Global Licensing

In licensing, as in other businesses, it is clear that we are truly, for the first time, experiencing the age of the “global economy”.

Nations outside the U.S. currently account for more than 40% of the worldwide total of licensed product revenue. Not so many years ago, most properties that were successful internationally were created and developed in the U.S. and then licensed in international markets. While this is often still happening, as more licensors around the world enter the business or expand existing activities, a healthy exchange of properties across the international arena is now common. Creators of new properties naturally are trying to focus on international appeal as much as possible, as the investment in developing and marketing a property has risen considerably. The use of licensing properties internationally on a range of products potentially reduces both marketing costs and the volume of advertising otherwise required for promoting the property individually.

There is no doubt that licensing in multiple global markets has important advantages for companies that either cannot or do not wish to invest overseas or export their products, but before developing multinational campaigns, licensors should keep a number of key issues in mind, such as the many cultural, linguistic, legal and financial differences that exist in different territories. Thinking globally involves the ability to understand markets beyond one’s own country of origin and requires knowledge of the political and economic situation in the country where a license is to be granted. Of particular importance is the understanding of global consumer behavior and the knowledge of the prospective licensee and his needs and capabilities.

Factors before entering a new region

As companies seek to tap new markets in other countries, the question arises as to whether licensing strategies which are effective in one country will also be effective in other countries. Therefore it is particularly important for a licensor to realize that each country differs in its specifics and must be looked at as a separate territory. Differences may exist, not only in language and the relative effectiveness of different licensing strategies, but also in such areas as market structures, retail patterns, legal systems and limitations, and tax implications.