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Steven Reece We are a leading Consultancy to kids entertainment brands including TV, toys & games. Our services include cutting edge qualitative consumer insight and consulting with entertainment brands to maximise their merchandising potential.

Saluting the health of the Board games Category – Essen Spiel 2012

Posted in Uncategorized on 21 October 2012

Essen Games Fair 2012

Just back from Essen Games Fair.

And for those who have questioned the health of the Board Games category of late, you obviously haven’t been to Essen recently!

Packed aisles full of hardcore Gamers, families and evey one in between. if you’ve never been and you’re interested in board games you really need to go.

Now the type of Games there can be a little hardcore, and therefore not necessarily suitable for mass market audiences, but both Hasbro and Mattel were in attendance, so there really is a game for everyone.

The most unusual thing about Essen is that it is both Trade show and Consumer show. The reality of chasing between meetings while negotiating hordes of Gamers is not always a happy reality, but it certainly adds to the flavour and atmosphere, and I yet again met most of my favourite people from board games companies in Essen.

So that’s it, Essen’s over for another year, but for those who remain negative about the prospects for board games, you really need to visit this show and perhaps it might make you change your mind…!

 

All the best

 

Steve

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What Toy Companies Can Learn From One Direction…

Posted in Uncategorized on 10 October 2012

One Direction – What Toy Companies Can Learn From The Pop Phenomenon

So here I was flicking around on TV trying to find something different to watch. And I found the BBC (in the UK) had a Celebrating Teen heroes pop concert featuring One Direction. Now before you start to think I’ve lost the plot, my kids love One Direction, so I was mostly checking this out to see if it was appropriate for them to watch (really!).

So then I started thinking, how the hell did they get so huge? Just what made them this huge.

Seems pretty obvious when you think about it:

1. The ‘Product’ - Let’s face it if they couldn’t sing, had no style and were chronically ugly they wouldn’t have made it.

2. Mass Market Traditional Media – These guys didn’t just arrive. The public (at least the British public) saw these guys go through an incredible journey via the X Factor TV show, and bear in mind that show is watched by 8-10m Brits, that is a fair media platform!

3. Hysteria / Word of Mouth - the music industry would most probably call it Hysteria, but I’d probably call it super-duper word of mouth effect. Obsessed fans seek out their counterparts and mutually obsess themselves into being further and further into the band.

4. Social Media – this wouldn’t have worked for The Beatles, but 10million+ people ‘Like’ One Direction on Facebook, and as upto 255million people have viewed individual videos on YouTube, it’s fair to say that Social Media has played it’s part in getting the boys to this stage!

5. Mix of characteristics and personality – all succssful Boy bands have a mix of characters/personalities. There’s normally a clean cut one, a cheeky one, a bit of a rough diamond etc. Why is this? Because different consumers are attracted to different characteristics and personalities.

So before you click away thinking this is a 3rd rate Pop music Blog, let’s bring this back to Toys!

A great product, broadcast media, word of mouth, social media and a range that offers ‘different strokes for different folks’…how many successful Toy ranges have followed a similiar path in recent years…?

Quite a few I think you’ll find!

All the best

Steve

 

 

 

 

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Moshi Monsters Now UK’s Top Toy Brand – Permanent Paradigm Shift…?

Posted in Uncategorized on 09 October 2012

Moshi Monsters Top’s UK Toy Brands – Has The Toy Industry Irrevocably Changed?

In a word, yes!

Toy News Online revealed this week that Moshi Monsters is the top selling Toy Brand for the last 5 months at time of writing (Oct. 2012).

http://www.toynews-online.biz/news/37329/NPD-Moshi-Monsters-continues-to-soar

Now while this isn’t that surprising bearing in mind the massive traffic and user stats for Moshi, or bearing in mind the Toy range has rolled out to fill nearly every last nook and cranny in terms of potential products and categories, it is nevertheless important to recognise this as the culmination of a massive paradigm shift.

In the late 20th Century, Toy companies aspired to have the biggest and best portfolio of Licenses in their portfolio.

The first decade or so of the 21st Century saw Toy companies take more control over the Entertainment driving Toy sales i.e. Movies, DVD releases and TV programming.

However, Moshi Monsters (and Mattel’s Monster High), have added another 3rd Toy sales driver – online Entertainment.

I’ve written elsewhere about why online Entertainment can be a stronger sales driver over the year than in & out movies, at least partly due to ongoing immersion, open ended exploratory play, and very hot word of mouth effect. However you look at it, Moshi Monsters has changed Toy Licensing in the same way as Amazon changed retailing.

Mourn, rejoice, embrace…whichever comes most naturally for you, but don’t think you can ignore this behemoth of an Entertainment format, because Moshi is the first of many. (First in terms of topping the Toy market that is).

For every Moshi Monsters or Club Penguin, there are another 20 or 30 up and comers on the way up.

Believe me, this trend is going to dominate the next decade in the Toy business.

Apps will come and go as the Tech evolves, but Virtual World Brands will explode their market share in terms of Licensed Toy sales.

On that note, standby for a big announcement from us very soon on this page…

All the best

Steve

 

Toy Brand Building Event

Posted in Uncategorized on 04 October 2012

How To Build Toy Brands – Escaping The Toy Industry Treadmill

On Friday 2nd November I’ll be running a Toy Brand Building event in Central London (UK), under the auspices of the Toy Marketing Academy.

Regular readers of this Blog will know that I am a passionate believer in the critical importance of building Brands in this industry.

The full day course will take the format of a Workshop – this is not a lecture, I will not be standing next to a lectern doing all the work! Attendees will be given Tools & exercises, as well as some comparative studies, in order to ensure every attendee takes away maximum knowledge and value.

For more details, and to book tickets, please click here: http://www.eventbrite.com/event/4020338942

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Licensing For Virtual World Brand owners – 7 Top Tips…

Posted in Uncategorized on 28 September 2012

How Virtual Worlds Can Set Up Successful Licensing Programs

With the rise and rise of Moshi Monsters, it’s become very clear that Toy/Game companies need to be abreast of the opportunities to license from Virtual world Brands. I’ve written about this elsewhere.

But lately I’ve been Consulting with several Virtual World Brands who needed help to embrace the world of physical product Licensing. So thought I’d post some Top Tips for Virtual Brands…some pitfalls, how to spot opportunities for Licensing Virtual worlds, and some practicalities.

1. Impressive Metrics – Potential Licensees will assess your Brand by analysing your metrics – topline stats on visitor numbers, engaged users and time spent in your online world. Make your stats as impressive as you can. Clearly you spend much of your time working to do this – so it’s obvious, but still critical! The bigger your reach, the greater the opportunity. And don’t presume that the same stats that are relevant for your core online business are the same for Licensees – Brand awareness is difficult to measure, but a combination of massive registered users and a strong core of devoted fans will work wonders.

2. Don’t Jump The Gun – Right now, this space is so hot for Licensee companies that you could easily get product on shelf before your Brand is ready. Your metrics may be good, but do you have a merchandisable Brand yet…not necessarily the same thing. if you do go too early you risk the product not selling off the shelf, which could kill the entire Retail opportunity stone dead.

3. Product Integration –  Licensees generally struggle to get any product integration with Entertainmnt Brands. In some countries and with some Brands/media formats it’s easier, but you have a massive advantage. Virtual World content is not controlled to the same degree as TV or Movies, and often some degree of product integration can be easily executed, delivering significant benefit to Licensees over other types of Licensor. (Obviously this needs to be done with integrity so as not to damage your user relationships, but with care that can be done).

4. Plan for success – it’s comparatively easy to generate interest in your Brand if you have decent reach. However, you will find that nearly everyone will want to slap your label on any old product to shift some boxes when you have reached critical mass. To ensure you protect your Brand, and grow both revenue and Brand Equity (a major factor in any eventual Brand sale), it’s critical to map out what a Licensing program should look like, and to define what Licensees will need to do your Brand justice.

5. The Job isn’t finished once you sign the deal! – The product approval process for Licensors can be onerous. We might all aspire to Moshi Monsters level of Licensing success, however, with that comes a mass volume of product concepts and executions to consider, approve and argue about! This process can be made less problematic by Tip 4 – plan for it, there are ways to reduce the pain – either by using a 3rd party or staffing up for instance.

6. Start With The End In Mind – the old adage of “If you don’t know where you want to get to, you won’t get there!”. If you are a Virtual World start up, you can scope out your world to make it more merchandisable. If you have an established world, there are still tweaks you can make, or features you can add which will significantly increase your Licensing efforts.

7. Seek Expert help – the reality is that most Virtual World companies have plenty going on keeping their sites running, interacting with users and dealing with various tech issues. Bearing in mind investment levels in getting to the point where you can License, and the potential multiplication factor on your valuation should you look to sell, you should consider seeking advice/assistance from those who know the world of physical products Licensing. Aside from helping you plan out, they are also likely to fast track the process of engaging with the right Licensees, as well as having the ability to actively broker deals for you. They should also consider differences in culture and geography – some products work better in some markets, and not in others.

If you would like to find out more about how to set up a Licensing program, or want help with an existing one, please feel free to email me: steve.reece@vicientertainment.co.uk

All the best

Steve

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How Toy Licensing Works

Posted in Uncategorized on 24 September 2012

Toy Licensing – The Basics

One of the queries I get asked most is how the Licensing process works for Toy and Board Games products.

So rather than explain the same thing over and over, decided to post this here as an easy reference tool.

This is for people who want to understand how the process works, it’s the real basics. It isn’t going to give you more the more advanced stuff, maybe I’ll do another post on that some time!

What is Toy Licensing – basically, this is where the owner of a Brand or Brands wants to generate 3rd party income from their Brands. They might not have the capability or interest in commercialising their Brands in every category, and might choose to ‘License’ the rights to particular product categories to companies focused on those products. These companies can then use the imagery, logos and other assets owned by the Brand holder.

Licensee & Licensor –  The Brand owner, the one who is Licensing their rights out is the Licensor. The company who will commercialise the product is the Licensee.

Commercial Terms – The Licensor gets paid via royalties paid on the Licensee’s sales, royalty rates would typically be c. 8-12% of Licensee’s net sales. The Licensee would normally be required to commit to an M.G. (minimum guarantee), which is a minimum amount they will pay the Licensor for the rights, regardless of whether they sell anything or not. The M.G. is normally split into an initial ‘Advance’, and subsequent installments over the period of the term of the license. The Licensee does not pay any additional royalties until they’ve sold enough to cover the M.G.

Contractual considerations – Clearly I am not a Lawyer, so always seek qualified legal advice, but some points which I have found to be important are: The definition of what counts as ‘Sales’ can make a big difference to how much royalty needs to be paid. It’s in the Licensee’s interests to define ‘Sales’ in such a way as to reduce the total sales value so that less royalties are owed, clearly the Licensor has the opposite interest. This is usually a point which leads to some ‘skirmishes’ in the contractual negotiations. In particular, I would suggest that Licensees should never accept royalties based on ‘gross sales’, only on net sales i.e. money they actually receive. The difference between Gross and Net is often due to retailer trading terms and discounts, which while often negotiable are an inescapable fact of doing business.

Term – most Toy Licensing or Board Games Licensing agreements are for 3 years. Because we have an annual sales cycle, three years is effectively 3 selling opportunities, anything less is perceived to not offer enough opportunity to recoup the M.G. and development expenses.

Royalty reporting – royalties are normally reported on a quarterly basis, with most contracts stipulating between 30-60 days from quarter end as the reporting and payment deadline. If you are a Licensee, 60 days gives you more time to collect cash from customers/ensure reported sales are not bad debts, if you are a Licensor, clearly 30 days gives you quicker cash!

Competing for Licenses – it’s normal to compete for Hot Toy Licenses. If the Brand you are trying to license is a clear driver of merchandise, the Licensor will be very likely to solicit interest from several competing companies in order to try to get an auction process going, which normally delivers better deal terms for them. There are ways and means to get ahead in an auction process – we once bid less than half of a major rival on a License which was critical to us…don’t have space to explain how we won that here, but check below for more details on a report which covers this!

Style Guides/Approvals – most Brands will deliver some type of style guide or Brand guidelines on how to use their Branding, imagery etc. Some won’t. So the development and product approval process normally goes one of two opposite ways: a). A very structured micro restricted approach, where the Licensor will give very specific guidelines/mandatories. b). No guidance at all, often leading to constant failure to approve, wasted R&D expenses and sometimes missed ipportunity/backlash. Neither of these is easy to handle, so my message is – don’t presume the work is done once you’ve won the License!

Getting in touch with Licensors – often Licensors will make themselves very available, as they selling rights. Most established Licensors will be at the Licensing Expo in Las Vegas in June, or at Brand Licensing Europe in October.

That’s the basics for those who want to know how it works.

For anyone wanting more advanced information, as well as some powerful Tools, Tactics and Tips on how to Win the hottest Licenses, check out my published report:  http://www.stevenreece.com/shop/

If you have any comments, or questions on this topic – please feel free to email me: steve.reece@vicientertainment.co.uk (I’m not responding to comments left on the Blog due to excessive Spam comments, so get in touch via email if you want).

All the best

Steve

 

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The Pendulum Swings Back From Video Games To Toys…

Posted in Uncategorized on 20 September 2012

Physical Toys Trending Up…

A few points in this Blog post may seem counter intuitive, but bear with me, because there are big momentum shifts afoot.

For decades there has been a shifting from physical play to digital play, from real tangible objects as playthings to the ethereal.

And the funny thing is that Toy companies were right at the heart of the start of the digital play phenomenon, but what happened then was that the massive R&D costs, and very different business model and culture of Video Games, left the Toy industry as a whole floundering somewhat.

Now in the meantime, Toy companies have hardly been quiet, the industry has embraced the Entertainment industry, as well as utilising low end consumer electronics well in play.

However, the big shift I am seeing is the accessibility of many widespread and much loved consumer technologies increasing drastically. We’ve moved from expensive software to $1-2 Apps, from expensive hardware bespoke to Gaming towards multi faceted devices which can do so much more than just one thing. And best of all, we’ve moved to a model where Toy companies can again compete on the tech playing field.

Now don’t get me wrong, Skylanders proves that Toy companies still have threats from within the Video industry, especially as boxed Video Games sales nosedive. As I’ve written before, I don’t see Toy companies replicating the Skylanders model with it’s comparatively massive R&D spend…BUT there are many other top selling Toys with significantly less barriers to entry.

We’ve seen Tablet technology deliver top selling Toys, even Toys R Us are launching one now.

But there are thousands of low priced technologies out there just queuing up to come to market in a Toy format. As ever, it’s just a case of sifting through the crap to find the real winners, and of course of delivering fanatstic Toys. The focus must always be on enhancing the play experience, but as long as Toy companies follow that, it seems to me that the future of the toy industry is looking brighter.

And when we finally get through these tough economic times, I predict a golden age for the Global Toy trade!

All the best

Steve

P.S. Have you checked out our new Toy Marketing website? The articles on this site are specifically about Marketing of Toys: www.toymarketingacademy.com

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October – A Busy Month In The Toy Trade!

Posted in Uncategorized on 19 September 2012

Dallas Toy Preview, Hong Kong Toy Fair, Brand Licensing & Essen Games Fair!

October is normally a crazy time in the Toy trade. Aside from the Dallas Toy show and HK show, in Europe we also have Brand Licensing Europe which is our main Licensing show (the equivalent of the Las Vegas show in the US), plus for those whose business concerns board games of a certain type we also have the Essen Spieltage (a consumer and trade board games show).

We’re also of course dealing with any last minute hiccups/sell through issues up until Christmas, plus marketing execution and consumer response matters.

Frankly, the next few months are no time to go on vacation!

So for what it’s worth, here’s what I’m doing next month. I’m skipping Dallas & HK. Instead I will be attending Brand Licensing in London and the Essen Games fair in Germany. This might seem like heresy to some – to miss Dallas & HK, but that’s just where my business is this sales cycle.

Anyone who wants to meet up and is going to Essen or Brand Licensing, please feel free to drop me a line – steve.reece@vicientertainment.co.uk. If you aren’t going to those shows, see you at the January/February shows!

Finally, this is a time of year where we approach a new sales cycle full of hope, aspiration and perhaps slightly free of the grim reality of actual listings as per 6 months time! But let’s not forget that the faith shown in our Brands and product ranges by retailers is about to be validated or otherwise, and those companies and people who successfully pitch next year while proactively maximising customer results this year (in whatever way those can prudently be influenced) will achieve the best listings next year. Those who can only see the future i.e. 2013 ahead, and fail to deal with the here and now will as ever suffer!

All the best

Steve

P.S. Have you checked out our new Toy Marketing Academy Blog? This new site focuses specifically on Toy/Game marketing techniques, strategies and tactics only: http:www.toymarketingacademy.com

 

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Anyone Seeking UK Sales Heavyweight…?

Posted in Uncategorized on 15 September 2012

I’ve been approached by a friend who due to circumstances at a corporate level beyond his control he has found himself searching for another Senior level sales role.

With top experienced at both corporate giants, and smaller companies, with really strong amicable relationships with retailers in the UK & International, as well as a long term track record of growing Sales, he could be just the person to help a company wanting to make an aggressive entry into the UK, and to boost their international business.

If you’re looking for someone like that, please feel free to drop me a line: steve.reece@vicientertainment.co.uk

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Bandai Builds Factory In Philippines…Start Of Trend Away From China…?

Posted in Uncategorized on 13 September 2012

Bandai Builds Philippines Factory

Bandai recently announced they will build a new factory in the Philippines. Here’s the release:

http://japandailypress.com/toy-company-bandai-to-build-9-5-million-factory-in-philippines-0310983 

The question mooted by some is whether this is the start of a trend away from China?

So I thought I’d proffer my opinion on this. Starting firstly with China…

And here’s the thing about China, yes it may have seen rising costs and inflation in recent years, and yes that may have lead to price inflation for many Toy companies, which in turn has lead to ‘friction’ (to put it mildly) between suppliers and retailers.

However, the reality is that speaking right here, right now, there is just nowhere in the world that compares to China for the following reasons:

  • Massive population.
  • High proportion of less well off people.
  • Sheer scale of factories – when the downturn hit I remember reading that 100,000 factories in China were closed due to low or no work. That wasn’t every factory in China, that was just the ones that closed!
  • Established trading patterns.
  • Established excellence/competence.
  • Established and much visited trade shows.

The reality is that China as a manufacturing hub is not going away, far from it. Because as hundreds of millions of Chinese people build their own wealth and escape from factory employment, there will still be over a Billion more in need of all and any work available.

I’ll leave the debate about ethics to one side, as there are certainly points to discuss there, but the reality is that there is no alternative when you look at the macro picture. If China suddenly stopped manufacturing Toys tomorrow, there is no obvious and easy alternative. Costs would rise. Capacity would be a major issue for years.

The reality is that while there is likely to be a trend towards less developed countries over the next decade or two, China is still going to be the source of the majority of Toy products for the forseeable future in my opinion.

So that’s the macro picture. On the micro scale, for sure companies are looking at alternative manufacturing locations, and if yours isn’t perhaps you should question that. There are several obvious candidates – South East Asia has numerous countries likely to grow their manufacturing base over the next decade or two. Companies are seeking a). competitive advantage and b). to reduce the risk of sourcing from one location/region.

As far as the Philippines is concerned, there are several advantages they have over there. Firstly there population, while dwarfed by China’s is still a very weighty 95m. They have anywhere from a reasonable to an excellent level of English language in general, and they are also used to using the $USD as a working currency.

The challenge they have is  they don’t have the established excellence and competence en masse compared to China, but there’s no doubt that they could easily build that over time.

So I would say that sourcing in the Philippines is going to be a growing trend, and we will see others join Bandai, if not in establishing their own factories, at least in terms of sourcing more products there.

If you need help finding good, reliable, cost effective manufacturing, please feel free to drop me a line, I work with dozens of factory across China and the world, and have helped numerous companies save costs / increase reliability. My email is steve.reece@vicientertainment.co.uk

Finally, one other opportunity the Philippines provides is a fantastic array of skilled virtual workers. Speaking from personal experience, I have had Web design, Graphic Design inc. packaging, admin support and even technical services such as CAD design done via the Philippines at a fractional cost versus what I would pay otherwise. If you haven’t investigated this opportunity I believe you may be spending more money across your business functions than you need to!

All the best

Steve

P.S.  I have a Free guide on Top mistakes Toy Companies make which you can download from here:

http://www.toymarketingacademy.com/toptoycompanymistakes/

 

 

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