Intellectual property licensing is about creating more value
By Kiran Kaur Sidhu August 21, 2018
- Brand owners only get 10% of product wholesale price but also put in only 10% of the work
- Understanding brand DNA is crucial before entering a licensing arrangement
SINAN Ismail (pic), the co-founder and chief executive officer of Digital Durian, had a thing or two to share about licensing intellectual property (IP) at MDEC’s Kre8tif Conference on Aug 9.
As producers of the Didi & Friends as well as Omar & Hana animated series on Astro satellite-TV, Digital Durian has achieved content distribution to multiple countries, one billion views on YouTube and success in licensing and merchandising.
Introducing Didi & Friends to the audience, Sinan explained that their intention was to go global from the beginning.
“Otherwise, we would have named the series Didi & Kawan-kawan (‘friends’ in Malay). The series is available in nine languages including Spanish, Hindi, Thai, Vietnamese and Bahasa Indonesia.”
At the end of his presentation, Sinan also showed the audience a Didi & Friends clip of a Malaysian folk song translated to Hindi. He said, “For me, this is quite emotional since a local song is now global.”
By licensing its IP to more than 15 licensees, the animation studio has bridged its digital products with the physical world and also created an additional revenue base for itself.
Things to consider before IP licensing
Keeping things simple, Sinan explained that an IP license gives other companies the legal right to produce goods such as toys, t-shirts and other merchandise. “The wholesale price for a Didi & Friends plush toy is RM42 and licensors or brand owners only get 10% of that or RM4.20.”
Although 10% in earnings appears to be a meagre sum, Sinan explained, “The licensee does the bulk of the work – production, warehousing, distribution, sales and maintains a relationship with retailers. That is worth 90%.”
He also advised companies to understand their brand DNA before licensing their IP. “Didi & Friends is an edutainment cartoon for children that’s fun and safe. We want the products to create family moments and not just be about children using the iPad to watch our videos on YouTube. ”
For Digital Durian, its target audience is made up of children as well as parents. “We create value for children and parents support us because they see that value.”
The educational and fun aspect of Didi & Friends runs from the digital IP across to its licensee’s products which comprises books, apps, school bags and plush toys.
“We also create value and send a message on the importance of safety by licensing car seats which are still not used enough in Malaysia,” Sinan said.
Digital Durian has also forged a partnership with ZooMoov, a kids activity centre, to create Didi & Friends themed rides. “We want to give parents and children more bonding opportunities through our licensed products,” Sinan explained to emphasise the importance of brand DNA in licensing.
Sinan also stressed that it is important for IP creators to choose licensees that align with their brand values. “When a licensee believes in your brand and is not just in it for money, it creates good chemistry for both parties.”
Sharing one of the hardest lessons in licensing, Sinan said, “Didi & Friends is very colourful. When it comes to merchandising, more colours make it more expensive for licensees. But looking back, we wouldn’t change a thing.”