The use of intellectual property (“IP”)/ brands in the visitor attraction sector has been around for a long time – from the sprawling Disney World to the launch of the Pepsi Max “Big One” at Blackpool Pleasure Beach in 1994 to Derren Brown’s Ghost Train at Thorpe Park in 2016 and Ferrari Land in Port Aventura in 2017.
The use of IP within visitor attractions is increasing year on year, with the investment being at three different levels
The locations for branded attractions (events, experiences or lands) is also expanding from the traditional theme parks to retail environments (Legoland Discovery Centre, Mattel Play) to hotels (Cbeebies, Downton Abbey at Marina Bay Sands) to farm attractions (Peter Rabbit, at Willows Activity Farm).
Just recently Merlin Entertainments announced an overseas roll-out of Peppa Pig branded attractions across some of its existing portfolio, and retail shopping centre operated Intu have signed a deal with Nickolodeon to introduce large family entertainment centres into some of their portfolio from 2018. The list is continuing and will continue until perhaps the consumer or the operators feel the draw has diminished to the extent that the premium price isn’t justified.
The 2016 LIMA licensing study identified the most popular IPs used in brand licensing generally are mainly from the entertainment and character sector at 45%, followed by fashion, sport and publishing sectors (at 5% to 10%) with relatively modest use from music, celebrity, art etc. The UK is the second biggest market behind the US for brand licensing.
Of course, once a visitor attraction has a branded element then this will extend beyond the item itself and into general and attraction-specific retail, catering and possibly events.
When dealing with an IP owner, the licence agreements typically has two components:
The percentages of revenue taken during the term of the agreement can vary widely but are normally between 4 and 10 percent of admissions revenue and 7 and 10 percent of IP branded retail, parties, corporate hire etc. Catering will normally carry a percentage less than 5 %.
Exclusivity is normally awarded as part of the licensing agreement based on an agreed radius from the licensee’s location. The IP owner (licensor) will have strong protection over the use of its brand in relation to marketing, promotion, retail range, operational standards etc and hence a specialist lawyer is often necessary when negotiating the license agreement.
The trade body IAAPA identified that the main driver for using IPs at attractions was higher attendances (rather than admission price increases, per se) with specific IP-related retail sales being a strong secondary benefit. IAAPA research indicated that the greatest impact was often at mid-scale attractions adding an IP land, with examples of attendance growth of 30% to 100%. On a larger scale, the Wizarding World of Harry Potter grew attendance at Universal’s Islands of Adventure by over 70 per cent in its first two years.
These findings are confirmed by recent studies which surveyed families and over 75% stated they enjoyed a family entertainment centre more if it had a familiar brand, and over 60% would spend more on catering and retail if that was branded.
So whilst there are significant costs and restrictions in using IPs in attractions, the direct financial benefits can be significant.