|Title:||United States ranges of licensing business guarantees by dollar values in percentages for 2010|
|Source:||TLL The Licensing Letter|
Start of full article - but without data
RANGES OF GUARANTEES, 2010
(Does Not Include Those Reporting No Guarantee)
$X-$XX,XXX (XX%) $XX,XXX-$XXXXX (XX%) $XX,XXX-$XX,XX (XX%) $XX,XXX-$XXX,XX (X%) $XXX,XXX-$XXX,XXX (XX%) $XXX,XXX-$X million (X%)
SOURCE: The Licensing Letter
Note: Table made from pie chart.
Average royalty rates fell X.X% in the past year, to X.X% in 2010 from X.X% in 2009, according to THE LICENSING LETTER'S XXth Annual Licensing Business Survey.
This is the first time the average royalty has declined since 2005; royalty rates have held relatively flat since then. Other years during the last decade or so in which royalty rates fell, according to TLL, were 1999, 2001 and 2002.
Playing into the decline:
* Extreme competition and the reliance of manufacturers and retailers on a few top-tier properties means that licensees have bargaining power over licensors for any but the most desired properties.
* Manufacturing costs are rising while retail prices are declining, making for thinner margins than ever. As a result, licensees say royalties need to be reasonable in order for a license to make financial sense. If not, the manufacturer will take a pass.
* The continued plethora of DTR deals involving all types of properties, retailers and product categories puts downward pressure on royalties. Retailers tend to have the upper hand in a DTR deal, where royalties are typically lower, in part because the retailer is taking on design and sourcing, and the merchandise isn't returnable.
The Entertainment/Character sector is one of the biggest categories, and carries one of the highest royalty rates. In 2010, it weighed down the overall average, declining by X.X%, the biggest decline of any major property type.
Meanwhile, a couple of sectors bucked the trends, rising slightly. These include Music (up X.X%), and Food/Beverage Brands (up X.X%), both very desirable property types in 2010 in certain categories.
Restaurant brands, Collegiate licensing, Comic Book properties and Automotive brands all held their own.
No Product Category saw an increase in average royalty rate in 2010, but several were steady. These include Eyewear, Consumer Electronics, Fragrance and Food/Beverage.
All of these categories saw plenty of licensing activity in 2010, with many licensors entering each sector. That could be perceived as suggesting that the competitive situation for properties is less severe in these categories than elsewhere. But in fact there may be too many deals in some sectors, even if some of the celebrity-based agreements are for very short periods.
Licensors, licensees, and agents expect to narrow the number of properties they own, hold rights to, or represent in 2011.
Licensors responding to the survey owned an average of just over XX properties in 2010, but they expect that to decline to just under XX in 2011; licensee respondents expect to hold rights to XX properties in 2011, compared to XX in 2010.
Agents expect to drastically lower the number of properties they represent, going from more than XX in 2010 to less than XX in 2011. (Survey responses and followup interviews suggest that agents faced the toughest challenges in 2010 of any licensing constituency.) Licensees also report that the percentage of their businesses attributable to licensed merchandise declined, to XX.X% in 2010 from XX.X% in 2009.
The contraction in the number of properties companies are working with does not necessarily mean the licensing community expects the business to contract in 2011; on the contrary, respondents collectively expect it to get stronger, some significantly so. "The trade is still jazzed up about licensing and the power of licensing," says one respondent.
But it won't necessarily be business as usual. As one licensing executive points out, "[There is a] willingness for the license holders to try something unique and different to get their brands out to the consumer."
AVERAGE ROYALTY RATE AND RANGE OF ROYALTIES, BY PROPERTY TYPE,
Figures in billions
AVERAGE ROYALTY, AVERAGE ROYALTY, PRODUCT CATEGORY 2010 2009
Art X.X% X.X% Art and Artists X.X% X.X% Museums X.X% X.X% Celebrities XX.X% XX.X% Entertainers/Models XX.X% XX.X% Chefs/Home-Related X.X% X.X% Collegiate X.X% X.X% Entertainment X.X% X.X% Estates X.X% XX.X% Fashion X.X% X.X% Apparel X.X% X.X% Footwear X.X% X.X% Home X.X% X.X% Music X.X% X.X% Non-profit X.X% X.X% Publishing X.X% X.X% Books X.X% X.X% Newspapers/Magazines X.X% X.X% Comic Books/Strips X.X% X.X% Sports X.X% XX.X% Trademarks/Brands X.X% X.X% AutomotivelMotor Vehicle X.X% X.X% FoodlBeverage X.X% X.X% Restaurants X.X% X.X% Sporting Goods X.X% X.X% Traditional Toys/Games X.X% X.X% Videogames/Interactive/Online X.X% X.X% OVERALL AVERAGE X.X% X.X%
PERCENT CHANGE, RANGE OF PRODUCT CATEGORY 2009-2010 ROYALTIES, 2010
Art -X.X% X%-XX% Art and Artists -X.X% X%-XX% Museums -X.X% X%-XX% Celebrities -X.X% X%-XX% Entertainers/Models -X.X% X%-XX% Chefs/Home-Related -X.X% X%-XX% Collegiate X.X% X%-XX% ...