5/1/2013
Predicting the next Angry Birds hasn’t been easy. Many apps have tried to mimic Rovio’s success as a merchandise powerhouse, and none of them has yet come close to Angry Birds‘ retail and sales dominance. But panelists at the KidScreen Summit held in New York City say these attempts are instructive to those seeking apps with the potential to develop multimillion-dollar merchandising programs.
It’s Never Too Late, but Early Can Be Fatal
Unlike movie franchises, in which a film’s debut is tightly coordinated with tie-in merchandise hitting store shelves to maximize sales, apps operate on their own timeline, says Lima Sky’s Eric Karp, developer of the Doodle Jump app. “It’s never too late, but you can definitely be too early.” Karp cites Disney’s Where’s My Water as an app that introduced plush and T-shirts before there was significant demand, and that consumer-products push ultimately hurt the brand’s growth and licensing opportunities. “It really needed to be online longer and ripen,” he says.
This time delay allows apps to build fan demand that they can leverage into larger deals. Doodle Jump, for instance, was the best-selling app in March 2011 but fell to become the third best-selling app in March 2013. However, the Doodle Jump deals signed in 2013 were 50 to 100 times larger than the deals it signed in 2011, says Karp. “If I were a top-50 app, I would wait at least a year before licensing,” he says. App properties need at least 12 months to separate the fads from apps with long-lasting potential.
Lock Everything Down Before Seeking Partners
Retailers want to minimize their risk and upfront investment when they accept any new, unproven property. As such, it’s app developers’ responsibility to make partnering with them as easy as possible, says licensing agent Debra Joester. This means property owners need to make their assets turnkey: Performers that animate voices in the app need to be legally under contract to develop voice chips for plush, and artwork needs to be cleared and formatted for product design. There should not be any lurking problems or delays in getting product to retail shelves.
Leverage Social Media to Gain Traction
Obviously every app developer wants its product in as many mass retailers as possible, but that desire is unrealistic in today’s retail environment, say analysts. Even if Walmart does accept a new brand, it’s likely to roll out the product over several months and across a few stores at a time, rather than unveil a full national push. “Brick and mortar is basically a game of inches,” says Karp. Retailers also don’t entertain big, all-at-once, full-scale launches, as they also seek to minimize their risk as much as possible. As an alternative, analysts recommend online retailers as the first step, even for a product with multimillion-dollar potential. Online retailing has a low cost of entry, properties are able to easily leverage online buzz to build traffic (following the reasoning that both the retailer and the buyer are tech-savvy), and products receive more than “inch” space. One reason Annoying Orange was able to transition from a digital brand to consumer products is that there were nine million fans looking to buy something, says Joester, who is licensing agent for Annoying Orange. She says the property effectively used social media to drive fans to online retailers where its merchandise was available. And then Joester and Annoying Orange were able to take these results back to brick-and-mortar retailers to illustrate this property’s viability. As such, Annoying Orange merchandise is now sold at Kmart, Target, and Toys R Us, among others.
Start With T-Shirts
Not all brand categories make sense for apps. T-shirts have smaller upfront costs when compared to other products, and toys require more investment from both the property owner and the retailer. As such, it may be savvy for app developers to initially introduce T-shirts to test demand. To this end, Temple Run recently offered mostly apparel via online retailer Café Press. The merchandise failed to attract consumers, causing Temple Run developers to re-evaluate their options. This testing would have been a much larger failure, in terms of buzz and money, had it primarily included hardline goods and brick-and-mortar retailers.
Video games are the toughest category for an app to enter, since apps already are video games, although on a different platform. “You can’t double dip or give them a better experience [than they get with the original game],” says Karp. However, while apps may miss out on the lucrative sales that come from video games, it’s a popular misconception that apps have to be free to be popular. “Even free apps can generate tens of thousands of dollars,” says Karp. “There’s been a blur in distinction between $.99 and a free app with in-game purchases. Two years ago, there was no way you could ever jump over the two, but now consumers say they want us to give them the ability to give us more money.”
What Is Success?
It’s truly challenging to measure what makes a successful app. As one executive asks, “How does one measure share of mind?” Even huge download numbers don’t mean much when it comes to measuring sales potential, according to Karp, though he does rely on AppAnnie.com for analytical insight. These murky numbers are inconsistent and fluctuate. Nevertheless, traditional retailers require analytics. They might mean little or nothing, but retailers often seek data such as total awareness, length of game play, and favorability when evaluating apps’ potential. Yet ultimately, retailers make a leap of faith when they allow any new product on their shelves. There’s no consensus on success, so it’s up to retailers to create their own definitions. Nonetheless, what may matter more to retailers than analytics is money: How much money are app owners willing to pay to support this brand at retail?
Pick Your Partners Wisely
Despite the wish by most app developers to align with a mass market retailer, including Target or Walmart, sometimes small is better for an app’s long-term results. “It’s a complex decision,” says Joester. “With a big company, unless you are confident you can generate $50 million to $100 million in business, you aren’t going to be important to them. It’s the small or mid-sized retailers that really need you. The big guys don’t need you.” And retailer support is critical to an app’s merchandising success since retailers can make or break a property depending on placement and stocking priority.
Innovative Gameplay
The Angry Birds app is more than just cute characters intent on destruction. The game essentially featured new touchscreen innovation by introducing the flick touch. This is not an anomaly. Apps with the most potential to be more than a fad feature advanced or innovative game features. This is one of the most effective ways to break out of the clutter. Fruit Ninja and Cut the Rope, for instance, also drove innovations through the touchscreen feature. Doodle Jump and Temple Run ushered in new game-playing behaviors through the accelerator feature.
These five examples illustrate how difficult it is for even very original apps to expand beyond the app world. For the truth is, only Angry Birds has really broke through on the merchandising front and most observers believe its success in that realm has peaked in the U.S.
CONTACTS AND CONNECTIONS: Joester Loria Group, Debra Joester, President/CEO, 860 Broadway, 3rd Fl., New York, NY 10003; 212-683-5150, x302; djoester@tjlgroup.com; www.joesterloriagroup.com.
CafePress, Ty Simpson, Director, Licensing Business Development, 6901 Riverport Dr., Louisville, KY 40258; 502-974-4392; tsimpson@cafepress.com; www.cafepress.com.
Lima Sky, Eric Karp, Chief Licensing Officer, 447 W. 22nd St., #3, New York, NY 10011; 212-929-3768; eric@limasky.com; www.limasky.com.
Rovio Entertainment, Naz Cuevas, Senior Director, Consumer Products, 1702 Olympic Blvd., #C, Santa Monica, CA 90404; 818-970-1030; naz.cuevas@rovio.com; www.rovio.com.
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