A case study of Korean character Li-censing business

Nov 18 2015Sam Lee / Ocon

Sam Lee [Currently] 2012 – Present Managing Director / Ocon Inc ( Job) Licensing and merchandising business Animation production, co-production International business

2012- Present Jury of Government support program for Animation and Character license part / KOCCA, a Gov’t org Jury of Government support program for content business / RAPA , a Gov’t org Consultant of Content business / KOCCA  [Formerly] 2010 -2011 Managing Director / Isis contents co ( Job) Licensing and merchandising business International business (Company ) Master licensee of Sanrio including Hello Kitty  2006 -2010 Chief Manager / Doolynara co ( Job) Licensing and merchandising business Animation production , co-production International business (Company) Licensor of Dooly, the little Dino

OCON

18 years history CGI Animation and Character related business Co-owner of Pororo IP ( * IP : Intellectual properties )

Emmy awards ( 2014) and many awards by Pororo and Dibo Master Licensee of “Kakao friends “ Master Licensee of “ Ani-Pang “

Today

Character Licensing and merchandising Market status of Korea

Case study : Kakao friends

Case study : Korean Children animation : PORORO and DIBO

L&M business in Korea

Character usageCharacter recognition

Local foreign

Recognition route

Character goods Animation friends Smartphone internet

What characters ?

Toddler Children Adult

Different ? 90 % Korean licensees are not importers but Manu-facturers 70% Licensees are SME 30% Chebul

Licensees are not only buyers but life time partners They should invest money to launch the new character products

CEO is the PIC , fast decision making

Different ?

Strong Local brands >Global Brand

More chance to watch local programs due to animation quota = More watch , More consume

Typical National Traits

Local Market chain >> Walmart, Carrefour Local search engine ( Naver) >>> Google Local instant messenger ( Kakao talk ) >> whatsapp , Line

Production

sell $50Buy $25Production

Factory Wholesaler Retailer Consumer

sell $75 sell $100

Royalties are imposed to Retail or Wholesale ?

Royalties ?

Most of the licensing agreement are made on Wholesale price not retail price ( global stan-dard )

-General merchandise : 8 % of wholesale price - Foods and beverages : 0.5 – 1.5 %- Minimum guarantee ( MG ) : USD5,000 Very cheap price _ Let licensee decide easily No.1 Brand PORORO and KAKAO as well

“ NO ENTRY BARRIERS “

Case study : Kakao friends

Kakao friends

- Launced licensing biz only 2 yrs- 10 offline shops - USD 2Mil / Month Offline Sales- USD 1Mil / Month Online Sales - USD 400,000 / Month royalties - 500 of merchandises- OCON successfully launched L&M Model

Most Hot characters in L&M Market within 2 years

2 main types character goods production

Licensing OEM

Let licensees make merchandise pro-

ductions “Lend IP”

Licensor make their own productions

All products are from licensees

All are OEM

* IP : Intellectual properties

Mixed Model

Licensing (Out) OEM

Well selling produc-tions _ toys , sta-tioneries

Uncertain produc-tions _ fashion , ap-

peals ; Do OEM first -> make market -> go to licensing

Current Cash cow Future Cash cow

DISTRIBUTION – Shops , Wholesales

Future licensing ? collaborationClassic licensing Collaboration 1 year agreement Short terms

1 – 3 months SME mainly Big and Giant

Relatively week brand Strong brand

No sign of own brand Only can see character granted - e.g Pororo pencil

Granted character and own brand both alive

LG X Kakao

Distribution by Licensor - Meaning doing wholesales, Retail shops- Buying licensing goods from licensees to help keep production-Guarantee licensee’s rigid sales volume

HELP LICENSEES TO MAKE MONEY is HELP YOURSELF

New distribution model _ Popup store -Limited time shop : 2 weeks – 1 months - Strong advertisement by SNS , Internet (Aiming young generation) - Limited goods - young generation friendly place : Near collage - Interior Design Oriented

Case study : Korean Children animation PORORO and DIBO

Pororo

-Produced by 2 companies co-work : Ocon , Iconix - Season 6 under production now - Annual Licensing income : USD20 Mil - Licensing goods sales : USD500 Mil a year- Partner companies : 600 - Licensing goods : 1,000

Make money with animation -You can only recoup 20% of invested money by TV Sales - Rest of 80% or over should come from OSMU

Anima-tion

Broadcast-ing

TV , IPTV , cable, …

Exhibi-tion /

perfor-mances

Video / Music

Video games

General Licensing

/ Fran-chise

Movie

OSMU ( One-source multi-use )

- Children’s Musical performance ** The slogan of korean animation

Dibo Musical in Philippines

-Indoor theme park (Pororo park)

Korea, China now Singapore ( Marina Square)

- Indoor theme park ( Dibo village )

-Movie

Pororo, Ice racing adventure(2013 .12 )

Pororo2 , Snow fairy Adventure (2014.12)

Pororo 3, Cyber space Adventure ( 2015.12)

Millions of visitors

Success factors of PORORO- Cooperation of two companies Iconix : comes from advertising company Ocon : Korea’s leading animation studio

-Right business partner : EBS Not 3 Major TV EBS : specialized for children contents - Strict pre-marketing research English name , penguin and etc -Strict licensing policies : Only for Children goods

- Gov’t support

Thank you

Sam Lee samlee@ocon.kr https://linkedin.com/in/samleekorea