TV's truce with merchandising

Prevalent times are strongly gripped by fierce competition wherein it’s all about lifestyle and instant access and that literally implies the availability of products across platforms – on-air, on-ground, at retail, with a pack, online, in consumers’ bedrooms, schools, birthday parties, etc. Aiming to make the same possible and better catered to, licensing and merchandising (L&M) has come to play a huge role in the same.

Players like Cartoon Network Enterprises, 9 XM and Viacom 18 among others are making the most of this L&M business to enhance their reach to a larger target audience and be better engaged with the fans by being available out of the idiot box too. “Merchandising definitely has the potential to play as big a role as you want it to play,” adds Sandeep Dahiya, Sr. Vice President - Consumer Products & Communications, Viacom18 Media Pvt. Ltd.

Role to play

9XM, a Bollywood music channel, is also known for its animated characters - Bade Chote, Bheegi Billi, Betel Nuts, etc. The characters have entertained the nation with their witty jokes and funny one liners for over three years now. Given the popularity of these characters, 9XM has recently launched Licensing & Merchandising line of business with Bade, Chote & Bheegi Billi. Pawan Jailkhani, EVP, Sales, 9X Media comments, “Today these characters have a loyal fan following which in turn have helped to create a clear distinction between us and competition. The licensing business will serve a dual purpose. It will help create a touch-point for brand 9XM across retail outlets in the country as well as generate revenue through sales of merchandise. In the initial years, the programme benefits from a marketing stand-point which is expected to add more value to the channel. The revenues will grow in the years to come.”

Dulce Lim-Chen, Vice President, Asia Pacific, Cartoon Network Enterprises (CNE) avers, “Cartoon Network and Pogo products are available in 4500 retail counters including the Aditya Birla Group, Lifestyle, Pantaloons, Reliance Trends, Shoppers Stop, Landmark, Crossword, Odyssey and more.”

However, at Star Plus things are perceived differently as the Star Plus’ spokesperson opines, “The role is currently quite limited.”

Target audience

For 9XM, the initial focus for the merchandising business will be the 4-14 age group. Jailkhani adds, “We plan to launch around the ‘Back to School’ season which would include apparel, accessories, stationery, toys and games featuring our animated characters Bade-Chote and Bheegi Billi.” However, in the coming 18-24 months, they will also offer products for the age group of 16-24 years.

Dahiya further shares, “Apart from the kids’ licensing, Viacom18 is also equally active in licensing in the youth space. Today, we’ve got licensed products around MTV in more than eight categories  - credit & debit cards with Citibank, stationery & paper with BILT, mobile phones with Micromax, travelgear with Wildcraft, eyewear with Aureole-Inspecs and bed-linen with Portico. Soon, we’re launching ‘Roadies’ range of footwear with Metro.”

For CNE, the target audience remains to be kids across 3-14 years. “We currently don’t have any offerings for adults,” adds Dulce.

Children and adults alike

When we refer to merchandising for the kids’ and the adults’ section, child or adult-oriented TV shows play a major role wherein the show’s characters or action figures come alive via the licensing and merchandising route. The level of affinity and emotional connect, thus, can be extended in a great way when the merchandising, trailing from a TV show, in this context, goes far beyond the original show, even after it’s been decades that the show has gone off air and may have lost its appeal and popularity.

When we talk about the adults’ merchandising options from TV shows/channels, the show we can refer here is “G.I. JOE: A Real American Hero,” produced by Hasbro in the early 1980s catering to the kids’ bit and more of science fiction and horror genres. Another example could be Star Trek in this case. However, it is also learnt that shows (occasionally), which were projected more for children, find following among adults too and a bit of a crossover is witnessed. Thus, the products from that show are oriented towards both – adults and children, thereby targeting a larger set of audience.

Following the foreign model and initiatives taken, the market in India is set to embark on a similar path with major players already having taken the plunge, exploring licensing and merchandising route in the space.

Market abroad

While the India phenomenon for Licensing and Merchandising has been gaining importance in the last 5-10 years, this category abroad has been in existence for many decades. The markets abroad are far more mature and well developed as compared to the Indian markets. “The product offerings under this category are vast and not just the regular stuff we see in India. The Yale study reportedly estimates the market worldwide at upwards of $175 billion, whereas the Indian market is just at Rs 500 crore,” comments Jailkhani.

Globally, licensing is viewed as an integral part of content and franchises. “Licensing allows content/brands to be viewed in a potentially much broader context via retail and physical products. It is also becoming a significant revenue driver for companies and a relatively inexpensive way for brands to travel globally,” avers Dulce.

However, Dahiya interestingly comments, “You cannot really compare the Indian licensing scenario with the international markets. The reason being that in developed markets the retail structure is exactly inversed. So, while in India 8 per cent retail is ‘organised’, in most of the developed markets 8 per cent of the market is ‘unorganised’ and that makes all the difference.”

Revenue generation

Dulce shares, “Turner’s L&M division showed a 90 per cent growth in 2010 over 2009, and is aiming at a 50 per cent growth rate in 2010.”

“In India, we have merchandising around two of our channels – MTV (MTV & Roadies) & Nick (Dora the Explorer, SpongeBob SquarePants, Ninja Hattori, Oggy & the Cockroaches). And both generate considerable chunk of revenues to make a healthy contribution to the company’s topline,” opines Dahiya.

9XM, just having launched its merchandising business, is targeting the ‘Back to school’ season of 2011. Jailkhani says, “Starting March 2011, our products will hit the retail shelves across the country. We expect that revenues from this merchandising business would be in the range of 1-5 per cent of the total revenues in the coming 1-3 years.”

Growth chart

Over the last few years, we have seen a lot of change in the Indian licensing industry. Though the business is at a nascent stage there has been a steady and healthy growth of over 20 per cent annually. Jailkhani comments, “The licensing industry has gained substantial momentum and character licensing constitutes to a major part of the licensing industry.

With the popularity of the characters on television soaring, L&M as a business will only grow. We anticipate the current growth rate to continue in the years to come as the markets will mature and further develop in our country.”

In India, Cartoon Network Enterprises, on the back of their iconic characters and brands like Ben 10, M.A.D, The Powerpuff Girls, Bakugan, Bob The Builder, amongst others, have had a 90 per cent growth in 2010 over 2009. “With the help of merchandising, we have expanded our retail reach by 35 per cent and enhanced our category strengths by 35 per cent and added over 350 new SKUs”, comments Dulce.

“I think the market has grown quite a bit over the last few years – both in terms of size as well as mindset. Today, close to 8 per cent of India’s retail market is organised (which was 3-4 per cent five years back), and its only going to get more organised. Secondly, more and more local players are realising the potential of licensing and exploring the same. So, while the industry is still nascent, the future is extremely promising,” avers Dahiya. The regular merchandising offerings ranging from regular bags, keychains or T-shirts for kids have grown and further expanded to categories like branded credit cards, high-end fashion wear, desktops, mobile phones and homewares among others. Going further, we are set to see increased number of licensed products in unusual categories!