Despite recessionary dips, consumer preference for brand names yielded slight growth
Los Angeles, CA (PRWEB) July 18, 2012
What's in a name? About $31.0 billion dollars in 2012, if companies in the Intellectual Property Licensing industry have any say in the matter. “Companies in this industry lease rights to intangible assets, including patents, trademarks, brand names and franchise agreements,” says IBISWorld industry analyst Andrew Krabeepetcharat. “Operators own the rights and allow others to use them for a fee.” Companies that lease real property or tangible assets are excluded from this industry. Franchise agreements that allow the use of a name contingent on the purchase of products from a franchisor are also excluded. For licensees, the benefits of such an arrangement are many: greater exposure, customer loyalty and the capacity to charge a premium for a product with a name like "Disney" or "Nike" on it, all without having to build a brand name from the ground up.
However, the value of brands within the Intellectual Property Licensing industry fluctuates, which adversely affects revenue during periods of economic uncertainty. “Unfortunately for industry operators,” adds Krabeepetcharat, “a decline in corporate profit and disposable income after the recession caused businesses to reduce marketing budgets.” Consequently, industry revenue declined in 2008 and 2009. Despite this setback, average revenue growth was maintained in the five years to 2012, increasing at an average 0.4% annually on the back of continuing consumer preference for brand names.
Major brands like those of the Walt Disney Company have long been prominent in the US consumer landscape. Over the years, the value of those brands and how much companies pay to use them has risen immensely. This factor has encouraged an increasing number of companies to license their products; however, the limited staying power of many companies has kept enterprise growth in check. In the five years to 2012, IBISWorld estimates that the number of firms operating in this industry has increased an annualized 1.0% to 3,952 companies. Competition among industry players has caused larger participants to increase their licensing activities through greater promotion and leveraging of brand names. Such competition has caused the revival of several children's entertainment brands in recent years, such as Transformers, which first appeared in the mid-1980s. Companies revive brands because established identities often do not require extensive developmental marketing and exposure. By capitalizing on such opportunities, large players have been able to grow as a share of industry revenue.
As the economy recovers, companies will resume investment in licensing agreements; industry revenue is expected to increase 4.5% in 2012. During the next five years, the popularity of brand licensing is forecast to rise, increasing revenue in 2017. Large operators will benefit from continued modernization of vintage franchises while small businesses look to cash in on existing brand popularity. For more information, visit IBISWorld’s Intellectual Property Licensing in the US industry report page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
IBISWorld industry Report Key Topics
Firms in this industry assign rights to assets such as patents, trademarks, brand names and franchise agreements for which a royalty or licensing fee is paid to the asset holder. Operators own the rights and allow others to use them for a fee but may not have created the assets. Companies that lease real property or tangible assets are excluded from this industry. Franchise agreements that allow the use of a name contingent on the purchase of products from a franchisor are also excluded.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.