Viacom's licence to merchandise growth

The network, competing with Disney's formidable presence, is adding external brands to expand its market

Viacom18's (Viacom) consumer product division is ramping up the licensing and merchandising business with brands outside its house. It seems to believe in 'the more the merrier' as it signs on the latest brand, DQ Entertainment's The Jungle Book. Viacom would have the rights of the master licensee in India and would be providing distribution and manufacturing muscle to the property. This is Viacom's third merchandising deal with an external brand.

Legal merchandise is finding its way into the shopping basket as organised retail spreads and brand narratives become familiar through more and more kids, youth and animated content. A number of brand licensing agencies have opened shop such as Bradford, Wild East Group and Dream Theatre, some of whom handle merchandising for Hollywood studios as well. Players such as Viacom18 have the added advantage of in-house brands besides wide distribution and manufacturing partners.

For Jungle Book, Viacom will handle themed apparel, toys, books and stationery, and will roll them out in organised retail chains and standalone stores. Viacom's consumer product division has been growing at 20 per cent year on year.

 

  Saugato Bhowmik, head - consumer products, says, "We will leverage opportunities with non-Viacom consumer products as an independent business model. We will represent third-party brands in different genres like entertainment, music, fashion, sport and lifestyle." Viacom has other external brands such as Peanuts and Charlie Brown and an international football club, merchandise for which it would roll out soon.

Viacom is one of the leading players in the indian branded consumer product (licensing and merchandising) market. It faces competition from not just licensing firms, but also other TV networks. In the kids toy and accessories segment, it competes, for example, with Turner's Cartoon Network (Ben 10, Powerpuff Girls) and Disney (Frozen, Lion King, Disney Princess, Captain America). These three networks account for nearly 90 per cent of the market, pegged at Rs 3,000 crore, according to industry estimates. Products for kids and men comprise the majority of the market, and toys, apparel and footwear account for nearly Rs 1,100-1,200 crore. Other players with high recall include GreenGold Animation (Chhota Bheem) and Mattel.

However, Viacom has the advantage of reaching a larger swathe of consumers with its mix of in-house brands and external brands. It has brands for both kids and adults thanks to its channels such as Nickelodeon, MTV and VH1. It has kids brands such as Spongebob Squarepants, Dora, Shaun the Sheep, Motu Patlu in kids and merchandise for MTV Roadies, South Park (adult cartoon) and cosmetics such as lipsticks (pic above) for grown-ups. It has more than 100 product categories, over 300 packaging variants available between Rs 5 and 7,000, across 200 cities and towns.

To take its own brands beyond retail stores, Viacom tied up with Dominos in July to popularise Nick's Spongebob Squarepants with a new combo at the pizza chain - Juniors Joybox. It had a Spongebob Squarepants toy along with a slice of pizza, breadsticks, a fruit drink and a dessert. Bhowmik informs that the inclusion of the toy not only helped popularise the brand further, but also helped Dominos achieve three times the original (sales) target.

The brands Viacom is now licensing for India are likely to add to its spread. Bhowmik says the Jungle Book range will be available online too.

With external brands, Viacom's consumer product division would have to share its revenue with the licensee. Typically, such deals are marked by a minimum sales guarantee along with a royalty ranging from 10-30 per cent, though Viacom refused to divulge the break-up for the recent deal.

However, it would be Disney that Viacom will have to beat. Jiggy George, founder and CEO, Dream Theatre, says, "While having non Viacom18 brands will allow it to broadbase its reach, it must integrate the brand into its strategy. The difference between Disney and others is that Disney has a consumer-product orientation. Right from the script stage, the company thinks of the consumer product aspect and reception. Getting brands is fine, the integration into the portfolio is what matters. Hence, Viacom18 would have to leverage its strength - the television medium - to popularise the property. Otherwise, firing up sales would be a challenge."

With the industry expected to clock around 25 per cent growth, Viacom, Disney and other competition would be pulling out all stops to work with partners to cover as many bases as possible. The Indian consumer is just getting started with branded merchandise.