Changing tides of the Indian licensing industry

Licensing & Merchandising in India is dynamically changing with advancements in technology and digital space. With a number of international brands strategizing on India via licensing, this has now opened new prospects to the industry. Last year India ranked among the top 25 global markets for licensing and merchandising. Pegged at $ 1,476 million, India really matches the global markets in terms of the ongoing trends with fashion as their marquee category.  Over the years India has managed to create great Indian IP’s while bringing global IP’s within the country.

Currently, the size of the domestic licensing industry is about Rs 4,000 crore of which 80 percent is dominated by characters and entertainment segment. According to a recent LIMA report, retail licensing in India is estimated at $1.26 billion. In terms of market size, entertainment licensing is valued at $406 million, fashion licensing at $594 million and sports licensing at $30 million.  In recent times another segment is gradually commanding its space on these overcrowded shelves – the food and beverage (F&B) range. Licensing and merchandising companies are waking up to the fact that it hides an untapped gold mine, given its sunshine prospects and the rapid replenishment of products.

Men’s personal care category also has opened up as an opportunity to tap since the last year. Man City FC collaborated for the first time with an Indian perfumery brand in India. Shabis Marketing which operates in the personal care segment has been successful in creating such collaborations and is also working with characters like Doraemon for their shampoo rage and other product lines.  Men’s grooming industry in India is growing tremendously in personal care segment. Brands like L’Oreal have completely revolutionized the men’s category over last decade. There lies an immense opportunity for wellness brand to expand via licensee route.

Retail Licensing

In the retail industry most of the international brands are now venturing into the Indian market. The emergence of modern and organized retail scenario in India has set the pace for new collaborations between international licensing companies and Indian business houses. Organized retail is still less than 10% of the licensing market. Arvind a major player in the retail segment represents Arrow, Cherokee, ELLE, Nautica, USPA, AEROPOSTALE, CHILDRENS PLACE, Ed Hardy, GAP and Kipling. The Murjani Group another industry giant is the licensee for Calvin Klein Jeans, FCUK and Tommy Hilfiger. Beverly Hills Polo Club (BHPC) is licensed to Spencers Retail.

The Indian retail market is estimated to be US$ 600 billion and one of the top five retail markets in the world by economic value. Currently, a majority of licensed retail market is dominated by unorganised players and therefore, the availability of products is dependent on the understanding and choice of distributors rather than the trends.

A number of licensing deals in the Indian retail sector has added to the growth of retail licensing in India. Reliance Retail signing a licensing deal with the Walt Disney Company. Fossil Group signed licensing deal with Japanese watchmaker Citizen to launch a line of hybrid smartwatches — watches that look analog but actually include a number of digital functionalities.  Popular retail brand Marie Claire which started off with conventional licensing deal for women’s wear pret collection in 2015, and later forayed into salon and wellness industry with a model combining of licensing and franchising has grown leaps and bounds in India.  The potential is huge in brand licensing in the retail segment, licensing in retail also helps diversify the brand potential in all areas making it a success.

Sports Licensing

Licensing in sports has developed into a multibillion dollar systematic business in India with formation of various leagues. Sports licensing in general has grown exponentially with international brands like NBA, FIFA, Real Madrid generating good amount of business in the retail consumer segment. Also Manchester United which established licensed academies across India is now selling a wide range of merchandises in India. Popularity of sports merchandise ranges from apparels, accessories to footwears both on the online and offline platforms. The country has made a conscious shift towards becoming a multi-sport country, which is why if you see Khelo India initiative by the government of India & the national games, that’s also promoting the concept of playing multiple sports. It is also expected that this year PGA (The Professional Golfers Association of America) will soon be launching its licensing program in India. With this we may expect a lot more international sports brands to follow. 2019 will witness good growth for sports licensing industry in India.

The FIFA World Cup 2018, hosted by Russia, was one of the biggest global events last year. Despite India not featuring in the World Cup, there was a jump in Indians travelling to Russia, as well as in the sales of jerseys, footballs and other game-related merchandise. Travel portal MakeMyTrip recorded a 400% jump in bookings to Russia during June-July compared with the same months last year. E-commerce players such as Snapdeal and Amazon have set up special football stores for the game enthusiasts. Snapdeal said it has seen a jump in sales of bean bags, recliners and home theatre systems. The top five highest selling jerseys were Brazil, Portugal, Argentina, Spain and France. The football event proved to be a revenue generator for the sports business with football contribution to business increasing by 40% over April-June.

Home grown sports brand Indian Premier League (IPL) is the latest entrant to catch up with the fad of sports licensing after its launch in 2007. The league witnessed a rise in its brand value to $5.3 billion since its launch 10 years ago according to estimate by global valuation and corporate finance advisor Duff & Phelps. In-fact, individual teams playing in the league have witnessed a steep rise in their teams brand value. With Kolkata Knight Riders owned by Bollywood actor Shahrukh Khan topping the table despite not winning the title for that respective year.  Following the opportunity to grab the market share other teams also forayed in to capitalize on the brand value during the course of the tournament to emerge as full-fledged lifestyle brands.

Sports personalities too have banked on the growing success of sports licensing by creating their own brands. To name a couple of examples Virat Kohli led the way with the launch of WROGN and the recent addition One8, in collaboration with PUMA. Yuvraj Singh’s brand YOUWECAN launched last year garnered good response. Apart from cricket which is a widely dominant sport across the country other sports league are becoming quite popular like the Pro Kabbadi League etc. Popularity of other sports athletes like PV Sindhu, Saina Nehwal and K Srikanth show signs of action in this space as well. We could also see IP’s being created for school and college merchandises which is a big business outside India.

Celebrity Licensing

Celebrity licensing is on an upswing in India. With Bollywood stars and athletes creating their own line of merchandise. Salman Khan launched Being Human which has proved to be a great success for the celebrity, Hrithik Roshan launched HRX a fitness focused brand, followed by Shahid Kapoor’s SKULT, Deepika Padukone’s All About You and Alia Bhatt’s eponymous fashion line. While sports icon like Mahendra  Singh Dhoni’s launched their brand Seven, Virat Kohli’s WROGN and Yuvraj Singh’s YWC Fashions. Additionally, Bollywood ventured into the merchandising space with films like Ra.One, Krrish, Raees and Rock On 2 however were not successful in garnering a favorable response from the consumers.

Entertainment Licensing

Green Gold Animation’s Chhota Bheem became the first Indian cartoon character to sell merchandise worth Rs 200 crore. Unseasonal nature of the sales across big cities and small towns alike and a large portfolio of products at different price points have been helping the steady growth of Chhota Bheem merchandise sales year-after-year. Also this year on May 10 Choota Bheem: Kung Fu Dhamaka movie is set to release which is being produced by Yash Raj Films to give the film the widest ever release for an animation title across India.

Besides, Rajiv Chilaka’s maiden child has also forayed into various segments- digital space, Netflix, movies, theme park and live-action musical show.

The much-awaited ‘Avengers: Infinity War’, which hit the theatres on April 27, witnessed massive success. Thanos’ journey to reclaim the Infinity Stones is almost upon the customers and cashing in on the hype are companies releasing exclusive Avengers-themed merchandises in India. From notebooks to mobile covers, companies such as Renault, Only, Acer were entered into various partnerships to provide fans and followers with a memorable experience. To attract more customers, Shemaroo Entertainment Limited partnered with Vigo Video and TikTok to promote the company’s Bollywood merchandise brand – Yedaz. Ace designer Masaba Gupta acquired the official license to create apparel, home products, and jewelry inspired by the cast of the epic show ‘Game of Thrones’ for India, the UK, and Indonesia, that is slated to release during the final season of the show this year.

Character Licensing

Character Licensing is another big licensing segment in India. The big players in the character licensing industry in India are Disney India, Viacom 18 and Cartoon Network Enterprises. Characters licensed out by Disney India include Mickey Mouse and Donald Duck. Viacom has brought in popular characters from Nickelodeon like Dora The Explorer and SpongeBob SquarePants. Children’s entertainment market is steadily gaining pace and apart from TV and cinema. It has been estimated that market size for character and non-character licensed products in organized retail would be in the region of $ 3.5 billion. Reliance Animation went beyond the mythological characters and came up with a character that could relate with kids with Singham which is an inspiration from live action Bollywood movie by Rohit Shetty.

Traditionally, India has been a children’s entertainment licensing territory. However, as a testimony to the growing entertainment industry and increase in the market for young adults, Marvel, Disney and Barbie profiting from a growing popularity in licensed products across various segments such as apparel, footwear, phone and computer accessories, stationery, gifts and novelties.

When it comes to reshaping the Indian licensing industry, Disney always remain the front runner. After the merger early this year with the 21st Century Fox, the Walt Disney Company reported quarterly earnings for its third fiscal quarter ended June 30. Disney has seen profits boost 23 percent in its most recent quarterly reports to a net income of USD 2.9 billion. Consumer products and interactive media revenues decreased 8 percent to USD 1.0 billion and segments operating income decreased 10 percent to USD 324 million.

The last two years also saw a massive increase in digital property licensing opportunities. With people becoming brand conscious, licensing in India to become a booming business with the increase in retail segment. For licensing to succeed in any market, organised retail is essential. E-commerce has managed to address the issue to some extent, but licensing is most beneficial with a successful retail strategy.

Corporate Licensing

Corporate licensing will be growing this year in India exponentially. With the highly volatile retail market every licensee is fishing for a brand that is dynamic and aspirational. Also corporates may adopt licensing in multiple forms as part of different strategies, it could be through a complete brand launch or a season to season affair. Licensing in the corporate segment could be used upon as a multi directional strategy, it depends how well the licensees are able to explore a corporate brand.

Changes in music licensing industry

With the increase in the number of independent artists, people have started understanding the concept of music licensing. Music licensing is intended to ensure that the owners of copyrights on musical works are compensated for certain uses of their work. Music label Sony Music has launched its global artist royalty portal — Artist Portal in India to empower artists by giving them easy access to royalty statements online.

Artist Portal is currently live in 27 countries such as the US, Australia, and China, with over 250 artists and managers. The platform also gives a break up of digital, physical, synch licensing and other revenues. Recently, Facebook inked licensing deal with Warner Music group to cover the music company’s recorded music and music publishing catalogs for use in social media. Music licensing went digital with PLUS (Performance License For Usage Of Sound Recording), an online portal, where executives can issue licenses, and receive payments within minutes. Social media giant Facebook signed licensing deals with Indian music labels such as T Series Music, Zee Music Company and Yash Raj Films.

Outlook

Licensing in India is exploring new avenues with shoe brand Bata partnering with Coca Cola for a new collection of shoes which will be part of the ‘Heritage collection.’ The heritage collection is a range of tennis shoes that was first launched in 2015. Many eminent personalities and fashion designers in India have started licensing their products to business houses who independently produce and sell on a large scale and give royalties to designers. Example recently, celebrity designer Nandita Mahtani partnered with Cartoon Network Enterprises for a special clothing collection inspired by characters like The Powerpuff Girls, The Johnny bravo, Dexter’s Laboratory and many more.  Exploration of Indian IP’s has become popular with introduction of Indian IPs like Femina Flaunt, Miss Diva, Miss India, Filmfare, ChuChu TV, Adlabs Entertainment, DQ Entertainment, Fashion TV etc. This gives a clear idea on how the licensing scenario has shaped in in the first quarter of 2019 and looks promising with good growth and opportunities arising in the industry.

Also the attraction of licensing trademarks for business intentions appears to be at an all-time high. It is interesting to note that during the past two years, the number of filing of trademark applications has increased drastically, however there has only been a nominal increase in the number of trademark application by foreign applicants.

With the licensing industry going the right direction exploring new possibilities licensing scenario in India will depend a lot on how well the country adapts and develops the industry in the next 4-5 years. Though there is a need for some push and support from the government on creating clarity for licensees on licensing laws and a proper licensing policy needs to be in place for the industry to flourish organically. Although licensees across various domains working with different brands across the world are voicing out their views for best practices for efficient licensing deliverables in Indian scenario. It would be interesting on how the overall licensing scenario in India carves out.

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