Showcasing iconic characters in new formats through licensing
Beyond film and cartoon characters, Pacific Licensing Studio now links corporate brands and museums with merchandise makers
From Starbucks tumblers featuring Dutch cartoon rabbit Miffy to a Secretlab gaming chair embellished with the Batman logo, licensing agency Pacific Licensing Studio (PLS) is finding new ways to bring iconic characters to Singapore consumers.
PLS brokers deals between licensors looking to monetise their intellectual property (IP), and licensees that create merchandise using such IP.
While some licensees may reach out to licensors directly, the licensors often lack in-market teams to handle such queries, said PLS co-founder and managing partner Neal Rudge.
“Part of our job is to try to make both ends meet. and find a way to create a deal between them,” he said. Licensors tend to engage local agents as intermediaries since that model is more cost-effective, he added.
Founded in 2011, PLS focuses on character licensing, where copyright holders grant permission to third parties to use their characters – often from films or television series – on merchandise or promotions.
The company’s major licensor clients include Japanese entertainment company Sanrio, most famous for Hello Kitty; American toy manufacturer Hasbro; as well as film production studios Warner Bros, Universal Pictures and Dreamworks Animation.
To date, it has worked with more than 1,000 licensees, ranging from retail and fast-moving consumer goods brands to wholesale suppliers such as manufacturers and distributors.
After a deal is made, PLS sees it through the execution. This includes supporting product development, training the licensees’ design team, as well as overseeing product approval and product launches. The company earns a commission from the royalties that licensees pay to licensors.
Establishing a footprint
The establishment of PLS was more opportunistic than intentional. In 2000, Rudge moved from the US to Singapore to work for American film and entertainment giant Warner Bros’ licensing unit overseeing South-east Asia.
About a decade later, Warner Bros decided to outsource its South-east Asia licensing business to a third-party vendor – presenting an opportunity for Rudge to set up such an agency.
In 2011, he established PLS with two business partners. At that time, there were only about three other character licensing agencies in Singapore, he estimated.
Warner Bros became the company’s first anchor client. Then, soon after its incorporation, PLS was appointed the licensing agency for the Angry Birds franchise by Finnish video game developer Rovio Entertainment.
It then scored its first sports IP deal when it secured the South-east Asia licensing rights for the 2014 Fifa World Cup.
Explaining the draw of merchandise, Rudge said: “The best way for fans to participate in the IP is to be able to own something that has a mark of the brand.”
Still, not all merchandise will sell well. South-east Asia is a particularly challenging region as each market has unique and distinct consumer preferences, said Rudge.
“For instance, Indonesians like big, bold applications of the creative (elements) but in Thailand, they prefer slightly more subtle designs that are influenced by trends from Japan and South Korea.”
There are also religious sensitivities to consider. For example, merchandise of canine or porcine characters is unlikely to be popular in Muslim-majority countries, he said.
To keep its finger on the pulse of each market and work closely with licensees, PLS has physical offices in major cities of each market: Singapore, Kuala Lumpur, Bangkok, Jakarta, Manila, Taipei, Ho Chi Minh City and Shanghai.
The company also hires local staff who are familiar with each market’s distribution and retail infrastructure.
“We’ve got to have our people on the ground to understand which licensees have the best relationship with retailers, and which licensees are doing e-commerce, as some of them can be quite old-fashioned,” said Rudge.
“It’s about finding the best (licensee) that has the right combination of maximising revenue and protecting – or even adding to – the licensor’s brand equity.”
Diversifying into higher-end cultural assets
Beyond character licensing, PLS is diversifying into higher-end cultural assets in response to growing demand. This April, it created a business unit for the licensing of corporate IP from fashion and lifestyle brands, as well as museums.
Corporate licensing aims to extend a corporation’s brand reputation into products or promotions, said Rudge.
“Asia has always been a more heavy character-entertainment market relative to other parts of the world,” he said.
“But it’s catching up with European and North American trends, and there’s more of a market now for sophisticated or higher-end licensing solutions, such as well-known culture or corporate brands that have certain equity – say, Starbucks or Paul Frank.”
As consumers in Asia become increasingly affluent and aspirational, more of them seek products “associated with high society and a higher-class lifestyle”, he noted.
Museum licensing, where museums license out the IP of their artworks and artefacts, is an especially hot space to watch, he added.
In September, PLS was appointed the exclusive licensing agent for The Metropolitan Museum of Art (the Met) in New York for greater China, South-east Asia and South Korea.
Under a three-year partnership, it will work with the Met to create merchandise inspired by the museum’s art collections – including works by artists such as Claude Monet and Vincent van Gogh – for regional consumers. This ranges from apparel to accessories and home furnishings, among others.
Corporate licensing now forms just 10 per cent of PLS’ revenue, with the rest from character licensing. But Rudge aims to raise its share to over a third, by 2026.
PLS is also building its presence in China, whose vast market size allows licensees to hit minimum order quantities more easily, said Rudge.
The company opened an office in Shanghai in March, in its first foray out of South-east Asia.
“China is a challenging market, but you have volume,” he explained. “Whereas Singapore is a smaller market, so it’s harder to justify a licensee picking up a licence to manufacture a product, because it’ll be very expensive to produce such small volumes.”
Tackling piracy
PLS posted revenue of US$6.5 million for its latest financial year ended December 2023, slightly down from US$6.6 million from the year before.
This was due to fewer tentpole movie releases from existing Hollywood franchises, resulting in a dip in related merchandise sales, said Rudge.
But with its entry into China and growth in the corporate licensing segment, he expects FY2024 revenue to grow by about 15 per cent.
Piracy continues to hurt the business, especially with the rise of online marketplaces. While PLS works with e-commerce platforms to ensure that sellers carry only licensed merchandise, there is no easy fix, said Rudge.
“It’s like whack-a-mole – you knock this one down, but someone can pop up over there,” he quipped.
Offline, at least, piracy has become “less of a problem”, he added. “Fifteen years ago, you would still have prominent major retail chains carrying pirated or counterfeit products. That doesn’t really happen anymore.”
As consumers’ disposable incomes rise, more of them want the real thing, Rudge noted.
“So we have this great advantage of this overall consumer growth dynamic in Asia, where more and more consumers are aspirational, and they no longer want the fake stuff.”
This article was first published on the Business Times on 9th October 2024, https://www.businesstimes.com.sg/singapore/smes/showcasing-iconic-characters-new-formats-through-licensing