Character licensing and merchandising has a relatively recent market in Australia with industry participants and a clear legal framework.

In commercial terms it involves exploiting assets that have a history of working abroad or locally by licensing their use for toys, clothing and other products.

Prominent among these assets are well-known names, logos, images and brands. They are protected by trade mark registrations, typically connected with a character, personality, musical group or highly engaging and promoted new entrant.

It was not always so, especially for adults. Compared to the US market, before say 1990 Australian attitudes could be summed up thus: “No, merchandising please. We’re Australian.” In fact that’s the title of a merchandising “how to” article I wrote in 1993 for Encore, an Australian film and television industry publication now only available on digital devices.

Industry participants in Australia

Today merchandising is everywhere in Australia. Walls of it greet you at mega-stores such as Target, Kmart and Big W and in boutique toy, DVD, record or book stores. In supermarkets such as Coles and Woolworths you get pulled up by your children requesting foods bearing the visage of famous characters. For example, Bob the Builder and The Wiggles appear prominently on several products including yogurt and biscuits.

Australia is now even a regular exporter of merchandising properties including the film Happy Feet and properties such as Bananas in Pyjamas and Hi5. Conquering all are The Wiggles, they have long appeared in the top annual revenue lists for entertainment acts in Australia. They have conquered the United States and other territories. From 1991 to 2007 worldwide they sold over 22.5 million videos/DVD’s and 5 million CDs.

At the core of the licensing and merchandising sector remain children. Prominent as providers to them across a wide range of toys are Hasbro Australia Ltd (Playdoh, Star Wars, Tonka) and Mattel Pty Ltd (Barbie, Pixel Chix, Sesame Street, Hot Wheels). Also prominent in toy sales in Australia, though for specific line items, remain Lego Australia Pty Ltd (building sets), The Hunter Group (toys and outdoor sports) and Sportscards Australia Pty Ltd (sports cards).

The kids division of the fully government-owned Australian Broadcasting Corporation (ABCKids) continues to grow as a prominent licensee and licensor. So does its range of offerings for children, now providing well over 100 characters. Still, the old favourites remain and continue to thrive. In 2016 Play School, one of the ABC’s pre-school programs will celebrate its 50th birthday. What is new and indeed exciting at ABCKids is a vast increase in the quality of games and activities available online.

For adults, merchandising and licensing have spread considerably into numerous lines where once they were not so common. As in other countries, Australia came to be bathed in celebrity-endorsed scents (eg Channel No. 5 by Nicole Kidman from 2003 and Darling by Kylie Minogue from 2006) and celebrity-endorsed clothes and accessories.

In sports mad Australia that field too is fully represented by merchandising and licensing agents, distributors and retailers.

Legal framework

Australia has a highly sophisticated regime of laws, courts and licensing conventions. They can be made to work for any type of product or licensing or merchandising strategy.

Trade mark and copyright law have provided the traditional legal base for many licensing and merchandising contracts. However, as software, the internet and new business models emerge increasing attention is likely to be given to additional mechanisms for monopoly legal rights using design registration law and patent law.

Challenges for industry participants

Over the horizon what will be challenging in Australia is also the topic of considerable hype or concern currently in Europe and the United States. Here are two questions which deserve their own focused review:

  • What have licensing and merchandising companies done to respond to the decline of print publishing, newspapers and magazines?
  • How have they adapted to use social media and other online marketing mechanisms?
  • Where do DVD distributors and stores renting or selling DVDs find revenue given the DVD format has past its maturity?
  • What are the opportunities from broadband and how can products prepare now?

Online media’s attractive qualities are taking more and more of the time of younger and younger children away from the toys and playthings that kept their parents busy in yesteryear. My four year old son was using a computer from the age of two and contemporary DVDs and online activities provide some of his most favourite pastimes, leaving the toy box untouched until friends drop by. This is not good news for those in the business of merchandising and licensing with no online strategy or at least positioning with respect to it.

These emerging challenges and the new environment for character licensing and merchandising calls for new or adapted business models. They do not have to replace existing revenue streams in one go, but they should be considered as a way of at least defending against the truly warp speed of change about to sweep us all off our historical foundations.

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Noric Dilanchian