! Magazine

8. TRENDS AND POTENTIAL BUSINESS OPPORTUNITIES IN THE GLOBAL LICENSING MARKET Before you can buy or sell a license, you must fully understand the purpose of licensing.For the brand owner, licensing provides greater consumer awareness of his property and an additional revenue stream. For the manufacturer, licensing provides a product that has built-in consumer appeal and greatly reduces product development costs.

9. Increase sales Sell other products in a line Build exposure and awareness for manufacturer’s brand name and products Open lines of distribution Create better profit margins vs. generic brands Helps manufacturer at the buyer level Create additional marketing support Creates marketing event Reasons To Buy A License

10. Terms are not conducive Stiff competition for the “hot” licenses Cost of product development Product sell through is tied to the strength of the license Need to commit to marketing and advertising costs Financial commitments must be made well in advance of marketing dates Does/will the license have significant awareness? Things to Consider Before Buying a License

11. Does the license fit within the product line? What is the shelf life of the license? Will the licensor sell the same rights to multiple licensees? Are the marketing dates of the property (e.g., movie opening dates) fixed, or could they change? How difficult will the approval process be? Can you retain the licensing rights at the end of the term? Things to Consider Before Buying a License

12. Is the property unique or fresh? Will the visual of the property help to capture the attention of the consumer? What is the media value supporting the property? What advertising, PR, and promotional support will there be to help achieve product sell through? What is the exposure value of the property? What other licensees have committed to property? Judging A License

13. Does the licensor have clout to help achieve retail support? Does the license fit within your product line? Does the property have awareness with retail buyers? Does the property allow enough time for product development and sell in? Judging A License

14. Marketing Your Property How you market your property can make the difference between success and failure.

15. Marketing Your Property The Following are important points to consider when developing a marketing plan for your property: 1. Create a Mission Statement: Have a clear idea of what your property is about, and what goals you are looking to achieve with it. 2. Demographics: Know who is the audience for your property, and direct your efforts and product to that audience. 3. Image: Make sure that the image of your property is compelling, appealing, and appropriate to the market you are attempting to reach.

16. Marketing Your Property 4. Opportunities: Look for opportunities to achieve exposure for your property. Whether it is through media exposure (TV, film, books) or via promotions, or tie-ins with events, charities, or products that reach the same consumer, exposure is a key ingredient in establishing a property. 5. Tools: Build the necessary tools, such as a style guide, as consistency is the only way you will achieve success. 6. Promote: You cannot assume that your property will be “discovered.” Success is more likely to happen if you actively market your property. 7. Quality: By only associating your property with quality products, you are more likely to achieve and remain successful.

17. International Licensing If your desire is to take your property outside of your local market, the question is how well will it be received? All too often, we find that many properties that have wide support in their home country, have little or no success in generating interest in other world markets. The fact is, what works well in one culture, may not have the same appeal in different regions, as tastes vary from country to country.

18. International Licensing Steps to make your property internationally friendly • Study the market(s) you intend to introduce your property into. Are there ways to make minor changes to your property that will help to make it more “local” friendly? • Color changes that are more in keeping with the taste of the local market. • Changes to storylines that might be more easily understood or accepted. • Changes to the names of key characters that make it easier for people to remember. • As humor is very difficult to transport from one culture to another, if this is a key part of your property, you may want to include some local market material. • If you have the budget and time, invest in having your property researched by focus groups to test consumer response, as to what changes may be worth making to help insure success.

19. TRENDS AND POTENTIAL BUSINESS OPPORTUNITIES IN THE GLOBAL LICENSING MARKET THANK YOU! WWW.LICENSING.ORG