International publisher Egmont has reported surging profits for its Egmont UK business this week on the back of strong performance of its brand licensing publishing activities According to a report in The Bookseller, Egmont UK saw sales rise 31.2% to £60.1m last year, reporting profits before taxation of £6.6m. This follows a similarly positive statement for Egmont Group published earlier this year that stated that 2014 had been the publisher's "best year yet".
Why Egmont should be performing so strongly in a sector where many publishers struggle to maintain double digit growth can be attributed to two factors. Firstly, Egmont concentrates on publishing children's content, and so occupies the sector of trade publishing which has grown most quickly in recent years. Recent research by Nielsen illustrates the extent to which children's publishing is out-performing other parts of the market. Children's books accounted for 35% of all print book sales in the UK in 2014 (up from 24% in 2004). And while sales of adult fiction dropped by 7% (by volume) on both sides of the Atlantic in 2014, this decline was compensated for by the growth of children's books, which were up by 7% in the UK and 13% in the US.
As a specialist children's publisher, Egmont is therefore particularly well positioned to take advantage of general market conditions. Yet the second reason behind Egmont's success is its smart strategy when it comes to acquiring popular brand licenses and developing content that leverages their popularity with children and young people. The key example of this in the UK is Minecraft. Egmont acquired rights to publish Minecraft books everywhere except the US in 2012, when the game had in the region of 40 million players worldwide. Since then Minecraft has grown to more than 100 million players, and Egmont's investment in the license has paid off nicely. According to Nielsen Bookscan, Egmont sold 1.8 million official Minecraft books in the UK alone last year. Nor is this the only example in Egmont's stable of the publisher taking popular video game properties into print: it's also the publisher of books inspired by the Angry Birds and Temple Run game series.
As the example of Egmont shows, focusing your publishing strategy around brand licensing offers many upsides when a franchise is on the rise, but it also has its risks. For example, while Angry Birds looked unstoppable five years ago, the company behind the franchise, Rovio, has seen interest in it drop off significantly over the past year - particularly in the form of the branded goods inspired by the games. It's therefore really important that a publisher of licensed content never stands still, but is instead always looking out for new creative rights to buy and then innovate on.
A flick through Egmont's most recent rights catalogue suggests that this lesson is not lost on it. This reveals that alongside new Minecraft and Temple Run titles there are a number more in the pipeline for the franchise that in all likelihood will be this year's biggest: the long-awaited Star Wars sequel. We now just have to wait until this time next year to learn whether the Force is still strong for licensed publishing in 2015.