Kate Bulkley, Media Analyst.

Vocal Goldmine

By Kate Bulkley

The Guardian

Monday August 11, 2003

The winner of the new Pop Idol series, which started on Saturday, may well find fame and fortune but someone else will really hit the jackpot. Kate Bulkley explains.

from last year's Pop Idol

from last year's Pop Idol

When the second series of Pop Idol started on Saturday, the lucky contestants probably thought that being discovered as a new talent who would sing No1 hits was what the show was all about. Well, for Will and Gareth at the end of last year's first Pop Idol success story, that was definitely the case. This year, they couldn't be more wrong.

That's because this year's Pop Idol has plunged into the licensing and merchandising market with the same raw enthusiasm as one of the show's aspiring stars. Whereas last year fans could buy a few obvious add-ons such as an official T-shirt, the book, the video and the mobile-phone cover, series two will offer all that and much more. The Idol brand will adorn everything from makeup (including a hair gel), and a full range of clothing, to a songbook, a PlayStation 2 game, an electronic dance mat, a karaoke interactive recording studio and even a perfume. There will also be a whole swathe of interactive services using mobile phones, from classic text-message voting to song downloads.

"The Idol brand will be the biggest TV licensed brand this Christmas," says Simon Spaulding, CEO of Fremantle Media Licensing Worldwide.

Just how big is not something many in the TV industry are willing to speculate about, but the entire licensing business is big and growing. In the UK alone the retail sales generated by licensed products was worth £3bn in 2002, while worldwide the licensing business generated $178bn (£110bn) in retail sales last year, according to the Licensing Industry Merchandisers Association.

TV programme brand extensions, including both traditional merchandising and interactive applications, are growing at such a rate that Endemol, the maker of Big Brother, says that nearly 30% of its revenue comes from the merchandising and licensing of its show brands. Fremantle, the production company behind Pop Idol (a format sold in 20 countries and already broadcast in half of those), believes its off-screen income could be up to half the total revenue of the company within three years.

The increasingly fragmented TV universe and the growth of competing media mean that production companies have to be more creative to "hold the viewers' attention through other ways than just the TV screen," says Catherine Mackay, CEO of Fremantle Media Enterprises.

Until a few years ago, the licensing industry was concentrated on merchandising spin-offs for Hollywood movies and children's television programmes - think Barney, Bob the Builder and, of course, any Disney character you'd like to mention. Every Christmas, then and now, the rush is on for parents to buy the cuddly toy, the doll figurine or the game celebrating the latest hit. The quiz show and the reality show formats, coupled with the technical advances that allow for interactive applications, have changed this picture.

It all started five years ago when Who Wants to Be a Millionaire was born. Revenue from branded merchandise brought in more than sales of the format. Millionaire sold a whopping 1m board games in its first two years, and the Millionaire PC game sold 1m units in just seven weeks, making it the biggest-selling game in the UK.

And although Millionaire is still within the top six brand-extension franchises - along with Big Brother, The Weakest Link, Survivor, Popstars and Pop Idol - it is the last on this list that is moving the off-screen licensing business to a new level.

The fact that Idol is a performance-based show about music is a huge plus for extra branding. Its core audience are the highly sought after 16-34 year olds - both young men and women - who will buy this merchandise. Of the 14 million viewers for the final show of Pop Idol series one, 72% were from this age group, and series two is courting them even harder by increasing the amount of interactive phone applications as well as merchandise.

But perhaps the most interesting "extra" on the new series is the involvement of Nestlé as the show's sponsor. Not content with normal break bumpers, an advertising campaign and on-pack support of Pop Idol, Nestlé has created its own version of the show - ChocIdols. So, while viewers try to spot the new Will and Gareth, they can also vote for their favourite animated chocolate characters, including Bubbles the Aero bar and Milky B the Milky Bar Munchies packet, who perform their songs in the ad breaks. At the end of the series, one of the Nestlé chocolate bars will become the Choc Idol.

"It's the biggest thing we've ever done of this nature," says Sam Ellison, marketing manager, chocolate brands for Nestlé Rowntree UK, who puts the budget at £6m.

Fremantle was also interested in signing up brand partners who would go the extra mile. UK company Re:Creation has created an online karaoke product called TalentBox which turns your PC into an interactive recording studio and lets you "publish" your Pop Idol song to a website where you could be voted a winner. Part of the launch of TalentBox has been a tour of the 16 largest shopping centres in the UK just before Pop Idol series two gets under way. Re:Creation believes up to 1m units could be sold before the end of the year.

Talent Box

But, inevitably, not all the TV merchandising is going to work. "With Pop Idol, anything to do with music makes sense," says Adrian Woolfe, MD of Celador International, part of the company that produces Millionaire, "but going down the route of makeup is quite a leap from the core brand and what it stands for."

The other potential danger is a lack of long-term planning for the merchandising linked to any programme. Developing the brand extensions in-house is one alternative that offers more control and is a path chosen by Endemol, which bought digital media company Victoria Real.

"People really get into these shows and they'll buy anything related to it," says Peter Cowley, head of interactive media at Endemol. "But it quickly disappears. It only lasts as long as the show is on. I don't think any TV production company is marketing-focused enough yet to make the brands live beyond when the TV show is on air."

But it's not for want of trying. Celador has put its Millionaire brand into places far from traditional TV screens. Passengers on Swissair flights can now play the game against fellow passengers - the prize is an immediate upgrade on their flight. Fremantle has put Family Feud on to slot machines and opened Baywatch theme restaurants. In South Africa there is an Idol-branded "vitality" drink.

"You can very easily have a very good business on shows like Pop Idol without licensing," says Fremantle's Mackay, "because it is a show that drives significant audiences and ad revenues. But the licensing side is new fruit for the business. What I don't see happening is what you have in the animation business where you are deficit-financing programmes in anticipation that you will get your money back out of merchandising and off-screen activities."

TV merchandising is still evolving. Fremantle's The Price Is Right is a 47-year-old gameshow format that is still on screens worldwide and is still the biggest single money-spinner among the company's ancillary revenues at 15-20%, whereas Idol generated 10% of the ancillary revenues before series two got under way in the UK. In the coming weeks, therefore, Idol could be rewriting the TV programme licensing industry single-handed. And you won't have to count any votes to find out.


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