Extreme Licensing

ESPN has its new game face on—one that involves a realigned strategy for the X Games brand and an agreement with IMG to champion the brand's licensing program in the U.S. "We felt we had some

April 6, 2018

6 Min Read

ESPN has its new game face on—one that involves a realigned strategy for the X Games brand and an agreement with IMG to champion the brand's licensing program in the U.S. i1_805.jpg

"We felt we had some great equity and history with the ESPN brand, particularly on the X Games side of the business," says Chris Brush, vice president of marketing for ESPN. "For the last year or so we have gone through some changes internally. As a group, we hunkered down and took a look at what we were doing and looked at where we could improve and that meant making hard decisions." One of the company's biggest recent initiative was the "One Game Changes Everything" licensing/merchandising program surrounding the World Cup.

X Games, an extreme action sporting event hosted in the summer and winter by ESPN, celebrated its 15th anniversary last year. Thirteen countries have hosted X Games. This year, games were held in Shanghai, China, in May; in Los Angeles in July/August; and the next event is planned for São Paulo, Brazil, in December. Winter X Games Europe will be held in Tignes, France, in March 2011. Disciplines vary from skateboarding and BMX to surfing and snowmobiling.

ESPN is using insights garnered from product programs across the globe as it looks to create a comprehensive presence at retail as both a credible sports brand and an aspirational lifestyle brand. It was that success on the international front that paved the way for ESPN's decision to switch from handling licensing for X Games in the U.S. internally to signing a deal with IMG. The relationship between IMG and ESPN began about six years ago in Japan and has expanded to Taiwan, China and Korea.

The X Games brand launched in the Japanese market six years ago and the winter games have been particularly strong. X Games has a DTR relationship with The Sports Authority in Japan with five licensees, including J.K. Brothers for footwear. i2_443.jpg

In Taiwan, where X Games has had a presence for five years, the company works through licensee V.League that owns space within shopping malls and department stores. X Games has opened more than 120 shop-within-shop locations in Taiwan and hopes to replicate that format in the U.S. Shopwithin- shops offer product across X Games disciplines with sports gear and apparel being dominant categories.

With lessons learned in other Asian markets and brand-building efforts taking hold, ESPN is readying a broad product offering for China.

"We have had X Games events in China for five years. That event has had a great halo effect in the region, not only in China, but creating positive waves in Asia, as well," says Francisco Arenas, senior director of consumer products at ESPN.

Some X Games product is available in China already, but a full, more structured shop-within-shop presentation will hit in spring 2011. Product is being developed in partnership with Tyra Garment.

ESPN is making better use of potential synergies with parent company Walt Disney, not only through licensee relationships but also, as is the case in the Asian market, maximizing brand-building opportunities. ESPN Star Sports is a joint venture between Disney and News Corp. that operates 17 ESPN and Star Sports-branded networks throughout Asia. ESPN also teams with its parent company on a sports series that airs in the U.S. on Disney XD and provides content for the XD website. ESPN content also airs on Radio Disney.

"We have been maximizing a lot of content for the events throughout the years and brand awareness has been elevated. Now we are ready for consumer product to fall and that is exactly what we are doing," says Arenas.

According to Arenas, a number of market factors bode well for X Games in China. He says in the last five years the action sports space has become very important in the Chinese market, a young market where parents tend to have one child that receives a lot of attention, which translates into product purchases. i3_287.jpg

"We see a big open space in the market without really an organized action sports brand from a message, content and product offering perspective and we see a great opportunity to fill that space," says Arenas.

ESPN will look to leverage some of the licensee relationship established by Disney in the Chinese market where distribution channels can be fragmented outside of major cities. ESPN is considering standalone stores and shop-withinshops for X Games in China.

Success with shop-within-shop concepts across global markets will provide insight into implementing a rejuvenated licensing program in partnership with IMG in the U.S. How to group categories and design concepts, getting licensees to work together and creating themes at retail will all be elements incorporated into the U.S. plan with current retail partners such as Walmart, Dick's Sporting Goods and The Sports Authority. ESPN will develop new categories and partner with new licensees in the U.S. for a yearround presence at retail. X Games is targeting spring 2011 for its new licensing push, but will unveil a new energy drink, X Games Energy, this month.

"We think we are a little underdeveloped in the apparel space, especially compared to other sports in the industry, and are looking at some of those best-in-class vendors we can approach to help us prop that up," says Wesley Haynes, IMG Sports Licensing's senior vice president. "We have added licensee Creative Concepts for computer and phone accessories. The X Games demographic is savvy; that is where our fans live and a good touch point for us."

ESPN and X Games, like most other companies and brands, have had to keep pace with the changing shopping patterns of its core customer. In a down economy, mass became the channel of necessity for cost–conscious consumers and that is not likely to change. Mass retailers, in turn, want to keep that customer coming back with brand exclusives.

"The retail market has changed, and change is good if you take advantage of it. You have to switch your mindset and adapt to the new market trends and this is a big challenge, but there are ways," says Arenas. "We watched what other brands in the sports environment have done—Shaun White at Target and Tony Hawk at Walmart are real success stories."

X Games celebrities such as White and BMX star Mat Hoffman benefit from global appeal. Last year, ESPN launched the XG3 line with Hoffman. It was the company's first venture into high-performance action sports gear and debuted with an exclusive collection of BMX bikes by Hyper and protective gear by Bell at Dick's Sporting Goods. As a follow-up, X Games will soon announce a new version of the BMX with an X Games gold medalist BMX rider partner.

"Going forward we see more opportunity to get back to our core. We really tackled it aggressively out of the gate and are making sure our partners are aligned with the quality and product innovation fans expect. ESPN is one of our greatest assets and we want to make sure what we do lives up to expectation," says Brush. "Sports generates passion from our fans and it is important to tap into that passion."

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