New niches in the license market. What brands will be popular in Russia in the coming years?

Russia’s special operation in Ukraine and the ensuing departure of foreign brands have had a strong impact on the Russian license market. According to Ipsos Comcon, the share of buyers of licensed products in Russia decreased by 3% year-on-year and now stands at 33%. At the same time, the lack of competition from major global players enables Russian licenses to take a larger share of the market.

Vestnik of the Licensing Market learned from the largest Russian copyright holders how the departure of Western brands affected the Russian licensed market, what consequences the legalization of parallel imports may have, and what brands will be popular in Russia in the near future.

Big chance for Russian brands

Since the departure of foreign licensors, several stages have already passed. At first, the market experienced a shock: many licensees faced early termination of contracts with Western copyright holders and related financial losses. This discouraged many manufacturers from working with licenses, and within two to three months there was a pause in the market. However, now, according to experts, the market has been reformatted – now there is competition, but among Russian brands.

The departure of the main players was quite noticeable, especially the first few weeks, comments Oleg Roy, writer, general producer of Great Frame. According to the expert, six months ago the market was too focused on Western partners, and now the situation has changed dramatically.

Russian licenses come to the fore – fortunately, over the past 15 years, a large number of high-quality animation has appeared and evergreen brands have emerged, such as Smeshariki, Masha and the Bear, Fixies, Barboskins, Three Cats and many others.

“Now Russian copyright holders have a great chance to occupy the vacated niche and develop their own brands in licensed sales,” believes Julia Golovahead of the licensing direction of the Soyuzmultfilm film studio.

“There are a lot of Russian characters and licenses on the market now,” comments Valentina Kursanova, Director of Business Development and Licensing 0+ Media. – Large manufacturers began to actively look towards Russian brands. We receive very strong incoming interest from cosmetics, clothing, and large retail chains.”

Retail chains really look at Russian brands. In particular, domestic licenses are increasingly being used to participate in loyalty campaigns and for major holidays.

At the same time, licensed goods under foreign brands have not yet disappeared from the shelves and continue to be in demand. “At the moment, a large number of remnants of licensed products from foreign copyright holders have been noticed, which will be sold on the shelves for a long time,” she said. Angelica VoskoboynikSenior Category Manager at STS Media.

Interest in departed or departing foreign copyright holders remains, I’m sure Igor Bochkarev, Licensing Director, Russia and CIS, IMG. According to the expert, this is facilitated by the strength of these brands, their recognition and popularity among the target audience and, accordingly, a large number of requests for licensed products with brands on the shelves of retail stores.

In addition, the lack of competition with many global players can hardly be considered a definite plus for the licensed industry. The key to the successful development of any market is competition, and any containment of it leads to stagnation and lagging behind more competitive markets, noted Igor Bochkarev.

“Russian brands need to learn how to work according to world market standards: plan in advance the release of content, the budget for promoting content and licensed goods, build marketing plans, assist licensees in working with networks,” emphasizes Julia Golova.

Market realities

Despite the growing interest in Russian licenses, one cannot speak of a surge in the number of deals on them. Manufacturers are still taking a wait-and-see position – weighing the risks, looking at brands, planning for the future.

“Now there is no situation where all licensees rush to conclude contracts with Russian companies. They take their time, consider, analyze and give preference to those companies that can provide the full range of services necessary for quality work,” comments Julia Golova.

The market situation has stabilized Valentina Kursanova. Some manufacturers stop working with licenses due to technical problems – lack of materials, paint for packaging. At the same time, new ones are coming, including large partners who used to work with foreign licensors, and now they want to work with domestic brands, the expert notes.

At the same time, the trend towards an increase in the number of licensees for Russian brands is clearly visible. According to Oleg Roy, today new licensees are coming both from the domestic market and from those countries that we did not pay attention to before. “Completely unexpected players come – there are not so many of them yet, because everything is just beginning,” the expert believes. How strong and how long this growth will be, time will tell.

Parallel Import

The legalization of parallel imports will allow the import of legal licensed products from unfriendly countries without the permission of the right holders. It is likely that the appearance on the shelves of licensed goods from brands that have left Russia will affect the licensed market, but it is still difficult to say how large-scale and how long the practice of parallel imports will be. Experts agree that it is too early to talk about the benefits or negative aspects of this decision. Most likely, it will be possible to evaluate the effect of parallel imports only at the beginning of next year. So far, it does not cause any particular concerns among market players.

“We do not foresee major changes and difficulties,” comments Valentina Kursanova. “Perhaps, even if there are goods of foreign brands, the buyer will choose Russian ones.”

According to Alexandra Ravina, the head of the licensing agency of the animation company YARKO, parallel imports will compete with licensed goods released by licensees in Russia, but this will not be critical for Russian licensors: “Parallel imports will not have the best effect on sales of licensed products in general. But we are a producer of Russian content and brands and do not expect such competition or counterfeiting for our brands to increase.”

From the expert’s point of view, working with Russian animation brands for potential and current partners will help to avoid such risks.

What brands will be popular

In the foreseeable future, interest in Russian brands will continue to grow. According to Igor Bochkarev, the licensing model itself is becoming more and more attractive for manufacturers: new players see new projects in the licensing market, understand the benefits of using brands and try to work with certain licenses. The main thing is to choose the right brand license for the strategy pursued by the potential licensee company, the expert believes.

In the context of the development of the Russian licensed market, the demand for domestic brands is obvious.

“Now there is clearly a great interest in domestic animation brands and characters, and as a result, an increase in the share of licensed goods of Russian brands on the shelves, as well as an increase in the volume of Russian animated content in the grid of television channels and VOD sites,” comments Alexander Ravin.

The trend is confirmed by TV viewing data. The results of the Ipsos Comcon “New Generation” 2022-H1 study show that the top 5 cartoons that children watch at least once a month are Russian animated series: “Masha and the Bear”, “Fixies”, “Barboskins”, ” Three cats”, “Smeshariki”.

“We can say with confidence that Russian licenses have good prospects, their popularity remains at a high level,” comments Alina LantSenior Project Manager, Regular and Syndicated Research, Ipsos Comcon.

Valentina Kursanova noted changes in the structure of content that will continue in the future: in the current situation, a whole segment has left – film release brands, which means that television brands will become more and more popular both on TV and on Internet channels. And the greatest growth, according to the expert, expects Russian evergreen brands.

In addition to entertainment content, more educational and educational content will appear, he believes. Julia Golova. The demand for educational content has intensified during the pandemic, and interest in products containing educational elements, especially for young children, is not weakening, but only growing. This can be seen from the abundance of such cartoons on the central children’s TV channel Karusel.

In addition, brands for an adult audience will be developed in Russia. According to Igor Bochkarev, adult brands are waiting for a boom in the near future. In the world this is a huge niche, but in Russia it still occupies a meager market share. In the near future, we can expect the growth of corporate and art licenses – brands of museums, galleries, etc. In addition, the segment of fashion licenses of celebrities and fashion brands, as well as gaming brands – both classic sports licenses and e-sports, will increase, the expert believes.

In general, those brands that are constantly and comprehensively developing will be popular. Success is achieved by the joint work of the copyright holder and the licensee. “It is important both the work of the copyright holder to create high-quality content, its rotation and distribution, presence on key online platforms, marketing campaigns in offline and online retail, etc. the most important marketplaces,” emphasizes Angelica Voskoboynik.

According to the expert, those who change with the new world and use relevant tools, such as AR (augmented reality) and working with data from online trading platforms, will remain strong in the market. As well as those who build strategic partnerships 360 degrees.

Now there are many opportunities for Russian brands – the main thing is to use them correctly. Children’s brands still remain the backbone of the licensed business in Russia, but other segments will gradually grow, and the departure of foreign fashion retailers also opens up new prospects for this.

“Bulletin of the licensed market”

Cover photo: pexels.com by pixabay