Every year, License Global magazine features its Top 150 Licensors list, which highlights by retail dollar sales the largest brand licensing companies around the globe.
The number one licensor every year since License Global began this report in 1998, is Disney. Last year, Disney reported its retail sales of licensed Disney merchandise at $53 billion. Keep in mind that this also includes Disney acquired brands such as the Star Wars franchise, Pixar films, The Marvel Universe, in addition to its franchises such as Mickey and Minnie, Lion King, and Aladdin.
Beginning In 2019, also included will be all of 20th Century Fox IP including the Avatar and Simpson’s franchise, plus Family Guy and so many more. The next closest competitor to Disney is Meredith Corporation, the magazine publisher at $23 billion (which includes their Better Homes and Gardens brand which is a Direct to Retail deal at Walmart; and also includes the sales of the homes from their name brand Licensed Real Estate Agency).
So, every year for over 20 years Disney has blown away every single other brand company in the world when it comes to licensing its IP for consumer products, live shows and events, and attractions.
Amazon “weighs in”
For those of us in the licensing community, the big question is what company could possibly give the largest Hollywood studio, kid’s entertainment, and brand company in the world a run for its money? The answer, we think, is Amazon.
The recent Brand Z Top 100 Brand Study released by WPP’s Kantar research division shows Amazon, for the first time ever, as the number one brand in the world. This year, Amazon overtook Google and Apple to become the world’s most valuable brand. According to the Brand Z Study, Amazon’s brand value last year surged 52% to reach $315.5 billion, surpassing Apple’s 3% advance to $309.5 billion and Google’s 2% rise to $309 billion.
Amazon, the company who turned Walmart and Target into retail underdogs. Amazon, which has changed the way we shop. Amazon, a company that understands the value of working with third parties to strengthen their brand value.
Licensing too, is based on the concept that brands become stronger by working with best in class partners that mutually benefit through partnership marketing. Amazon has built its ecommerce business through just these sorts of partnerships with third party retailers and suppliers that fulfill Amazon’s customers’ orders. Amazon, understanding the power of branding, has their third party suppliers deliver the product ordered in Amazon branded packages. Smart branding!
In a classic licensing scenario, the third party licensee pays a royalty to the brand owner/licensor. I would argue that Amazon is in fact awarding itself a “royalty” in the form of acting as the retailer for the products being sold through its ecomm business. In 2018, Amazon sold $200 billion worth of products.
Amazon’s greatest challenge, of course, has been to convince name brands to sell their products through Amazon. In most cases, name brands have been resistant to selling through Amazon. In response to this resistance, Amazon has attempted, albeit unsuccessfully, to create its own brands. The answer for Amazon lies in its ability to license in brands as DTR (direct-to-retail).
The opportunity to lease name brands
In the last ten years, a number of Brand Management companies have been created that buy up well known consumer brands for the brand equity they have built over time, and then license them out to manufacturers in different categories or license them in direct to retail deals.
The largest of these brand management firms, Authentic Brands Group, a nine years young company, owns 50 well known consumer products brand such as Aeropostale, Airwalk, Elvis Presley, Marilyn Monroe, Mohammed Ali, Nautica, Nine West, Prince, Sports Illustrated, Vince Camuto, and Volcom to name just a few. Other companies in this space are Centric Brands and Marquee Brands. These brand management companies do not manufacture products, they simply license the brands in exchange for a royalty payment.
Thus, they are much more willing to license their brands to Amazon in what we call in the business, a direct-to-retail deal. Amazon essentially then is leasing the brands for a set amount of time and can choose product categories and source the products directly. Together then with licensing, Amazon can win tremendous market share through licensing.