Sesame Street plans merchandising boom

The people at Sesame Street are scratching their heads about the UK market. The legend-ary show has been screened in this country for 27 of the programme’s 28-year history and although the British watch the programme, we do not buy the merchandise.

Last year the Children’s Television Workshop (CTW), which produces the show, made just 3m from the retail sales of all its licensed merchandising in the UK. Small beer for a classic brand when you consider that Disney’s relative upstart Buzz Lightyear turned in revenues of 8m in 1996. But now CTW is embarking on plans to increase sales by 700 per cent within three years.

“We don’t know why we have such a low profile in the UK,” says Diane McGrath, CTW director of international licensing Europe, Middle East and Africa. “We are a classic brand and we have been on TV in the UK for almost three decades. But a lot of other small properties have a larger presence in the market than us.”

McGrath’s arrival in June heralded a change in direction. The UK licensing contract was handed to The Licensing Company (TLC), new licensing deals were struck and the UK, Russia and Poland were made priority markets.

“I have a different view to most people here,” says Baxter Urist, CTW’s senior vice-president product licensing and international television group. “I don’t think there is anything wrong in the UK. If there is a problem it is with the specific strength of the British market.

“In the UK there is a long heritage of children’s characters in the pre-school market, from Beatrix Potter to Postman Pat. Then, on top of that, you have what every other market has, this year’s hot toy. In the US, retailers stock us like Crest toothpaste, we are a staple. But in the UK we are not in that situation. Does that bother us? Yes. But we hope to turn that into dramatic growth this year.”

CTW’s previous licensing partners have included Patrick Sinfield Licensing, and Marvel Entertainment UK.

But an insider to previous CTW licencing deals says they were not properly thought through. “They were poor. They were not cohesive or well targeted. Retailers were not courted. When the show was on TV, videos should have been on sale in the shops. Fairly basic things like that never came together.”

TLC was awarded the licence in August last year for a rolling year-on-year contract. Angela Farrugia, joint managing director, says although the show is a classic children’s brand, it has never been treated as such in the UK. “No one had properly worked the brand before and thought up a proper brand strategy.”

TLC aims to more than triple the amount Sesame Street makes from merchandising in this country. It is aiming for retail sales of 10m by the end of this year, and 20m by the end of 1999. The entire UK licensing market for all products is worth 1.6bn.

TLC had to ensure that the four basic supports of an entertainment licensing deal were in place. The first, and probably the easiest, was to keep the show on British TV screens. Channel 4 was happy to extend its commitment to take the show well into the year 2000, but rejected CTW’s overtures to co-produce a UK version rather than simply show the US one. C4 is understood to believe that as the US version of the show has worked on British screens for all this time it is not necessary to change the formula.

The other three supports are: video deals, which will be announced by the start of next month; a contract for publishing rights to “draw kids into the Sesame Street world”; and the Tyco-made toys. Tyco, which has made the line for several years, has promised above-the-line advertising for the first time.

The strategy is to push the traditional pre-school nought-to-four-years line of toys and clothes. But for the first time TLC will also push, equally hard, its nostalgia-led “club” line, aimed at 18- to 25-year-olds. The range features branded Lycra tops, T-shirts, record bags, drinks flasks, and caps. There are even plans to put a record out next Christmas. The final, smaller, market is the adult range aimed at over-25s.

But one senior licensing observer is sceptical of CTW’s chances of tripling the show’s merchandising revenue. “That seems to be a hell of an ambitious plan. There does not seem to be any new activity to kick-start a programme. A buyer needs to be convinced that Sesame Street is going to take off now when it has not for all these years. Everybody is out there fighting for shelf space and this show is no different.”

TLC claims to have struck 14 licensing deals with more on the way. It says that stores like Woolworths, Toys R Us and the Tie Rack will stock Sesame Street items. Marks & Spencer is understood to be another interested party.

CTW licensing arrangements are more organised than before. But equally, the competition in the pre-school market from the likes of

Disney and strong traditional British properties has never been tougher. In the youth market it faces similar pressure from sport, movie and fashion licensees. Sesame Street is, in British terms, a sleeping giant – it is a moot point whether anything, even TLC, can rouse it.