Inside Licensing News and Notes, Aug. 9, 2018
Funko Posts Q2 Profit
Funko swung to a $417,000 profit in Q2 ended June 30 from a $4.5 million loss a year earlier as revenue rose 32.4% to $138.7 million on strong sales of both classic (Harry Potter, Disney’s Hercules) and newer properties. The year-earlier loss included costs tied to the acquisitions of Loungefly and Underground Toys.
Sales of Funko’s vinyl figures rose 30.6% to $114.9 million, while those from bags and accessories (Loungefly, Underground Toys) increased 41.7% $24.2 million. The number of “active” properties Funko sold in Q2 increased 26% to 510 as sales per property rose 5% to $272,000.
Funko’s U.S. sales improved 32.8% to $97.1 million, while those in international markets jumped 31.7% to $41.6 million.
Meanwhile, Funko, having secured new licenses for Fortnite and Pokemon, raised its forecast for annual sales ending Dec. 31 to $620-$630 million from $595-$615 million.
With Fortnite, Funko “explored a lot of opportunities” with rights holder Epic Games, but “ended up with what we thought would give us the most success,” Funko CEO Brian Mariotti told analysts. “Everyone is going in with a ton of hope that it will be the next great property, but it still has to be proven out.”
In the case of Pokemon, a licensing deal has been “a long time in coming,” Mariotti said. Funko’s initial business with Pokemon will be a “slow burn” and Funko is discussing line extensions for 2019, he said. “We won’t jump in with 10, 20 or 30 products” but instead introduce the line gradually.
Funko also is expanding shelf space at Walmart in moving the bulk of its products to the retailer’s DVD/entertainment section this fall from the toy department, Mariotti said. The move is similar to Funko’s display at Target where its product also is in the home entertainment section, save for the “Five Nights at Freddy” figures that remain in the toy aisle because they are “more toyetic”, Mariotti said.
Funko, Russell Nickel, CFO, 425-783-3616, Russell@funko.com
Viacom’s Licensing Business Revenue Gain
Viacom’s ancillary business, which includes licensing, posted a 17% gain in revenue to $158 million in Q3 ended June 30, benefitting from the SpongeBob SquarePants: The Broadway Musical and an increase in consumer products sales, the company said. For the nine-month period, ancillary revenue jumped 21% to $266 million. Overall, Viacom’s Q2 net income declined 23.5% to $522 million as revenue fell 3.8% to $3.23 billion.
Viacom, Wade Davis, CFO, 212-846-6700
Otter Media, Rooster Teeth, Sold to AT&T
Wrapped in Otter Media’s $1 billion sale to AT&T this week is Rooster Teeth and it extensive licensing program for the RWBY RWBY Chibi anime series. Jazwares is the master toy licensee and oversees licensing for the brands, which have deals with, among others, Trends international (posters), Bioworld (apparel) and retailer F.Y.E. (cereal). Rooster Teeth, whose fan convention attracted 100,000 people last year, generates “millions of dollars” in merchandise sales, Otter Media founder Jesse Jacobs told the New York Times. In addition to Rooster Teeth, AT&T, as part of the deal with Otter, also is acquiring the anime streaming service Crunchyroll, which joint produces content and shares some merchandising rights with Funimation. AT&T’s newly formed WarnerMedia Division will oversee Otter Media’s properties.
Rooster Teeth, Gary Haddock, Head of Animation, 512-480-0336, email@example.com