Euromonitor International – Analysis
While the US is the birthplace of many international licenses through the influence of its Hollywood blockbuster movies, Asia Pacific is also one of the biggest licence-driven traditional toys and games markets globally, with half of the world’s top 10 most heavily licensed toys markets in this region. In almost all these countries the proportion of 0-14 year olds in the total population was below 20% in 2014, suggesting that the grown-up population also has a say in which licensed toys are purchased. As one of the fastest-growing traditional toys and games regions globally, there are undoubtedly vast opportunities as well as risks. The only question is how to locate them.
Euromonitor International – Analysis
Source: Euromonitor International
Which markets are shaping up?
South Korea, Indonesia and Singapore are the top three countries in terms of licensing penetration in the region, with more than 40% of toys being licenced properties in 2014. South Korea is the most heavily licensed toys market globally, with over half of products being licensed, valued at US$274 million.
Japan is the largest licensed toys market in the region in actual terms, with a value of just shy of US$1.7 billion in 2014, accounting for 35% of Asia Pacific’s sales.
By contrast, in India and China, licensing penetration remained well below the regional average, at around 6-15% in 2014. Having said that, China’s licensed toys market still translates into almost US$1.4 billion in absolute sales, making it the second largest in the region.
Think global, act local
China: Sales of licensed toys pushed by cross-platform integration
China is one of the most interesting markets in terms of toys licensing, as the country’s regulations prevent foreign companies fully developing their properties in the country. There is national policy imposed by the State Administration of Radio Film and Television that compulsorily requires TV channels to broadcast only domestic animated TV series during prime time. Imported animated TV series can be aired, but the proportion of foreign programmes must be lower than 40%. In order to survive in this unfavourable environment, a number of multinational companies competing in traditional toys and games have resorted to the online video platform in recent years.
International franchises such as Barbie, Cars, Marvel and Transformers enjoy loyal consumer bases that they have built up over the years. Apart from classic animated toys, successful launches of new animated movies also provide stimulus to toys sales. For example, the Disney movie Frozen was aired in theatres in 2014, with the positive image of Princess Elsa benefitting greatly from strong popularity, not only among children, but also their parents as well.
As the leading domestic player in traditional toys and games, Guangdong Alpha Animation also adopts a strategy similar to Disney. The company produces animated television series and movie series. As the owner of animated characters, the company also manufactures and distributes animated toys. This ensures that the company can capitalise on television and movie series while managing the sales operations of its toys first hand. In the coming years, its model could continue to threaten the sales of international properties as, despite the success that Transformers and Frozen have enjoyed, in most cases, the impact of international movies levels off quicker than the emotional influence of properties based on domestic television series.
South Korea: Licensing industry enjoys strong government backing
The South Korean government puts great efforts into protecting and promoting local properties, as it sees licensing as a key component of a growing economy. Local character licensing is perceived as an important national resource, with the competitive domestic film industry giving a further boost to local firms in the development of successful characters so that licensing will prosper. These properties are also exported to other countries, giving South Korea more influence in character licensing in the region.
The most popular pre-school and toddler characters are Pororo Penguin and Tayo Bus, which has been increasing in popularity. Tayo Bus has been extended into many different industries, including stationery and apparel. This is different from many other countries, where some of the most popular pre-school and toddler franchises are likely to be Disney Cars, Disney Princess etc, showing the strength of the domestic licensing market in Korea.
During 2014, the most influential licensed toy was Tobot by Young Toys Inc. The franchise’s popularity secured the company second place (after Lego Korea Ltd) in traditional toys and games shares, pushing Bandai Korea Co Ltd back into third position. Tobot is a transformer robot car that was developed in cooperation with Kia Motors Corp, with its popular TV animation series helping to boost sales. As of early 2015, a new rival, Hello Carbot, which is a brand by Sonokong Co Ltd in cooperation with Hyundai Motor Co, became the leading licensed toy, as popularity rapidly shifted towards this new character. As part of its strategy, the company initiated a TV animation and family musical show featuring the new character Hello Carbot, which immediately increased sales and awareness of the brand.
Japan: Licensed traditional toys and games is largely local and character driven
Licensed character toys are particularly strong among children and young women in Japan. Licensing has increasingly helped penetrate different categories, with varying degrees of success.
By far the most popular toy licences in Japan are long-established home-grown characters. As these characters are frequently used in new television anime and movies, consumers have considerable exposure to these characters. For example, Anpanman is a popular licensed character in infant and pre-school toys. Masked Rider, the Super Sentai Series and Ultraman are prevalent in boys toys, especially in dressing-up and role play and action figures. Hello Kitty and Pretty Cure, meanwhile, are popular in girls toys. In 2014, Hello Kitty, which is one of the all-time most popular licensed characters in the country, celebrated its 40th anniversary. Tomy Co launched licensed Hello Kitty toys in collaboration with Licca-chan and Koeda-chan towards the end of 2013 to commemorate the merchandise’s anniversary.