DIGITAL TRANFORMATION OF LICENSING Charles M. Riotto, President International Licensing Industry Merchandisers’ Assn. (LIMA)

DIGITAL TRANSFORMATION OF LICENSING LIMA IS THE WORLD’S PRIMARY LICENSING TRADE ORGANIZATION THE INDUSTRY’S MAIN SOURCE OF EDUCATION INFORMATION AND NETWORKING OPPORTUNITIES OVER 1,100 MEMBERS IN 32 COUNTRIES OFFICES IN CHINA, TOKYO, MELBOURNE, LONDON, MUNICH, MEXICO CITY AND NEW YORK

BRAND LICENSING IN THE DIGITAL ERA LIMA’s website is the primary portal for global licensing industry news and information. www.limachina.org/ Tani Wong, Managing Director, LIMA China www.licensing.org

BRAND LICENSING IN THE DIGITAL ERA WORLDWIDE RETAIL SALES OF LICENSED PRODUCTS IN 2015 US$251.7 BILLION +4.2% WORLDWIDE ROYALTIES FROM LICENSED MERCHANDISE SALES IN 2015 US$13.9 BILLION +7.8%

THE GLOBAL LICENSING INDUSTRY Estimated Retail Sales of Licensed Merchandise in 2015 (in U.S. dollars) 1. UNITED STATES $138.0 BILLION 2. UNITED KINGDOM $13.1 BILLION 3. JAPAN $ 12.0 BILLION 4. GERMANY $ 10.2 BILLION 5. CHINA/HK $ 7.6 BILLION

THE NORTH ASIA LICENSING MARKET Retail Sales of Licensed Products in Major North Asian Countries 2014 v. 2015 World Rank Country 2015 Retail Sales in US$ 2014 Retail Sales in US$ % Change #3 Japan $11.95 Billion $12.20 Billion -2% #5 China & HK $7.61 Billion $6.14 Billion +24% # 17 South Korea $1.72 Billion $1.49 Billion +15% #34 Taiwan $0.56 Billion $0.45 Billion +26%

THE NORTH ASIA LICENSING MARKET Royalties from Licensed Merchandise in Major North Asian Countries World Rank Country 2015 Royalties in US$ 2014 Royalties in US$ % Change #3 Japan $694 Million $704 Million -1.4% #5 China & HK $443 Million $348 Million +21.4% #17 South Korea $100 Million $ 86 Million +14%

THE NORTH ASIA LICENSING MARKET PER CAPITA SPEND ON LICENSED PRODUCTS IN KEY NORTH ASIAN COUNTRIES (in 2015) Country Population Per Capital Spend in US$ Japan 126 Million $ 94.14 China 1,384 Million $ 5.42 Hong Kong 7 Million $54.32 South Korea 51 Million $34.40 Taiwan 24 Million $24.35

THE GLOBAL LICENSING INDUSTRY Year over Year Regional Retail Revenues (Millions USD) Region 2015 Retail Sales 2014 Retail Sales YoY Change US and Canada $ 45,362 $ 140,107 4% Western Europe $ 50,560 $ 46,760 8% Eastern Europe $ 9,479 $ 9,621 -1% LATAM $ 9,597 $ 10,414 -8% N Asia $ 23,482 $ 21,951 7% SEA/PAC $ 7,415 $ 6,649 12% ME/Africa $ 5,000 $ 5,132 -3% ROW $ 817 $ 903 -10% TOTAL WW $ 251,713 $ 241,538 4.2%

2015 North Asia Retail Revenue by Property Type Property Retail Revenues (Millions USD) Country Total Art Celebrity Ent/Char Fashion Music Sports Corp/Brand Publishing All Properties Japan $ 11,949 $ 77 $ 137 $ 7,769 $ 1,305 $ 258 $ 726 $ 1,513 $ 164 $ 11,949 HK/China $ 7,609 $ 43 $ 188 $4,454 $ 1,552 $ 51 $ 192 $ 923 $ 206 $ 7,609 S. Korea $ 1,715 $ 7 $ 43 $1,020 $ 224 $ 17 $ 133 $ 264 $ 6 $ 1,715 Taiwan $ 563 $ 4 $ 17 $ 324 $ 69 $ 44 $ 95 $ 3 $ 563 $ 21,836 $ 132 $ 385 $13,566 $ 3,150 $ 333 $ 1,096 $ 2,795 $ 379 $ 21,836 Percent of Region 55% 58% 36% 57% 41% 77% 66% 54% 43% 35% 33% 49% 15% 18% 8% 6% 11% 7% 5% 12% 9% 2% 3% 4% 1% 100%

Split by Sales Outlet – Brick and Mortar vs On-line Country B&M On-Line China 70% 30% US 71% 29% Germany 76% 24% Spain 78% 22% UK 82% 18% France 84% 16% Canada 88% 12% Japan Mexico 92% 9% Australia 95% 5% Global

DIGITAL TRANSFORMATION OF LICENSING Notes from Respondents to the LIMA Annual Global Licensing Industry Survey 2016 Report: There is an increased focus on licensing Digital Properties and the personalities emerging out of apps and other platforms. There is an eagerness to find brands that will reach the Millennial target. Many respondents referenced gaming as a growth area, both in the online and as casino sectors as buildouts continue in the U.S. and accelerated abroad.

DIGITAL TRANSFORMATION OF LICENSING “Digital has clearly emerged as a licensing trend, changing the way in which entertainment is consumed globally. Video Games/Software/Apps, Publishing and Music/Video categories, taken together, now account for 13% of retail sales revenue, or US$32.7 billion.” Source: LIMA Annual Global Licensing Industry Survey 2016 Report

DIGITAL TRANSFORMATION OF LICENSING Retail Sales of Licensed Merchandise in China/HK (in Millions of US$) Category 2014 2015 % Change Software/Video Games/Apps $184 $213 +15.8% Music/Video $ 83 $103 +24.1%

DIGITAL TRANSFORMATION OF LICENSING Our Panel of Experts Mr. Ron Johnson, Executive Vice President, Consumer Products, Promotion and Recreation, Viacom International Media Networks Ms. Leigh Anne Brodsky, Executive Vice President Discovery Global Enterprises Mr. Daniel Amos, Associate Vice President, Brand Development Beanstalk

THE GLOBAL LICENSING INDUSTRY 谢谢 www.licensing.org