The Toy Industry by Size and Category
The categories of the toy industry are identified by the type of product, purchaser, and very often the end user. There are many variations within each category, and not every product fits neatly into a category. Thus, one may well ask is something a preschool toy or a learning toy? Is it both? Very often those determinations are made by the manufacturers, but the retailers may also define the categories individually. As we see so often in this business, standardization is almost impossible. Today’s learning toy may have more in common with an iPad than a traditional wood alphabet block, though both may be sold in the same aisle. This chapter looks at some of the categories—as well as the exceptions—and it’s a great jumping off place for trying to get a grasp on the scope of the business overall.
Interestingly, when you walk through toy stores (and there are few better ways to get a sense of the contemporary toy business than to do that), even after reading this you may be a bit confused as to why Product A is in some category. Welcome to the toy industry. Where a toy ends up merchandised in the store is often the result of competition between buyers who specialize in certain areas. These conflicts can get more and more pitched, particularly as newer toys don’t always fit easily into one category or another. And yet, a significant part of the planning of any product is determining where it will go in a store—or as they say, what aisle it will go in (preschool, action figure, games, etc.).
The NPD Group is a data company based in Port Washington, New York. It’s in the business of compiling data about different markets and selling it to its consumers. Founded in 1996 and with a global presence, NPD has evolved over the years. Before the advent of computerized inventory tracking at retailers, it was the only source for point-of-sale (POS) data for manufacturers. However, as retailers became more and more computerized, this information was less important to get from a third party. Today, a manufacturer can sign into a retailer’s site and track sales on a daily, or even hourly, basis, or however the retailer has set it up. This nearly immediate access to sales data has made the waiting for the monthly report a thing of the past. Still, NPD tracks sales and aggregates data based on consumer surveys and other methodologies, though few retailers provide their sales data.
Nonetheless, the NPD Group’s tracking is still the current standard for the toy industry. Using a combination of surveys, some retailer data and other tools, NPD provides what the industry accepts as the most accurate possible reading of size.
NPD data for toys is available through toyassociation.org, showing current year and previous year’s sales. What the data don’t show is that fluctuations in any given category may not be indicative of an overall trend that can be interpolated into forecasting. Rather, this backward-looking data may include one major hit in the overall performance of a category. It’s important when looking at growth in a specific category also to look at the products sold during that period, one runaway hit can skew the numbers for a category overall. Moreover, as with categorizing at retail, there may not be consistency in year-over-year data. Because the products themselves change so rapidly, they may defy easy categorization.
The breadth and lack of specificity of what’s contained in these categories is problematic for any serious statistician, but that isn’t dissimilar from the reporting of other trade groups. For the student of the toy industry, it’s important to be aware that categories such as Infant, Toddler, or Preschool toys encompass a tremendous range of products with very different purchase occasions and markets, yet they all fall under one category. Still, even with these caveats, as a snapshot of recent sales, this can be useful.
What can also be seen is that while certain categories grow in a given year, the overall size of the industry stays fairly constant in the $19–21 billion range at wholesale for traditional toys.
The market remains virtually constant primarily because the population of children aged 0–17 grows very slowly, approximately 1 percent per year, according to the U.S. Census Bureau. It is also a finite market. Toys have a role in children’s lives for a very short time, particularly when considered in the context of products (cereal, soap, razor blades, etc.) that will be bought for a lifetime. Once children stop playing with toys and turn their attention to other products, that’s it. They’re gone as consumers. New customers are being born every year, and that offsets this annual attrition, but as noted, the birth rate is not significant enough to fundamentally alter the size of the market.
Additionally, within this population there are also significant subcategories of children defined by gender, age, and demographic profile. In its reporting, the Census Bureau breaks the child population into three age categories: 0 to 5, 6 to 11, and 12 to 17. Toy categories are much narrower, defined by physical and social development. Some may adopt a toy early and play with it longer, for instance.
And there’s one more variable to consider: as noted earlier, approximately 40 percent of the products in the toy industry are new every year. Currently, there is no data aggregator that looks at year-over-year on such a granular level. Why? Well, for the simple reason that this data wouldn’t be of much use to anyone. The short-term nature of the products in this industry and the inventory turnover mean that companies move on very quickly without too much invested in looking back and what did and didn’t work.
Thus, it’s best to use this information to get an overview. Moreover, if we consider that there is a new generation of children approximately every eight years, these data further underscore the constant level of toy purchases made in the United States.
Toy Categories
If one wants to understand the toy industry, it’s imperative to understand the product, and that’s a fairly tall order, which is why most people in the industry and companies for that matter tend to specialize in a given area. At their most basic level, the vast majority of toys are inert lumps of plastic, molded into a shape, put in a package, and offered for sale. Naturally, what that leaves out are the emotional, intellectual, and highly individual connections kids make to those toys.
There are some common features and play patterns within the individual, so-called supercategories or toys, which are helpful to understand if one is going to try to get a handle on this business. At the end of the day, however, toys are really totems onto which children project their imaginations, and the challenge for inventors, marketers, and manufacturers is that no two children interact with their toys in quite the same way. While there may be overarching themes or play patterns consistent with the various categories and which toymakers hope to embody, a toy is not like a can opener or a keyboard that has a specific utility and function regardless of who is using it. Toys only have value when they inspire an imaginative experience, and that is as diverse, individual, unpredictable and changeable as children themselves.
So, let’s take a look at these categories. What follows are intended to be broad strokes introductions to these categories. We couldn’t possibly touch on all the nuances and variations—sometimes by product—that impact these properties, but this is intended to give you a general introduction to these products and some of the market forces that impact these categories. These categories are those usually tracked by the Toy Industry Association and the research group NPD. These categories have changed over time as the products have changed, so, as noted, it’s virtually impossible to get an accurate year-over-year comparison of these categories. What’s important to understand is how the industry breaks down the categories, always acknowledging that their size and performances will fluctuate in any given year.
Over time, the industry does tend to run in cycles, like any fashion business. Categories may be undermerchandised or “sleepy” and along comes a hit toy that stimulates sales. Within a season, many other companies rush products to market in order to take advantage of the success.
At Toy Fair in 1998, I was in an elevator at the Toy Building in New York, and I overheard two buyers talking about Pokémon. The game had just arrived in the United States a few months earlier, and it was getting a lot of buzz, but the toys—and the play pattern of catching and evolving small monsters—was unproven. The buyers expressed skepticism about the property and were wondering how little they could buy. In the ensuing months, the game became a huge hit. A year later, buyers were avidly hunting for everything Pokémon.
A more recent example is Shopkins from Moose Toys. These small, vinyl collectibles are sold in so-called blind bags (in which the child can’t determine the toy he or she is getting) and are characters based on the everyday items you would find in a grocery store or department store. Introduced in 2013, they became a huge hit, and still in 2016, they are one of the leading items in the toy business. At Toy Fair in February 2016, no fewer than 30 different lines were being shown. Realistically, the market only has room for a few of these and many will never find an audience. Inevitably, the craze for Shopkins will die down, the market for small collectibles will soften and, very possibly, either go dormant or not be a major contributor to the business for about eight years till a new crop of kids discovers this “new” way to play as a new product hits the market. One can look at the history of the toy industry and see how this scenario has played again and again. In the mid-1960s designer Marvin Glass created Mousetrap for Ideal and created the skill- and-action game category that was huge for the rest of the decade. In 1974, Dungeons and Dragons introduced the role-playing game category. In 1983, Trivial Pursuit revitalized the adult board game industry and inspired dozens of trivia games. In 2001, MGA Entertainment’s Bratz shook up the fashion doll industry, giving these dolls an edge and sense of style that resonated with girls and challenged the dominance of Barbie.
This is simply the way the business works—and how it will continue to work. If you want to understand the industry as it is today, as mentioned, the best thing you can do is go to the toy store. It bears repeating: the best way to understand the toy industry is to go to the toy store. You might be surprised how few people in the business spend sufficient time in the stores. It truly is the only way to understand the scope of the business, pricing strategies, and the logic of some of the choices made in merchandising. We’ll discuss this in more detail in the chapter on retailing, but given the turnover in the toy business, the dynamic, fashion-oriented, and cyclical nature of the business, the best snapshot of the industry at any given time is what is on store shelves.
Action Figures
History
The Action Figure category as it’s known today dates from 1964. That was the year that G.I. Joe came on the scene. Essentially, it was a doll for boys, but since buying a doll for boys was out of the question at that time, a new term had to be coined. The executives at Hasbro came up with the moniker “Action Figure,” and it stuck.
G.I. Joe was launched at a time when the U.S. Military was considered heroic, and the play associated with G.I. Joe and his compatriots was all about hero fantasy. The initial figures represented the Army, Navy, Air Force, and Marines, and the play was all about imagining real combat scenarios. This was consistent with TV shows of the period and certainly the national mood. The success of G.I. Joe prompted other companies to jump into the new category. The character like Johnny Hero was a sports star who could be accessorized for different sports. And two years after G.I. Joe, Mattel introduced Major Matt Mason, a space hero who captured the romance and adventure of the space race. The category was established, and boys’ play would never be the same.
By the beginning of the 1970s, the mood in the country had changed. The Vietnam conflict had changed the attitude about the military, and these storylines were not as compelling to children. More importantly, the resistance to the draft had created an environment where military service was not aspirational or even particularly heroic, and action figure play is nothing if not heroic. (Certainly, that’s the empowering role of this type of play in a child’s imagination.)
Concurrently, the Cold War spawned a new kind of hero: the secret agent. TV shows like The Man from U.N.C.L.E. inspired kids to imagine they were battling enemy agents. (This kind of play never really inspired action figures, per se. Rather, secret agent toys were more accessories and role-play toys, which were generally tracked in this category at the time. Today, role-play has become a bigger part of the overall play pattern for boys with characters and is tracked and merchandised independently—another example of the dynamic nature of this business. What has emerged over time is that in some cases, as with the example above, kids don’t want to play with the character, they want to imagine that they have become the character. While this is certainly not new in the history of play, it is only in recent years that the toy industry has invested so strongly in it as part of a character franchise—as distinct from classic role-play, such as cowboys, police, firemen, etc.)
In the 1970s with the culture in such a radical shift, if G.I. Joe was not going to fade away like an old soldier, he had to be reinvented. And he was as a “Real American Hero.” He, too, became a Cold War agent and took on many more heroic guises. Enemies became more abstract, but the essential good-versus-evil play was always central to the play experience.
Throughout this period, figures based on Marvel and DC comic characters, and one-shots like Stretch Armstrong kept the market active. Mattel produced a hero line called Big Jim, which is now largely forgotten. Two highly successful characters from the 1970s were turned into action figures inspired by the real-life stunt man Evil Knievel and a figure based on the character from the television show The Six-Million Dollar Man. But it was Star Wars that would be the game changer in this category and usher in the age of the contemporary Action Figure. Mattel declined the rights, and Kenner, a relatively small company at the time, won them. Figures based on Star Wars were the first in the 3¾-inch scale that was the standard for many years. Previously, figures had been more doll-like, standing between 10 and 12 inches (Mattel’s Major Matt Mason was about 7 inches), but the new, smaller size was something kids could really play with—and more importantly could afford to collect en masse. Kids began collecting them by the dozens. The new scale also enabled Kenner to create playsets—large plastic structures that were highly profitable and opened up new revenue potential.
The Star Wars success also cemented the relationship between entertainment and toys. Whereas prior to Star Wars, toys based on movies or television shows were at best an afterthought, toy merchandising became central to the planning of the movie, and upfront guarantees, the money paid by a toy company to secure the rights to make toys, quickly became a significant revenue opportunity for movie studios.
Throughout the 1980s, television also became a major source for driving action figure sales. G.I. Joe continued on TV, and newcomers like He-Man and the Masters of the Universe, Thundercats, and more emerged as hits. And true to its nature, every toy company thought, or hoped, that it had the “next big thing,” a new storyline or group of characters that kids everywhere would have to have. So today while we may remember the hits that have become part of our cultural history, for every success there were many more failures. Outside of a handful of passionate collectors, if you mentioned Coleco’s Sectaurs, Mattel’s Food Fighters, Hasbro’s Air Raiders or Inhumanoids, or Remco’s Super Naturals, you’d get a blank stare.
In fact, as we’ll see in a moment, the characters that break through and become profitable, long-term successes are few and far between when compared with everything that’s put out there. In the 1980s and 1990s, as Star Wars figures continued their dominance, Teenage Mutant Ninja Turtles, Transformers, and The Mighty Morphin’ Power Rangers dominated the category. Transformers, in particular, inspired all kinds of battling robots, but one ever really challenged the domination of the Autobots and the Decepticons. In fact, the failed launch of Max Steele and the Robo Force was a significant contributing factor to CBS divesting itself of its toy businesses in the mid-1980s.
The Market Today
Action Figures, like most categories in the toy industry, is dynamic and constantly changing … on some levels. Yet, in 2017, the dominant properties will seem very familiar, and virtually all of them are entertainment based. Star Wars, Teenage Mutant Ninja Turtles lead the pack, as they have for years.
Entertainment continues to be the major source for action figures. Changes in the entertainment environment in recent years have provided opportunities and challenges. While there are more outlets for entertainment content than ever before, thanks to streaming from Netflix, Amazon, Hulu, and others; Action Figures remains a highly difficult category to break into for would-be manufacturers or new entertainment properties. There are two primary reasons for this. First, the entertainment has to be sufficiently compelling that children will want to take the characters off the screen and play with them in their worlds. Second, assuming that a character has achieved this, the question is always, “What are children going to put down to pick up a new character?” While there are many entertainment properties that children will watch, there are only a few that they will play with consistently. In other words, it’s difficult enough to launch a new property in a crowded media market and attract an audience, and it’s even tougher to get kids to play with the toys. Only a fraction of the lines introduced in any given year develop a significant market presence. We’ll discuss this in more detail in the chapters on licensing and merchandising, but one also has to consider that there are only a handful of companies that can produce action figures, and there is only so much shelf space at retail.
Despite the trend toward not defining toys by gender, historically, most action figures have primarily appealed to boys. They’ve been designed and marketed to the way boys play, which is driven by power and conflict. There have been female figures, but for the most part, their powers and how they “win” has been driven by traditionally male play patterns. That’s changing. In 2016, Warner Bros. and DC Comics introduced a line of female action figures called DC Super Hero Girls. The line included many of the classic, female DC characters as high school students, and it’s had a strong launch. These have been heavily marketed to girls with specific storylines.
Boys and girls approach action figure play in very different ways, largely related to how they approach conflict. In boys’ play, the enemy is defeated when it is destroyed. For girls, the impetus is to enroll and convert the enemy and create a more cooperative environment. This has been observed in play tests and research over the years, and while marketers are trying not to be prescriptive, meaning that they don’t want to dictate gender in marketing, kids will play with toys consistent with their gender.
Action figures are also sold in a variety of scales. Classic 3¾-inch figures, which have been the predominant form since the late-1970s, exist side-by-side with 12-inch figures, and even some so-called Big Figs, from Jakks Pacific, which come in a variety of sizes up to 48-inch tall versions that are really more statues than figures.
Not all action figures are designed for kids to play with, either. Collectors make up a healthy portion of the market. The percentage of action figures sold to collectors will vary based on the property, but in some cases, such as Star Wars, more than half of the figures that appear at retail will be sold as collectibles primarily for display. Companies such as McFarlane toys predominantly address this category, but major toymakers such as Hasbro, which makes the Star Wars figures, actively engage with the collectors in developing lines. Advances in manufacturing, specifically in molding technology and the ability to go from computer-generated character images to molding, has allowed more detailed figures and accurate representations of actors whose faces can be reproduced through 3D scanning (if they license their images) all increase appeal and value to collectors.
Thanks in large part to these advances, retail prices for action figures have remained stable over recent years, most basic lines sell individual figures for $7.99–9.99. Margins are about 30–33 percent. In the late-1970s, margins were significantly higher, though volumes were less. Moreover, large playsets, a staple of Fourth Quarter holiday sales, typically deliver much larger margins, allowing manufacturers and retailers to compensate for smaller margins in figure sales.
How the Current Market Behaves
As noted, this category is entertainment driven. Yet not all entertainment is equal. Whereas movies were once the predominant medium through which new properties were introduced and merchandised, today it is television. And not just television. Today’s kids function as their own programmers. The DVR, streaming services, and other forms of home video, allow kids to watch what they want when they want it and to engage deeply with characters they like. It’s typical for kids to watch many episodes successively, also known as “binge watching.”
Television also offers the opportunity of year-round sales as opposed to movies that have about a six-week window for retailer in advance of a movie’s opening. With some larger entertainment franchises, the combination of media only strengthens a property, but that’s not always possible.
Still, one of the most prevalent current strategies for action figure manufacturers is what we’ll call franchise building. Increasingly, a movie is seen as an event in the life of a character brand. Take, for instance, Batman as one example. The recent movies have been wildly successful at the box office internationally, and Warner Bros. has committed to the development of a wide variety of movie and video content supporting the property. The movies have been fairly dark and rated PG-13, which means that the vast majority of the children who will be playing with the toys are unlikely to see the movies. There are, therefore, different iterations of Batman in the marketplace. Fisher-Price, for instance, makes Batman sets in its preschool playset line that are much more appropriate to a preschooler in terms of design and play pattern. Still, it is Batman, and through these toys a child gets to participate in the cultural excitement surrounding the character, yet in a way that is age-appropriate for him or her. There is also an animated TV show and other media targeted to preschoolers, so they are involved with the property while older kids in the culture are as well. These toys also have the benefit of providing ongoing revenue for manufacturers and retailers even as sales for merchandise created specifically for a movie slow down. Hasbro has used the same strategy with Spider-Man and Star Wars toys to appeal to broader audiences and keep kids engaged with a property with age-appropriate content for younger kids, and simultaneously capitalizing on the awareness building impact of a movie in the culture at large.
Product strategies will vary based on the property, and no two are alike. Some properties like Star Wars, World Wrestling Entertainment (WWE), or Teenage Mutant Ninja Turtles have a broad appeal, while others, such as Spawn or entertainment properties like The Nightmare Before Christmas, have much narrower audiences and fewer fans who may, however, buy more deeply in terms of merchandise, and they will buy over time, extending the life of properties without the need for new entertainment.
There are, however, two general types of action figures that give a broad strokes idea of how the current action figure market behaves: movie-based and TV-based toys.
Movie-based properties generally have extensive licensing programs that go well beyond action figures, and not all movies are appropriate for action figure representation. Typically, merchandise appears at retail about six weeks before the premiere date of the movie, and the promotion of these toys is considered part of building the excitement and hype for a movie. How these figures perform after a movie opens depends on the movie and whether it appeals to collectors or to kids for play. As noted earlier, launching an action figure line with only a movie is challenging, as the characters and the story have to be established sufficiently that consumers want the merchandise. (Star Wars is always the exception, as they plan major release dates for all merchandise about two months before a movie opens. This series, however, is a cultural entertainment event, and can’t be considered as a model for typical movie product merchandising.)
TV-based properties provide much greater opportunity for product, though it is largely, but not exclusively, toy related. Toys typically appear at retail as much as a year after a show launches, at which point demand has hopefully built up for toys. As more and more toy companies are partnering with production companies, the period from the debut of the show to toys showing up on shelf has been shortened. Additional seasons provide ongoing opportunities to introduce new toys, and since children watch these shows daily, they have deeper relationships with the characters and are more likely to interpret the stories into their play.
With high barriers to entry, in terms of getting attention and attracting consumers, and the inherent risks of entertainment as well as relatively short retail windows to establish a brand, the action figure category remains highly challenging, but it is richly rewarding for those that break through.
Transformers: Three Decades of Success
Transformers, first introduced by Hasbro in 1984, was a classic good-versus-evil story of the never-ending battles between the good-guy Autobots led by Optimus Prime and the bad-guy Decepticons led by Megatron.
The original transforming toys (from vehicle to character robot) were licensed from Takara, but it was Hasbro that developed the storylines and the various entertainment platforms. TV shows, comic books, and later animated movies drove the storyline into boys’ lives, and the larger-than-life robots who gave power to the humans that interacted with them was a classic theme and play pattern for boys aged six and up. The manipulative play of transforming the robots was certainly part of the appeal of the toys in the early years.
Over time, the stories became more sophisticated, and an entire mythology around the characters developed. This had the effect of aging up the property for kids who wanted a more sophisticated storyline, while the cartoon shows engaged the younger end. Hasbro effectively engaged both ends of the consumer universe in age and developmentally appropriate ways.
Hasbro also created toys with different levels of sophistication so that younger kids could engage with a transforming experience that was simple and easy for them to do.
The constant introduction of new themes (a strategy the Power Rangers have used to good advantage as well) kept the storylines fresh as new children grew into the property. Over time, the Transformers became known even among kids who never played with them, and 20 years into the property, a second generation was beginning to discover them.
Finally, four successful live-action movies continued to broaden the franchise and drive toy sales at the upper end of the age spectrum—and adults—even as an ongoing television show entertains the younger kids. There are different ways for kids to interact with the Transformers at different times and still have what is, to them, a satisfying experience with the property.
Moreover, as with many mature entertainment properties, a movie is an event in the life of the franchise. It is not a make-or-break situation. Indeed, with the movies rated PG-13, there are many kids at the younger end of the Transformers audience who won’t see it, and yet they are engaged in the property through the TV show and some of the toys and so are engaged in the cultural excitement that surrounds a blockbuster movie.
Toy sales in a movie year are going to be significantly higher than in non-movie years, so the strategic challenge for a company like Hasbro is certainly to manage the franchise so that it remains strong on its own but also to manage the entire product portfolio to account for the inevitable highs and lows that come with a mature property.
Few properties will ever achieve the track record Transformers have had. They have passed from playthings into parts of our larger culture. At one time, an action figure line considered a hit lasted 3–4 years and appeals to a core audience while they are in that target age bracket. Inevitably, kids—and the market—demand something new. It is also a rare property that can be relaunched and find an audience. Teenage Mutant Ninja Turtles has done it, but He-Man was unable to. It’s a combination of timing, a measure of luck, and, of course promotion. However, in the current market, the presence of the established brands is such that they shut out other entries into the market.
Action Figures—What It Takes to Succeed
An entertainment platform is essential to the success of a contemporary action figure line. As previously stated, the story has to be compelling enough that kids will not merely want to watch it but that they will want to express themselves through play with the characters.
And it has to remain top-of-mind with the target audience. The scale and nature of the entertainment platform will in part determine the size of the program. A television show that’s seen five days a week for a year is more likely to have a longer-term toy potential than a movie that has approximately a six-week window to attract an audience.
It’s not that one of these necessarily offers more potential than the other, it’s that the profitability has to be calculated based on the nature of the program. Even so, at the end of the day, a movie or TV show that bombs is not going to sell any toys, so the stakes are high, particularly as commitments to produce toys and licensing contracts are often signed well in advance of the entertainment being finished.
Other factors can also impact action figure sales. The delay of a movie release date can completely upend a toy launch. If product is shipped, it can do poorly at retail, which would jeopardize reorders. If a movie is delayed, typically a licensing contract would be renegotiated, but that can’t compensate for lost revenue and companies’ overall product plans. The business can be unpredictable since movies and toys can take as much as two years to produce. Fortunately, this is relatively rare.
Television programs have a slightly easier time of it, but only slightly. There is the opportunity to wait and see if a show develops a fan base and a demand for product prior to making a full commitment to product. While there is still investment cost in design and preparing to manufacture, losses can be mitigated if a show doesn’t perform. Conversely, if a show is a success, rolling product into the market on an ongoing basis keeps supply lagging behind demand, and that can have a positive impact on the longer-term potential of a property.
In the current market, television also offers expanded partnership opportunities between toy companies and content producers. Whereas traditionally networks would pay a fee to be able to air content, and the content provider would own the property, be responsible for production costs, and get the licensing revenue from toys and other products, more and more were seeing different kinds of deals being struck. As children’s television watching shifted to cable and such channels as Cartoon Network, Nickelodeon, and others, and more recently on-demand and streaming; the network fees didn’t cover the cost of producing the entertainment.
Content producers became more and more dependent on revenues from licensing and other promotional deals to generate revenue from a property to offset production costs and be profitable. More and more common in recent years are deals where the network also becomes a producer on the project and shares in the revenue. One illustrative example of this has been Paw Patrol, created in partnership between the toymaker Spin Master and Nickelodeon. Both companies share in all revenue, using merchandise and Canadian tax credits for production to offset costs, they all share in the success.
Toy companies will also pay the networks to run their shows, but that shifts most of the risk to the toy company. Plus, it can be very expensive to buy air time, which is limited. In recent years, more and more companies are trying to launch their properties through online webisodes and through channels such as Netflix. The challenge in those scenarios is in creating and maintaining an audience, sufficient to drive merchandise.
The collector market drives a certain amount of action figure sales as well. Properties like WWE appeal largely to the adult male collector, ages 18–34. This market behaves differently than other parts of the action figure sector in that the avid fans will buy often and deeply. The challenge is to keep refreshing the marketplace, sometimes on as short as a six-week cycle.
Collectors have certainly driven—and continue to drive—the expansion of the Star Wars line. Thousands of different figures have been created, but ironically, this brand behaves more like a commodity than other parts of the Action Figure category because a long history allows Hasbro to project sales with a certain level of accuracy and determine viability and profitability of any new figures—to an extent at least. The strong collector universe, however, is quick to express what they’d like to see as figures.
Yet not every property is going to inspire rabid, passionate collecting. Take The Lord of the Rings, for example. While that had a tremendous fan base, gauging the potential market for action figures was a challenge. They never achieved what many assumed was going to be its mass market potential. While some collectors bought into it and were quite active in discussing the details of the costumes and decorations on the figures, they did not drive sufficient sales. At the end of the day, there was really no way for kids to play Lord of the Rings, and so, despite being beautifully designed and manufactured, the items failed as toys.
And that’s a critical question, particularly in this category. Whether a figure is for collecting or playing, the one thing every action figure line requires is what we call a “way in.” With collectors that means a story that resonates so personally deeply that fans want to reflect that connection in purchasing figures for display. With kids, it means that the story is compelling enough that they want to play it.
In the latter case, and assuming that you have a great story that kids will want to watch, the next question that too few manufacturers ask (or answer honestly when there is potential revenue at stake) is: How will kids play it? Cute as the monsters were in Men in Black, for example, there really was no way for kids to play it because it was just about blasting monsters, and kids weren’t sufficiently immersed in the storyline or the main characters that they wanted to play out their versions of the storyline. On the other hand, the Teenage Mutant Ninja Turtles in their unending battles with the character Shredder and the Foot Clan provide ongoing fodder for kids’ active imagination and play. It’s not enough merely to have a plastic representation of a character; kids must also be able to project themselves into their version of the narrative.
The other questions that must be asked when launching an action figure line is: What are you bumping off the retail shelf and, equally importantly, what are kids going to put down in order to pick up your product? (This is not just relevant to the action figure category; it applies to the toy industry as a whole, but it has particular resonance for this category.)
The two questions are interrelated. The first is fundamental to being successful in getting placement with retailers. It requires knowing where the competition is in its life cycle, what your figure offers, and an ability to project greater revenue per square foot of shelf space than the competition.
In the case of some movie toys, the challenge may be a little easier because when one movie goes another comes in and that shelf space is more easily allocated. In the case of a television show, for instance, the challenge is to show the potential for staying power, which is the rational for trying to build a character franchise with different versions of the same category discussed earlier. A retailer that is making a satisfactory margin on a property is unlikely to give that up for something untested. (We’ll discuss this more in a subsequent chapter on sales.)
With kids, time and attrition will work in favor of new entries. Kids grow out of and get tired of properties and the next crop of kids coming up often wants something new, but with properties that are continuing to reinvent themselves and appealing to new generations of kids, the challenge becomes somewhat greater.
If all of this sounds a bit confusing and inexact, that’s because it is. As we will continue to see, there are no hard-and-fast rules as to what will work. Excitement about a television show or a movie can be tremendous before it debuts or airs, and manufacturers and retailers can make multi-million dollar commitments based on the belief that something will be good. In this way, the toy industry is exactly like the movie industry; there is a level of belief that is based on the conviction of an individual or a group, but there is no way to determine how the market will respond until the product is available. The only way to mitigate risk is to do less, but that risks leaving money on the table that one won’t get back. Hence, there is the go-big-or-go-home mentality when it comes to signing up some movie properties for toys. A property may do well enough so that no one loses money. It may be a spectacular failure or it may so far exceed expectations that it becomes a cash cow for decades. The flip side of that is always the movie that didn’t have sufficient merchandising and then became a big hit, only to disappoint in terms of sequels. Shrek was a tremendous hit with kids and families, though it wasn’t heavily merchandised. When Shrek 2 came along, the assumption was that if there had been toys they would have done well. They didn’t because while kids loved the movies, they didn’t want to replicate the movie in their play. Not all kids’ movies make good toys. We’ll talk more about this in the chapter on licensing.
Remember, major companies with experienced people didn’t believe that Star Wars or Toy Story for that matter had sufficient potential to sell toys to make it worth the risk.
Arts and Crafts
History
The basic products of arts and crafts—crayons, paints, and so on—have been staples for centuries. As toys, though, the modern era is generally dated from 1903 when Crayola introduced its first box of eight colored crayons. (Previously, Binney & Smith had made black wax crayons only.) Sold as art supplies and in various kits over the years, these have not really changed much. Innovations, such as paint-by-number, and other innovations made “professional” results possible for kids. Other innovations have never varied too much from the basic coloring, painting, and collage play.
Highlights of the post-World War II years included Kenner’s Sparkle Paints in the early 1960s that allowed kids to make pictures that, you guessed it, sparkled. Crayola introduced the aforementioned and now-classic 64-crayon box in 1958. The rise of electric toys made such hits as Mattel’s Vac-U-Form and Creepy Crawlers. (Creepy Crawlers has been successfully reintroduced several times since.) Shrinky Dinks fascinated kids and crafters alike. Typically when these products were advertised heavily on television, they did well. For the most part, though, the arts and crafts (and we include activity toys in this category as well) sector has been a staple category that doesn’t require much promotion, given that it’s a very basic way kids play. This has allowed manufacturers to deliver products with high margins and year-round sales.
The Market Today
The arts and crafts sector has remained fairly stable over the past 10 years, with fluctuations of plus or minus a few percentage points on any given year based on specific products. The fad for the Rainbow Loom, a toy that allowed kids to weave rubber bands into bracelets and other creations, drove increased sales in 2014 that collapsed in 2015 when the fad had passed.
The staples in this category sell year round, though there is a noticeable increase during the back-to-school season, which typically runs from July through mid-August. Costs on staples are often deeply discounted during this season to attract consumers to specific retailers, shaving margins during the promotional period.
The category has remained strong even in a high-tech environment. In fact these toys complement tech toys and reflect the classic nature of these toys as well as parents’ desire to limit screen time.
Recent product trends in addition to the basic categories have included make-up, food, fashion accessories (especially jewelry), paper crafts, and unique compounds or materials.
Finding ways to create new opportunities for purchase and new materials have also driven the category. Adding features such as lights and sound to drawing tablets, configurations that make take-along play easier and providing new playsets with different themes, all give parents a reason to purchase more deeply. Play-Doh is an excellent example. First introduced in 1956, the compound has remained relatively unchanged over the years. However, finding different ways to mold and make things that look finished has been a challenge. From its first Fun Factory to the recent introduction of new formulas that are easier to play with and mold merchandised alongside the original, the brand has driven multiple purchases within an individual household.
And that’s really one of the key characteristics of this category: these products are consumable. Crayola estimates that by the time a child reaches the age of six, he or she will have gone through, on average, about 700 crayons.
This is also a category that is not as limited when it comes to age. Children as young as 18 months can play with crayons, and various craft sets can appeal to kids as old as 10. Other recent trends have incorporated creating fashion and décor accessories, popular licenses, and materials that have included plastic gems and duct tape. The fashion-oriented segment of this business seeks to replicate current fashions and interpret them for younger kids.
Licensing certainly plays a role in this category and particularly in the consumable segment. This allows kids to engage with characters without a huge investment by parents, and at the same time because these products are often easy to produce and often involve only printing, the barrier to entry for many manufacturers is fairly low.
From a retail perspective, both the year-round nature of this category and comparatively high margins are appealing. While mass-market retail is dominated by a few players, the specialty market (see the discussion of this in the chapter on retailing) carries a great many more of these products.
This category has also significantly expanded in terms of retail outlets including stores that specialize in crafting products, such as Michael’s, as well as traditional grocery and drug stores.
Key players in the current market who specialize in this area include Crayola, Cra-Z-Art, and Alex, but there are many companies of different sizes that introduce individual items.
Arts and Crafts—What It Takes to Succeed
As noted, the barriers to entry can be comparatively low in terms of manufacturing costs, and the products are often commoditized. Modeling compounds, chalk, markers, paint, crayons, and so forth do vary in terms of quality, but the consumable nature of these products and the relatively low retail price points tend to make consumers less discriminating if they think something is going to be fun for their kids. (Many parents say that what they’re buying with these sets are not just products their kids will enjoy but “quiet time for me.”) Still, there is a great deal of brand loyalty to brands like Alex, or Crayola, as parents consistently report that they have had positive experiences with their products over time.
The real opportunities for success in this category involve leveraging consumable commodities in new ways that enhance play. Hasbro, for example, has consistently done well with the Play-Doh sets that involve creating food products. In addition to creating more mess-free products, Crayola looks for new ways to leverage compounds and incorporate different play experiences, such as games or narrative play, into the arts and crafts experience. Still, getting retail distribution can be a challenge, so a strong license can help, though that will add to the costs.
Also, since the majority of these products are not TV advertised, packaging plays a pivotal role. In addition to making the products look fun, high piece count, the number of projects one can create, and the ability to purchase refills are all factors. Most important, however, is to develop products that address the cognitive and physical abilities of children who are using them.
Building and Construction Sets
History
The beginning of the 20th century was a huge time for construction toys. A building boom was going on in the country, and so naturally that would be reflected in toys. In 1913, the first Erector sets were launched. The following year, Tinkertoy made its debut. And in 1918, Lincoln Logs first appeared. All three of these are still made today. As are basic blocks, which have been around for centuries, but they started being made and marketed as educational tools in the late-18th century.
Construction serves a wide variety of developmental purposes, from encouraging eye-hand coordination, to building spatial relationships, enhancing perceptual acuity, and understanding other elements of the physical world. Generations of children have been—and continue to be—fascinated by the building process.
While some of the relatively modern toys were marketed heavily to boys, such as Erector sets, this kind of play is inherently gender neutral and its benefits have been well documented as children imagined, built, destroyed, and built again.
As toys, the three mentioned above dominated the industry through the first half of the century. In 1947, a Danish company introduced interlocking bricks called LEGO and while they made a small success in Europe, it wasn’t until in 1960 the then-president of Samsonite luggage introduced them to the United States that LEGO began to take off.
Various different configurations of toys were introduced, and people may remember American Bricks, Capsela, and others, but by the 1970s, LEGO was the dominant construction toy on the market, and brick-based building became the standard. Many companies got into the block market, including Best-Lock in England, Coko in China, and Mega Bloks in Canada, and as LEGO’s patents expired between 1978 and 1989, it opened the door to other block-based systems compatible with LEGO. Though LEGO sued to stop competitors from making bricks they alleged were infringing, the final ruling that the bricks were functional and therefore could not be trademarked came in Canada in 2005. As you’ll see in a moment, this event which might have sunk another company has instead had little impact on LEGO as it continues to report growth at a rate far outstripping any other toy company.
In 2014, Mattel acquired MEGA Bloks and introduced a variety of new, licensed sets and toyetic figures that were distinct from LEGO’s classic Minifigures. LEGO, however, still dominates the category with about $5.2 billion in sales for 2015, the company’s best year ever, more than five times the sales of MEGA for the year.
There are other construction systems. K’NEX, first introduced in 1993, is based on rods and connectors. In 2015, Spin Master revived the 100-year-old Meccano brand with a variety of robot and vehicle sets. Hasbro tried twice to get into the category, but has subsequently withdrawn from it.
Few categories illustrate the cyclical nature of the toy industry more dramatically than the construction category. By 2003, the category was in decline, and LEGO suffered losses. Hasbro’s attempts noted above failed to catch fire, and the entire category had declined to about $600 million in sales in the United States.
It’s impossible to pinpoint an exact cause of the turnaround in this category. Yet, licensing and entertainment certainly played a part—as did the expansion in the mass market. LEGO, which had never produced licensed construction sets and would certainly have been vulnerable to another company experienced in licensing mounting a competitive system, began producing Star Wars sets since 1999, and as the category started to recover, licensing and niche products would play an increasingly larger role in its growth. (Ironically, Hasbro had had the chance to get into the construction sector with the Star Wars license and passed on the deal. When LEGO picked up the license, it saved the company and set the stage for its later growth.) Suddenly, kids who would not necessarily participate in open-ended building were deeply engaged in LEGO because of Star Wars and many licenses that would follow. Today, LEGO represents about 85 percent of the entire construction category.
In 2017, construction sets have also integrated more play in some of the sets to appeal to kids. Still, the elements of good construction toys remain the same as they were a century ago: build, play, display.
The Market Today
With revenues nearly triple what they were in 2003, building and construction toys are a hot category. Several things are driving this growth, probably the most significant contributing factor is that companies like MEGA Bloks and LEGO have successfully broadened the potential audience. While building was at one time limited to open-ended play, the boom in licensed properties and the transition to a more theme- and model-based play pattern has brought new people into the fold.
Star Wars continues to be LEGO’s best-selling licensed brand, but LEGO has also successfully introduced its own intellectual property that it has promoted not merely through building sets but through online entertainment and highly developed storylines. The company branched out into the gaming category and took a bite out of that category. With properties based on movies and television shows, LEGO also has taken share away from the action figure category.
Under Mattel, MEGA is getting a complete overhaul, and, as the brand managers say, their goal is to be a “fierce number two.” This has meant extended licenses and dividing the brand into three parts: preschool, basic, and collector.
Contemporary construction sets go beyond model building, and companies have learned that a successful toy in this category also needs to deliver more elements of play and “playability” than would have been more common in 1990s and earlier. To add value to the sets, kids want vehicles that they can play with and figures they can imagine in different scenarios. Traditional play patterns complementing the construction, whether in open-ended narrative play, or to a lesser degree, games, have contributed to success. Whether under a license or as a stand-alone property, kids are also buying across a franchise, complementing major birthday or holiday purchases of expensive sets with lower cost sets that are bought year-round. The boom of these sets has turned this into a year-round purchase. Additionally, the figures have become collectibles, particularly when they are done in the likeness of popular characters, and there are some LEGO fans that are almost exclusively into collecting these figures. (There are more LEGO minifigures in existence than there are people on the planet.)
Both LEGO and MEGA Bloks have continued to expand their preschool and young builder lines as well, further broadening their potential market and creating product targeting a discrete market segment. These toys are more preschool in nature, focusing on blocks that are easy for small hands to grasp and manipulate and simple builds. However, they are marketed and merchandised as construction, or more accurately, preschool construction, a subcategory.
The biggest recent development in the construction category has been the expansion into traditionally girls play patterns and sets—dollhouses, characters, and so on. LEGO introduced its Friends line and prior to the acquisition by Mattel, MEGA had created licensed Barbie sets. Mattel has developed construction sets based on its American Girl brand as well.
The introduction sparked controversy about LEGO trying to pander to gender stereotypes by giving girls dollhouses and making the pieces pink, but the fact of the matter has been that 80 percent of LEGO toys had been sold to boys. There are plenty of girls who are, and have been, engaged in more traditional construction play and who respond to the LEGO Star Wars and LEGO City lines as well as some of the other collections. However, after three years of research, LEGO determined that while there are many girls who would enjoy construction play, the then-current themes and pieces didn’t appeal to them. LEGO Friends was created in response to what girls said they wanted and how they would play with construction toys. While a comparatively small portion of the construction business, it’s a market that hadn’t existed previously and took nothing away from the established consumers.
Since the Mattel acquisition, MEGA has continued to expand in this category, leveraging other Mattel brands such as American Girl. Goldie-Blox and Roominate are two newer brands that have tried to take share in the girls’ sector, but to date, despite a great deal of publicity, they have failed to attract consumers in any significant numbers.
The growth in this category has been possible because between expanded licensing deals and opening new markets, it has continued to grow without cannibalizing existing business. This category is also unique in that fans tend to stay in it longer and some become lifelong users. While there is certainly attrition and the adult construction consumer market is comparatively small, it nonetheless contributes to the category’s overall performance. This is particularly true with construction sets based on video game properties intended for adults like Halo produced by MEGA.
Building and Construction—What It Takes to Succeed
The barriers to entry are quite high in this category. Design and engineering costs are high, and consumers are very sensitive to performance. Systems need to work, and bricks need to stay together. Quality is a paramount issue to parents, particularly as more and more active play is integrated into these products. Moreover, between LEGO and MEGA Bloks, most of the top-shelf properties appropriate for this category have been secured across all demographic groups, very nearly closing out other companies who might want to get into this sector in a brick system.
In addition, creating a new system is challenging, given the amount that individual consumers invest over time. There is a greater potential for success in creating systems that work with “other brick-based building systems,” as the marketing lines go.
While K’NEX has been a consistent seller, its market is smaller. Reintroductions of Tinkertoy (including a pink version targeting girls) and Lincoln Logs pick up small pieces of the market. Smaller companies have introduced other systems, such as CitiBlocs, which is a variation on a classic wooden block, but these have limited appeal and are generally a parent-driven purchase based on perceived educational value. Likewise a variety of other systems with unique designs and marketing platforms find some level of distribution in specialty channels, but very few of them are profitable, and it’s very rare for them to transfer into the mass market.
Typical of the industry, the recent success of the category has prompted many companies of all sizes to look at getting into the market. While nothing is ever written in stone, the best opportunities for a mass-market success are going to be those that integrate with brick-based systems and capitalize on the momentum of the marketplace while providing innovation. The reality is that consumers tend to buy deeply in these categories, and the demand for new sets and configurations is tremendous, which means that it’s very difficult once a family has made an investment in one system to get them to switch. Moreover, once a consumer has bought into a specific system, additional purchases integrate with that system, and the likelihood of switching is diminished.
Dolls
History
Dolls, along with balls, tops, and others, are among the oldest playthings known to human civilization. Volumes have been written on the development of dolls and the history of dolls. Moreover, the essential play of dolls has remained unchanged over centuries. In the contemporary world, doll play breaks down fairly easily into a few specific play patterns. Nurturing play is a role-play activity in which girls see themselves as mommies, taking care of a baby. Fantasy play surrounds narratives that incorporate supernatural beings—fairies and other magical beings. Fashion doll play is aspirational in nature, but it, too, breaks down into specific segments. Also included in this segment are mini dolls, dolls based on animals such as Hasbro’s My Little Pony or Littlest Pet Shop brands.
The doll sector as we know it today emerged after World War II. Dolls had primarily been baby dolls, though there were phenomena such as the Shirley Temple doll. Fashion dolls were limited and were primarily paper dolls, though Betsy McCall (based on McCall’s magazine) was a six-year-old. The play was either about being a mommy or having a best friend. All that changed in 1959 with the introduction of Barbie. Called a “Teenage Fashion Model,” this was the first plastic doll onto which girls projected their fantasies about being older, individuals and independent. Still, baby dolls persisted as Ideal introduced various feature dolls such as Betsy Wetsy, Tiny Tears, and Thumbelina that all did something—pee, cry, move—and, of course, Mattel’s Chatty Cathy, the first talking doll who said an amazing 11 different things. (Chatty Cathy was one of the best-selling dolls in the United States from 1959 to 1965. It was later reintroduced in 1970, though it was not as successful in its relaunch.)
From the mid-1960s on, the so-called feature doll became an annual offering. Beautiful Crissy had hair that grew. Baby Alive in the early 1970s actually pooped out the gelatinous green food girls fed her, and as technology improved, dolls did more. By the late-1990s, dolls like Playmates Amazing Amy were powered by a computer chip, cost nearly $100, and were intended to be the most realistic nurturing experience possible. (Just over a decade later, these dolls look clunky and unsophisticated with children having to make a connection between, for instance, a feeding spoon and the dolls mouth by matching metal contacts. Still, at the time, it seemed quite advanced.) However, as the economy changed and certainly after the economic impact of the recession that began in 2007, manufacturers were challenged to come up with feature dolls that were less costly to consumers. Concurrently, some vocal groups of consumers were complaining about these dolls, saying that they simply wanted a simpler doll. Still, when Hasbro re-released Baby Alive in 2006, the doll was one of the hits of the year, yet another indication of how unpredictable the toy business can be—and how much a single product can influence it. The Baby Alive brand and its annual introductions across a variety of price points and with various features continue to be very popular.
Barbie meanwhile went through her ups and downs, almost disappearing in the early 1970s as women’s roles and gender perceptions changed. In the early 1980s, a young and brilliant product manager named Jill Barad and then Mattel CEO, John Amerman, virtually reinvented Barbie and started her on the road to the leadership position she has in fashion dolls today. Barbie’s long and colorful history has been documented in other works, but for those wanting to learn about the toy market, the important thing to remember as one looks at Barbie is that her ongoing viability has come from being reinvented as the market has changed. She may be a cultural icon, but she has always had to appeal to contemporary children in the contexts of their worlds.
The Doll Market Today
The doll market is usually broken up into six distinct segments, each of which has different behaviors in the market. These six represent the categories as defined by most retailers and manufacturers with an emphasis on the mass market.
Baby Dolls
Baby dolls typically represent infants, and the play is all about nurturing, taking care of the doll and the child fantasizing about being the mommy to the doll. In addition to very basic dolls at a low cost, there are also lines like Corolle (owned by Mattel) that are more expensive, European-inspired dolls. Madame Alexander has expanded their offerings to include baby dolls and play dolls, though the company is still largely best known for its collectibles.
For the most part, adults are the ones buying these dolls for children, so they are often bought on the strength of in-store appeal and price point.
Traditionally, these dolls weren’t licensed, but in recent years, Disney has introduced baby versions of the Disney Princesses, which include such characters as Cinderella or Elsa from the movie Frozen as babies. Regardless, the nurturing play is still the same.
Large Dolls
The prosaic name for this category is really a catchall for a variety of dolls. Established lines like Cabbage Patch Kids fit under this, as do a multitude of other dolls that are based on popular licensed characters, but these can also be dolls that are very basic rag dolls as well. What distinguishes this category is that these dolls are about 12 to 20 inches tall, and they are basic playthings. This category has received a lot of attention in recent years, thanks to Mattel’s American Girl line that inspired a variety of different types of dolls with storylines designed to sell at a lower cost and sold through mass market retailers. Like many categories in the toy industry, this is cyclical. While American Girl established this category, the dolls were expensive and, frankly, out of reach for most consumers. In 2016, the company introduced a less expensive line of dolls sold through mass-market chains. At the same time, other companies seeing a decline in this sector of the doll market are targeting it with products in 2017. Inevitably, some will be profitable and others will not. The cycle of pushing product into an underaddressed category and, in fact, putting too much product in the market is typical of the way the toy industry works. Eventually, the cycle will come around again as products are withdrawn and the sector seems “sleepy” again.
Marketing tends to be inconsistent in this category. Where there’s an entertainment property, marketers rely on its popularity. Others rely on price comparison at point-of-sale (POS). But, as we’ll see in a later chapter, lack of effective marketing in a competitive environment can hurt a product irreparably.
Feature Dolls
These dolls share a lot of the characteristics with the large dolls, with the addition of some sort of active feature, usually electronic. These dolls dance, sing, eat, talk, and so forth. They, too, range from relatively simple dolls with a sound chip to more sophisticated, computer-powered dolls. They are mostly established brands, whether Hasbro’s Baby Alive or dolls based on popular entertainment properties such as Mickey and Minnie Mouse, classics with renewed popularity in 2017.
These dolls are, and need to be, widely promoted. In fact, determining whether or not the doll will make a good commercial often features prominently in the product development process.
Marketers will often introduce a feature doll as a “key driver” for a large doll line. They have a higher price point, but may not deliver as strong a margin for the retailer as a basic doll in the same line, hoping to leverage a “halo effect” and impact all offerings within a line.
The challenge with a feature doll is building enough play into it so that it becomes more than what is often called a “watch me toy,” that is, a toy that goes through its paces but doesn’t really require the interaction of the child. Concern about paying $50 or more for such toys (this has also happened in the plush category in recent years) that don’t foster interaction has prompted manufacturers to make simpler, less expensive toys. The sweet spot at retail for these toys is currently about $35–39.
Dolls that interact with apps or with lots of electronic features that drive the price up to $100 are introduced every year. Few of them are successful in the current market. Consumers are leery of spending that much for a doll, and they often start to consider that expense versus investing in a tablet or something with longer-term value. These dolls do sell when the price comes down, but interviews with consumers throughout 2016 suggest that a basic doll often satisfies the child, which is the point in the first place because it’s never the technology, it’s the play that resonates with kids.
Collectibles
In the first edition of this book, we discussed this sector as “Mini Dolls.” In the intervening years, the category has been radically transformed, and the category is often referred to as “collectibles.” (This is distinct from “Collector Dolls,” which are intended solely for display and are usually bought by adult collectors.)
This category emerged in the early 1980s with the introduction of Polly Pocket, which dominated it for years, even as competitors tried to introduce new lines. Few of them had the staying power of Polly, but over time they fell off, victims of the inevitable product cycle. At one time, virtually every licensed property that had a doll line also had a mini doll line. Yet as Polly’s popularity began to fade, and Mattel (which had the license to produce it) focused on other products, kids simply moved on … as they do.
Collectibles emerged in the mainstream around 2010 with the introduction of tiny, vinyl collectibles known as Squinkies, which were launched in the United States by Blip Toys. Inspired by toys sold in vending machines in Japan, they became one of the hits of 2010 and 2011. While not a traditional doll, these are sold in the doll aisle at major retailers.
Their success, naturally, prompted a stampede to the category by many companies. Relatively low production costs certainly helped spur entry into the category. In addition, entry retail price points of about $2.99 made them affordable and a regular toy purchase. Many parents saw these purchases as great impulse items and an alternative to candy.
Typically, the most basic items in these series are sold in blind bags, which means kids don’t know what they’re getting. Lines have basic, rare, and ultra-rare figures to inspire kids to buy often in hopes of getting favorite ones. Trading and collecting are major parts of the social play around these lines. In addition, successful lines have created ways for kids to play with and showcase their collections.
Whereas property owners and manufacturers might have introduced mini dolls in the past to provide a low-cost entry point into a brand, in 2017, many are introducing collectibles. What this means is that at 2017 trade previews, nearly 40 different lines of this type of collectibles were being shown. While lines such as Shopkins from Moose Toys have attracted a broad audience, it’s far more common for these brands to have smaller overall audiences that buy in quantity and over an extended time. Even one of the other highly successful lines, Tsum Tsum from Disney and Jakks Pacific, appeals pretty much exclusively to Disney fans. Fortunately, there are a lot of them.
This category also has the distinct advantage of being a year-round purchase and doesn’t affect sales of larger toys in the category to any significant degree. The low comparative risk versus other more sophisticated toys makes this category highly attractive as a brand extension for many properties.
Fashion Dolls
Put bluntly, it starts with Barbie and goes from there. This category has been dominated by the Girl from Malibu for many years, but it has also been a shifting category. Still, with the Barbie brand (including toys, lifestyle, and all other Barbie-branded products) topping, approximately $3 billion annually worldwide, she is the force to be reckoned with. As noted previously, Barbie’s success has been in the ability to keep reinventing who she is in the context of the contemporary market. The genius, if you will, behind Barbie has been her very adaptability. She can take on different roles and personas while still remaining Barbie. She has been a lightning rod for controversy over the years (Who knew polyvinyl chloride was conductive?), but most of the controversy has happened over the heads of little girls. The same, too, happened with the legal wrangling between Mattel and MGA over the ownership of the Bratz property.
This is a category that has also seen cyclical changes. In 2012, this was a hot and crowded competitive environment. By 2017, many fashion dolls, particularly those based on entertainment properties, had faded. This left a clearer field for Barbie, with sales that grew in direct proportion to the decline of other competitors.
In 2016, Barbie introduced a new line of Fashionistas dolls that represented different body types and skin tones. This demand for diversity has been well received by consumers and Wall Street. It points out, too, the ways in which the toy industry always reflects the culture at large. Cultural awareness of diversity and demand for that in toys drove innovation at Mattel. The result has been one of the best-selling fashion doll lines in years under the Barbie brand.
Cultural demands have shaped another aspect of Barbie. Inventor Ruth Handler, one of the founders of Mattel, was always adamant that Barbie have no definitive narrative so that little girls would be free to make up their own. In the past 20 years, stories have been used more and more to inspire imagination, and Barbie has been no exception. More than 150 careers and dozens of movies later, Barbie has had multiple executions, most of which have been crucial to the ongoing reinvention of the brand mentioned earlier.
There is also one other significant advantage to the brand equity Barbie enjoys. Quite frankly, it’s tough to put a new fashion doll concept into the market. Development and promotion costs are high, and getting retail support is not easy. For example, if a typical advertising-to-sales ratio is 5 to 10 percent in other categories (not always seen in the toy industry, incidentally), fashion dolls need to go big in order to break through to promotion responsive little girls. Warehouses are littered with dolls that might have been good concepts but lacked the promotion push to make them significant players.
Monster High: The Life Cycle of a Brand
The brand began as a reflection of the market and the culture; Tim Kilpin who at the time was the executive who oversaw the line’s development said the brand teams observed the fascination with novels like “Twilight,” Goth fashion, and the supernatural impacting all aspects of the culture.
“You can’t explain where the spark comes from,” he says. “All you can do is create an environment where the spark happens. And who doesn’t hate what happened in High School?”
But Mattel’s thinking went more deeply. While an adult may look back at high school in embarrassment or dread, a girl in the core doll age looks ahead to high school as something to be romanticized. And so Mattel tested, and tested, and tested. Given a strong consumer response, the company was on a path to following a traditional toy strategy, but as the consumer response continued positive—and the culture didn’t seem to grow tired of vampires and monsters with a youthful mien—the company realized that it had something bigger on its hands and decided to hold back until the characters could be more developed.
As Kilpin says, “the cost of failure is so high. You’ve got to do your homework.” And so the storyline emerged of the teenage children of classic monsters. Draculaura is Dracula’s daughter. Clawdeen Wolf is the daughter of the Wolfman and so forth.
Mattel also knew that to put this over with girls, they needed to immerse them in the storyline. They produced webisodes for the characters, complete storylines, a universe for the dolls, all grounded in a reality that girls of the target age—initially 8–11—could relate to. Knowing, for example, that this is an age when kids are struggling to fit into their social context, each of the Monster High characters is an individual, has flaws they’re sensitive about and still try to fit in. “Freaky is fabulous” became part of the story’s positioning, and it was compelling and universal enough that girls related to it.
But it wasn’t all smooth sailing. As Kilipin says, just before the launch Wal-Mart decided not to carry the doll, but Mattel was committed to it, and production was underway. And their insights were proven correct. The company had more than 1.5 million views of its video in the first weekend, and the ball started rolling. Incidentally, Wal-Mart has carried the doll with great success after recovering from its initial cold feet—and seeing the level of promotion that Mattel put behind the brand.
What Kilpin says in discussing the initial success of the brand, however, is that it all comes from consumer insight and understanding on an almost granular level what resonates with specific kids. A Monster High girl is not necessarily a Barbie girl, and determining the difference and being able to create characters that are relatable and aspirational opens up all kinds of opportunities.
Monster High was a huge success, and, no surprise, fostered a great many competitors. As often happens, however, the brand “aged down,” which meant that younger and younger kids were attracted to it. In response, Mattel made the dolls prettier and blunted the edge (albeit not too dark a one) that had given Monster High its distinct personality. Core fans grew out of the brand and others dropped away, and though sales were still respectable, it was no longer the powerhouse that it had been. This is a very typical life cycle within the toy industry for a brand. Because of the nature of the business and the comparatively small window in which a consumer will engage with a brand, the tendency is to chase opportunity, sometimes at the expense of brand integrity. Understandable as that is, that strategy seldom results in long-term success.
In 2017, the brand is undergoing a makeover to return it to its original positioning. Whether that will be enough to restore it or turn it into a classic and staple remains to be seen.
Looking ahead, this will continue to be a category that is fashion-responsive and entertainment-driven. Companies are looking for the next great theme and storyline to emerge. As Monster High was established, Fairytale inspired dolls, the follow-up to Monster High, seemed like a logical answer, and many companies including Mattel invested in it, but this theme didn’t resonate with kids. Whether it lacked the “freaky is fabulous positioning,” or just seemed like a me-too, Mattel’s line did a respectable business, but the competitors mostly got out after one season.
Although it may sound a little bit exaggerated, the challenge for any doll brand targeting the older end of this consumer spectrum (ages six and up) is to try to create a “lifestyle brand.” That simply means offering many ways for kids to interact with the brand that go beyond the actual toy. On the one hand, this can be extremely expensive and time-consuming. On the other hand, compared to the expense of producing a TV show or movie, creating animation for the Internet and YouTube can be very inexpensive.
Finally, as one looks at this category, it’s important to understand it in the context of the typical play patterns of fashion dolls as a function of children’s ages and cognitive development. Over the years, the age range for fashion doll play has dropped severely. While in the 1970s, it was common for girls as old as 10 or 11 to be playing with Barbie, in the contemporary market, the top age is often 8 (always excepting a phenomenon like Monster High that can extend the age with a novel concept that appeals to older girls). The age of entry into the market has also aged down with girls as young as three or four starting to play with fashion dolls. However, the way a three-year-old and a six-year-old relate to dolls are completely different based on their stage of cognitive development. As we’ll see repeatedly, understanding the fine distinctions that happen in ages of children is essential to developing toys that will appeal to them.
The current fashion doll category, in general terms, breaks down into three phases with respect to play and how children interact with them.
Fantasy Play. These are the youngest girls for whom fairies, princesses, and other stories are the most compelling. This is usually in the three to four age range. Magic, fantasy and tons of glitter appeal to kids in this age group. These girls are very self-focused and only beginning to have cognizance of themselves in the context of the larger world.
Grown-Up Play. Girls in the four to five age range begin to see themselves in the context of their world. The play replicates what they see in the home, replicating family relationships, and thinking about what they want to be when they grow up. How else could Barbie have successfully had more than 130 careers?
Teenage Play. As girls begin to be socialized outside the home at ages five to six, they begin to fantasize about becoming teenagers, going to high school, and so forth. This is where Barbie play was in 1959, and it’s still a part of girls’ development. Rather than looking up to parents, girls start looking up to older girls, and the play is more fashion and friend related. This was the group that Bratz so successfully targeted by creating fashions that were reflective of what these girls were seeing in the world around them.
As with everything in the toy industry, these are not hard and fast rules. There are dolls like the Disney Princesses that cross over all three of these categories, but even if the dolls remain the same, the play will reflect the developmental stages.
Collector Dolls
As a category, collector dolls are a minor contributor to the overall doll business and don’t figure prominently in the mass-market toy industry, which is the primary focus of this book.
For the most part, collector dolls are created by small, specialty companies and are sold through specialty stores, online, and at doll shows. Doll collecting remains the second most popular hobby in the United States, and there are many small companies and artisans serving the collectors. At the same time, there are a handful of larger companies that serve this market segment, including the Barbie collector line, the famous Madame Alexander dolls, or the collection of artists’ dolls sold by Ashton-Drake Galleries and other comparatively smaller concerns. Even the entertainer Marie Osmond has a line of dolls, which has proven to be extremely popular with collectors. The market, however, is predominantly adult women. It’s a niche market. Madame Alexander’s baby dolls and large dolls are considered in their respective categories. These dolls can be very expensive, and are sometimes produced in runs of less than 1,000 units.
However, in an attempt to broaden the doll market, several manufacturers have marketed versions of mass market dolls as collectibles, blurring the line between “collectible” and “collector.” Largely targeted to girls and young women who are too old to play with dolls, but who may enjoy collecting and displaying them, thee versions of popular dolls from lines like MGA’s Bratz, Mattel’s Monster High and, of course, Barbie. Many of these include the so-called Limited Edition holiday dolls, though of course the limitation in many cases is based on the number of dolls that have been ordered by retailers. Typically, these will cost significantly more than the mass market versions of these brands and have more sophisticated and elaborate outfits and packaging.
Only Barbie, which has a robust and active fan base and collector community, has designed its collectible business in four tiers ranging from mass production to the Platinum tier in which only 1,000 dolls are made of a given variety.
In Mattel’s case, the Pink tier, which has a potentially unlimited production run, is sold wherever Barbie is sold, but the rarer dolls are sold only online or at authorized specialty stores.
For a time in the mid-1990s, there was a perception that collectible dolls would significantly appreciate in value, based on record breaking sales for certain older collectibles. Adults bought dolls with the idea that they were investments. They were not, and today online auction sites are flooded with Barbie dolls, particularly, that are selling for not much more than their initial retail price, if that.
Dolls—What It Takes to Succeed
It’s impossible to create any kind of formula for success in such a diverse broad category. However, good product, strong promotion, and compelling storylines all contribute to potential, particularly in the fashion doll business. The overall goal is to stay relevant to, and reflect, consumers’ worlds in the present time.
Licenses for baby and large dolls can do well. In fashion dolls, these are limited keepsakes, and while a business can do well with a celebrity doll, for example, this is a quick in-and-out because the business will move on. After all, who would buy a Spice Girls doll today?
Games and Puzzles
History
Board games and puzzles have a long history. Chess, checkers, backgammon, and so forth have been part of all human cultures. Parcheesi created a sensation at the beginning of the 20th century, and Ouija Boards, Monopoly, and many other classics began as fads. Many of the games introduced in the early years of the 20th century are still made—Scrabble, Clue, Sorry, Candyland to name just a few.
In the 1960s, Marvin Glass introduced the skill-and-action game, and such classics as Mousetrap, Booby Trap, Ker-Plunk, Hands Down, and many more became hits with the Baby Boom generation. Othello followed in the 1970s, but shortly thereafter games stopped being played by adults, though kids games still sold, and by the early years of the 1980s, the conventional wisdom was that adults didn’t play board games. (The one exception was Dungeons & Dragons introduced in the early 1970s that created the specialized niche of fantasy role-playing games that continues to have a strong following, as does Magic: The Gathering.)
The game business changed again with the introduction of Trivial Pursuit in 1983. Its success prompted many other companies to rush into the market with trivia games, most of which were too specialized and found a small market, if any. Adult games were back, and the launch of Pictionary in 1985 cemented that impression. Suddenly everyone was trying to create a game, and the lottery mentality that often infects the toy industry was pervasive. The New York Toy Fair during these years was full of games that people had taken second mortgages to produce, and many of them failed miserably.
During this time, even with the rise of video games, board games for kids continued to be a viable market. Hasbro acquired Milton Bradley in 1984 and Parker Brothers in 1987, securing its place as the largest game manufacturer. Western Publishing, which produced Pictionary, Pressman Toy, Cardinal, and other companies vied to get the game dollar, which was really an entertainment dollar for adults. During the economic downturn following the crash of 1987, it became popular to promote games as inexpensive home entertainment.
Recently, there has been consolidation in the game market as smaller companies have been acquired. Hasbro acquired Cranium in 2008. The United Kingdom-based Goliath Games acquired Pressman in 2014, and in 2015 Spin Master acquired Cardinal Games. These deals have allowed comparatively small or family-owned companies to cash out, but they’re also opened the door to wider distribution. Still, like much of the toy industry, the games category remains title based.
Puzzles, on the other hand, have remained constant sellers. First introduced in the late-17th century, these puzzles became mass-market sellers in the 1930s when new methods of cutting the puzzles were introduced. Puzzles have a devoted fan base that buys regularly, largely based on the photographs, and they continue to deliver high margins. Different configurations and even three-dimensional puzzles have been breakout hits in recent years, but this is generally a stable market.
The Market Today
The puzzle market remains fairly stable over the years. Recent attempts to introduce augmented reality to puzzles have been expensive failures. Given that puzzles, with only a few exceptions, are paper and ink, costs are comparatively low, margins are high, and this is a solid, profitable business.
Games tend to be very trend driven. In 2017, games such as Apples to Apples for families, Cards Against Humanity, and Exploding Kittens for older people, represent a new vitality for games among young adults and a return to the social nature of games. These all have an ironic edge that is particularly appealing to contemporary sensibilities and tend to be group-based party games rather than competitive challenges.
Starting in 2015, the skill-and-action category has been revitalized. Games such as Pie Face, in which the loser gets hit in the face with whipped cream, or Wet Head, in which players take turns wearing a helmet and pulling a rod from the compartment on the top. If you pull the wrong rod, you get wet. The success of these games has also been driven by YouTube videos of people being doused or pied and otherwise looking silly. With this development, the game isn’t just about the people actually playing; it’s also about people who watch the YouTube videos, and these videos have proven more powerful than traditional advertising in driving sales. In 2017, we anticipate a new: “golden age” of these types of games with many new entries and moving family entertainment away from screens.
Classic games still make up a sizeable portion of the market. Monopoly, Clue, Yahtzee, Operation, Risk, and others are staples of the game aisle. Hasbro produces special collectors’ versions of these games either directly or with a license to companies like USAopoly.
Despite relatively low production costs, it’s not easy to make a good game. Game mechanics is a whole field of study, but these essential elements are often ignored in the development process. As a result, there are only a handful of really well-designed games, subjectively speaking, that make it to market. Larger companies tend to buy games from inventors and provide distribution. This benefits all parties in a good deal because it saves what can be extensive R&D time for the large company and provides the inventor with royalties he or she would not be able to get otherwise.
Innovation is really coming from the smaller companies. A company like the Seattle-based Wonder Forge has been successful with a variety of preschool games, but as President Jacobe Chrisman notes, the success has to do with the combination of a good game and a strong license. They have successfully leveraged Dr. Seuss, Teenage Mutant Ninja Turtles, and Angelina Ballerina into profitable games. While the Wonder Forge invests heavily in game mechanics and gameplay, Chrisman also notes that getting retail placement without the licenses is virtually impossible. In a competitive field, the license has to sell the game, particularly when, with few exceptions, games don’t generate the kind of revenue or margin that allow extensive television advertising for preschool and young children’s games. (The skill-and-action games of the 1960s were heavily TV advertised, but that was a different world.) Hasbro created “Family Game Night” as a promotional activity, and it helped them … and the entire category, promoting game play as home entertainment.
Marketing for games, as it has since the mid-1980s, consists of publicity, promotion, and relatively lower cost tactics. Pictionary in the mid-1980s, famously sold more than one million games in approximately 18 months without any TV advertising and using only publicity and promotion at a time when sales of one hundred thousand units of a game was considered successful. Still, once a game has proven itself in the marketplace, TV advertising can be an effective tool for broadening that market. And, as we’ll see in the coverage of the sell-in process later on, TV advertisement can figure into the mix. Still, the best way for games to grow is through word of mouth. People who enjoy games tend to want to share them with their friends. Disappointing games aren’t shared, and if they’re purchased tend not to be played again and certainly are not recommended.
Games and Puzzles—What It Takes to Succeed
With puzzles, there are fairly low barriers to entry. A strong image, an innovative construction, or an added feature can be effective in attracting a consumer who is already predisposed to purchase puzzles.
No two games, on the other hand, are exactly alike, though many fall into categories such as chase games where players follow a path (Chutes and Ladders, Game of Life), strategy games where you have to plan moves (Othello, Chess), or the aforementioned skill and action games, to name three.
Quality of a game, from a pure game mechanics perspective, is not always a determining factor in sales. For example, it’s possible to sell a mediocre game with a strong license in the preschool aisle, as success is not necessarily measured by the pleasure a game provides the consumer but in its sales numbers. A strong property sells as much for its novelty appeal as the quality of its gameplay.
For manufacturers, having a track record of profitable game sales is more likely to get placement at retailers than a new game company is. As noted earlier, that’s where the specialty market comes in as a proving ground for games.
There are a few elements that characterize a good game, however. It must be easy to learn. People need to be able to open the box and be playing in very short order. (Always with the exception of games like Dungeons & Dragons where part of the playing experience is the set-up.)
It must be fun to play. As fundamental as that sounds, there are a lot of games that aren’t fun. Turns take too long. It’s complicated. Or, most importantly there’s no social interaction. From a play standpoint, board games deliver an experience unlike any other in the toy industry. They are basically social experiences. Especially in the adult game category, but also in children’s games, the interaction among the players that the game promotes must be as engaging as the game itself. That can be the difference between success and failure. Several years ago, Hasbro introduced versions of Monopoly and Battleship that had a computer module in the center. This dictated virtually every aspect of the gameplay, and it shut out the interaction among the players. They just sat and looked at the computer module without talking. Aside from the fact that it was very expensive, the game itself preempted the social experience.
These games were later updated to accommodate tablets, but the sales were equally poor. Sitting around staring at screen isn’t fun. Board game play is about people coming together to have fun together, and the electronics preempted the interaction between the players.
As mentioned earlier, this is why game mechanics are critically important. How the game flows, how elements of chance and strategy are balanced and even down to the average length of the games, all figure into whether or not it is viable once consumers get it home. Rigorous play testing and adjustments are required in the development process, but that doesn’t always happen. It’s expensive and time-consuming, which is what leads to some pretty boring, licensed preschool games especially. Still, if the game sells, the licensor gets its royalty and the manufacturer and retailer make money, that’s the objective. This is anathema to real board game mavens and developers, but it is the reality.
The social experience also determines another important element: the game should be somewhat different each time it’s played. Whether that difference comes from the appearance of random elements or the personalities of the players, a game that is predictable and repetitive and doesn’t provide an engaging social experience generally doesn’t do well.
Good games can be a cash cow for years, or even decades. Yet of the hundreds of games people try to introduce each year, very few achieve long-term profitability. Thus, each game that a company decides to produce requires an individual marketing and sales strategy based on the variables of the market, the potential consumer, the projected life of the game, the experience of the gameplay, and so forth.
In recent years, larger companies such as Mattel and Hasbro have attempted to take a branding or licensing approach to their games. That is, rather than invent wholly new games, they have taken established brands—Candyland, Monopoly, Uno, and so forth, and tried to create line extensions that were essentially the same game but had a few new bells and whistles. While adding some revenue and helping to get a few more listings at retail, the consumers have been lukewarm on them. Why, for instance, buy another Candyland game when the price is significantly higher than the original, which is still sold, and there is no compelling reason for the consumer to trade up? Hasbro tried to group its word games under the Scrabble brand, but the result was confusion at the consumer level. What, consumers wondered, was Scrabble Boggle? In the consumers’ minds, these were two distinct brands and game experiences and combining them made no sense.
What all of these point up is that games are not like other sector of the toy industry. They have a wider potential audience in terms of age. With the exception of skill-and-action games that are very visual, they are hard to advertise on TV. They don’t behave as a typical brand because even with new features, they’re not consumable and can stay on the shelf for a long time, so it’s hard to give a consumer a compelling reason to purchase.
However, having taken Hasbro to task a bit earlier, let’s also give credit where credit is due. The company continues to be dedicated to games development and clearly acknowledges changes in play patterns. Many of the company’s classics have been reintroduced in versions that have shorter game play, a clear acknowledgment that families have less time to play games. Some of its new introductions under the Monopoly brand, for example, have been excellent games in their own right, and their skill- and-action section is more robust each year.
As for a formula that can be applied across the board? Forget it. In this way the game business is more analogous to the movie business than a consumer product business. Even when all the pieces are in place (to use a game pun), one never knows if something is going to be a success until the market weighs in.
Pictionary—How a Hit Was Made
Though it’s now more than 30 years since it first drew attention, the story of Pictionary remains a model of how the game business can work, and certainly represents the dream that keeps people in their garages trying to come up with the hit. Of course, the realities of the business are that you have probably an equally good chance of writing a hit screenplay as coming up with a hit board game, but that doesn’t stop people from trying.
Rob Angel came up with the concept of what was essentially charades on paper, and with $15,000 borrowed from family members, he assembled the first games in his apartment. His partners in the effort Terry Langston and Gary Everson handled the business end and design, respectively.
Unable to find a store that would carry the game, Angel set up a table in the Seattle flagship store of Nordstrom’s and started playing the game and selling it to anyone who would stop by. The excitement was electric, and soon they were setting up game play in other Nordstrom stores, and the game sold out. Game companies were looking for the next Trivial Pursuit, and the unconventional sales technique came to the attention of Tom McGuire, an industry veteran who had been laid off from Selchow & Righter (makers of Scrabble and Trivial Pursuit). He had heard about this new game company looking for someone to handle sales. He did more than that; he created a whole new company initially of former Selchow sales representatives called The Games Gang. Later they went into partnership with printer Joe Cornacchia and Western Publishing to be able to meet the demand. They hired noted publicist Linda Pezzano and her team (which included your author) in hopes that the Trivial Pursuit lightning would strike again. With a combination of game playing parties, grassroots marketing and getting a lot of people to play the game, within two years after the launch of the game, the team was celebrating the production of the one millionth game—at a time when selling 100,000 units in a year was considered a runaway success in the game business.
So, why is this relevant today? In the games sector, as we’ve seen a bit earlier, the major companies are not investing in research and development. It falls to small companies—or individual inventors—to create games and demonstrate that there is a market for them. Then, a large company can either purchase the game outright or license it and provide a level of distribution and marketing that would be beyond the small company’s capabilities.
The success of Pictionary points up one other essential component of effective game marketing: consumer trial. There is no other sector of the toy industry that is so responsive to trial and word-of-mouth in selling games. Getting those people most likely to purchase a game to try, purchase, share, and recommend it is an essential part of the process. Board games typically don’t make good TV commercials, but good ones create entertaining experiences. Perhaps it’s a little easier in today’s market where blogs and online sites can facilitate word-of-mouth, but the principle remains unchanged.
Infant and Preschool Toys
History
This is another dynamic category in the toy industry. Today, it encompasses all kinds of toys designed for children ages three to six, though that’s not a hard-and-fast rule. For tracking purposes, the definition of this category has been anything but constant. The category is also tracked to include infant toys as well as preschool toys, though the two are very different in terms of design and utility. Electronic learning toys were tracked separately from other nonelectronic learning toys. Therefore, it can be maddening to attempt to construct any kind of coherent history of the category over time. One certainly can’t get an accurate assessment of the changes in the growth of the category over any extended period because, as with other categories, advances such as electronics and the growth of licenses have reshaped and resized the category many times over the last 20 years.
There are, however, a few changes that have influenced the category today. In the 1990s and beyond, many of the larger preschool brands such as Mattel’s Fisher-Price and Hasbro’s Playskool pulled out of the basics business. With the exception of licensed goods, generic rattles and teethers, stacking toys, and so forth were being produced less expensively by many Asian companies and delivered better margins to retailers, and it became more and more difficult for major companies to compete in that sector. As a result, the larger companies began focusing on more and more sophisticated products using licenses. Sesame Street, Blues Clues, Dora the Explorer, Thomas the Tank Engine, SpongeBob, and so forth became staples of the business.
Preschool educational toys have also emerged over the last 20 years or so as a major contributor to this category. Starting in the mid-1980s, the electronic learning toy began to become a staple of the preschool business. Child Guidance was one of the first companies to have a major success in the category with its Talk ‘N Play, which combined a book and a cassette tape to create an early reading experience. At the same time, Teddy Ruxpin, a stuffed bear with a cassette player inside, was a huge hit using similar technology, though the bear appeared to read the story.
As computer chips began to be integrated into toys, VTech pioneered the early electronic learning toys, and soon lights, sounds, and rudimentary computer chips became basics in this business. In 1995, the preschool category was revolutionized with the launch of LeapFrog and the subsequent introduction of the LeapPad became a huge hit.
All of this was played out against a cultural backdrop that emphasized early reading and the development of language skills. The entry requirements for kindergarten had become more achievement-focused in terms of prereading, and parents were turning to LeapPad and toys that helped children with phonics as essential tools. At the same time, there were studies that suggested that listening to classical music improved children’s ability to learn, and an entire line of Baby Einstein toys was born. (The study has since been debunked, but not before the company sold millions of pieces and was acquired by Disney.)
During these years, toy companies capitalized on the fashion for early learning, and though the toys were excellent and, certainly in the case of LeapFrog, pedagogically sound, it’s another indication of how cultural fashions drive the business.
With the advent of tablets and handheld electronics, the sector changed again. Smartphones are in more than 75 percent of households in the United States, and children can to them almost from birth.
The Market Today
The preschool business in 2017 has undergone some change in recent years. Licensing is still a major factor in the business, and toys based on popular characters are as strong as they’ve ever been, though, of course, the characters have changed based on their popularity. Disney remains powerful with properties like Doc McStuffins, Frozen, and classic Disney Princesses, and relative newcomer Paw Patrol is easily the strongest property right now. It’s important to note, however, that this is just a snapshot of the category at this writing, and the makeup of the category will vary each year. For children two and under, the parent usually chooses the toy. However, children over two are beginning to specify the toys they want based on the shows they are watching. As a result, the category is somewhat volatile because it requires a significant investment in development, design and production, and a lead time of about 18 months to get toys into the marketplace and a commitment to licensing that is both necessary and risky.
With entertainment-based preschool toys, this has led to a shift in how these projects are developed and funded. Increasingly, the types of partnerships discussed earlier between production companies, creators, and toy manufacturers are becoming increasingly common and necessary. The risk is spread over a variety of stakeholders, as are the rewards. These types of arrangements can also be instrumental in helping a product get to market more quickly. In the 1990s, the prevailing strategy was to allow properties to establish an audience before introducing toys, and the lag time between a show’s debut and the appearance of product could be as much as a year. For a show that hits, in today’s market, that’s challenging. Again the risk is greater with going into production, even preproduction, of product before the show has a chance to find an audience, but that is now part of the overall risk assessment. Sometimes it works, and other times it doesn’t, largely due to the nearly overwhelming number of children’s properties that are being introduced. No longer limited by available time slots on broadcast television, property creators are looking to streaming and subscription services to provide platforms for entertainment.
The other major change in the market since the first edition of this book has been the emergence of STEM and STEAM as educational or marketing concepts. The acronym is for Science, Technology, Engineering, (Arts), and Math. The intent is to foster early experiences and beginning literacy in these areas through play. In many cases it works well, but like many things in the toy industry, on one level this is really old wine in a new bottle. The fundamental elements of play are inherently educational as they provide children with new experiences that help them to build the neural pathways that will facilitate assimilation of information when they get into more structured curricula. So whether one wraps pushing a truck in the notion that the child is getting an early introduction to physics or simply discovering that he or she can experience cause and effect through the behavior of the toy (the “old school” positioning), the cognitive play benefits are the same.
Concepts often become fashionable in education and toys, and STEM and STEAM are the current fashion. It’s a double-edged sword, however, and marketers should approach this advisedly. Parents interviewed in 2015 indicated that very often “STEM means boring.” On the other hand, through overuse, the impact of the term has been diluted. It may make a good call-out on a package, but at the end of the day, if a toy doesn’t engage a child at his or her cognitive level, seems too complicated, or isn’t a rewarding play experience, it will be rejected. Children don’t play to learn. They learn through play.
When the first edition of this book was published, the industry was buzzing with news of preschool tablets. In 2017, those have virtually disappeared. Parents have handed down the tablets as they have acquired new ones, and children are using them. This is indicative of one of the ways technology has changed the toy industry. At one point, toys were child-appropriate replicas of adult products. You’re not going to give a toddler a real stove to play with, or allow him or her to drive a real dump truck. Technology, on the other hand, can be easily used by toddlers who have learned that their touch can make something happen—a very basic learning. The barrier between the adult version and a child version virtually disappears through the technology, though, of course, the child uses the software that is consistent with his or her developmental stage.
As they became more prevalent, there was also a rush to integrate tablets and smartphones into various preschool toys. It might have been a good marketing hook, but for the most part these toys were disasters. A good play experience didn’t need the technological enhancement, and they were confusing for the child. What they failed to take into account was the cognitive differences between virtual and actual play. This is an endemic problem in poor toy design; adults fail to fully understand how a child engages with a toy at a certain level of development. Fortunately, as the fad for integrating electronics into basic preschool toys has faded, there has been a renewed focus on physical play as valid in its own right.
Technology has had another effect on the current preschool market—a downward pressure on retail prices. When parents are considering toys, particularly preschool toys that have a comparatively short lifespan with a child, price plays a big role in the purchase decision. VTech, for example, has been able to leverage its technological and production expertise to deliver great value and good margins for retailers, and combined with good toys has become one of the major brands in this category. With its 2016 acquisition of LeapFrog, the company is able to apply its operational efficiencies to that brand as well while maintaining its brand equity in the educational space. This is critical in a highly competitive category.
Even as the mass-market preschool business continues to be dominated by licensed products and technology, there are still niche markets. Much has been said in recent years about the growth of “green” toys for this sector. There are companies that do sell toys made of biodegradable plastic or natural fibers or made of wood from sustainable sources. While catering to an affluent and small demographic group, these toys may be profitable for the companies who produce them, but they do not figure significantly in the overall preschool marketplace.
Preschool Toys—What It Takes to Succeed
For the mass-market preschool business, there really are three subcategories: educational, licensed, and basics.
Parents and caregivers are the primary purchasers of educational toys, especially for younger kids, and these products need to be marketed on the basis of educational outcomes. At this writing, that focus is on prereading and early numbers competency. The licensed sector depends largely on the license and its popularity. Understanding the properties and how kids interact with them and how they want to reflect that in their play is crucial to success in this category. TV advertising and other forms of promotion are critical, but the power of the property to appeal to kids is also a key factor. It’s also critical to understand the competitive nature of these properties and who the purchaser is. For example, while both boys and girls will watch Doc McStuffins on TV, girls are the primary consumers of product based on the character. Understanding the nuances of a license and the ways in which kids play with the characters is essential to developing engaging toys.
Case in point: The children’s show “Dragon Tales” was a very successful, award-winning show that ran on PBS from 1999 to 2005. The toys based on the show did not perform up to expectations. Part of this was the competitive frame; it was the heyday of the Teletubbies and Blue’s Clues to name just two other properties in the market at the time. Hasbro was producing both the Teletubbies and the Dragon Tales toys, and with few exceptions produced stuffed toys based on the characters. What was missing was the central element of the show—the Dragon Scale, which allowed the human characters to be transported into the world of Dragon Tales. Our interviews with kids at the time found that fans of the show were making their own and creating their own adventures. This piece was critical to the play, yet neither the licensee nor the licensor thought to produce it.
The final consideration for this is that while kids will watch a great number of shows, the ones they want to play are much more limited. A realistic understanding of the size of the potential market for these toys is essential—and it changes as shows come and go.
The challenge in the basic end of the business is to create a compelling story for a given product or product line. The case for sub-brands is that no single product is going to generate the kind of revenue that will justify significant investment in marketing and advertising, but aggregated across a sub-brand, these products, which can be promotion responsive, have a better shot at finding an audience.
Outdoor and Sports Toys
History
This category encompasses everything from playground balls to Frisbees to NERF blasters to sandboxes. Basically, if it’s going to be played with outdoors, it fits into this category. Almost as long as there have been human beings, there have been balls and other outdoor toys. Archaeologists found yo-yos and jacks when the pyramids were opened, and boomerangs, clackers, and other classic toys were initially weapons used in hunting.
Given the breadth of products that fall under this heading, it’s virtually impossible to make generalizations about this category, or even forecast performance. There are staple brands like Frisbee or Wiffle Balls. Little Tikes is known for its molded sandboxes, Furnise for bubble toys. This can also include Hasbro’s NERF and Super Soaker lines, which one can’t possibly compare to a generic playground ball in terms of performances, market responsiveness, or brand impact.
The Market Today
Despite the diversity of product, there are several significant factors about this market segment. First, it represents about 10 percent of the total U.S. toy market, much of which is divided among comparatively small companies once you take out major brands like NERF. Second, while the majority of toy sales are concentrated in the Fourth Quarter, the bulk of these sales come in the spring and summer, from the end of April through July 4.
As to what distinguishes toys in this category, it has largely to do with the product and what buyer is assigned to it at the various retailers and where the product is merchandised in the store. (Incidentally, this is not always consistent from store to store.) Finally, with a few exceptions, these toys are not heavily marketed, which allows them to deliver comparatively high margins to retailers, though volume may be lower.
Sports and Outdoor—What It Takes to Succeed
There are branded products, like NERF, Wiffle Ball, Frisbee, and so forth, and there are commodity products. Each is going to perform differently. While Hasbro puts significant marketing dollars behind its NERF brand, a basics company does not. As a result, there are no rules or formulas that can be applied across the board to try to create any kind of commonality across this category.
The success of NERF in recent years has fostered a variety of other blasters. Mattel tried to get into the market with a line called BOOMCo, but they made a fatal error in the play pattern. They stressed shooting at targets and had sticky darts that would stick to a special target, but that’s not the way kids play with these toys.
They like to blast each other, and BOOMCo failed to find an audience. More successful have been either private label brands from Toys “R” Us or from companies like Buzz Bee Toys or Zuru that are able to build in a lot of features and keep prices comparatively low. The good news is that this has expanded the category with NERF continuing to lead innovation with new types of blasters and configurations. These developments point out another aspect of the toy industry: success will always breed imitation. However, imitators will only pick up a small percentage of the sales. While that may be sufficient to be profitable, real growth as NERF demonstrates, comes from continuing to innovate and provide something new. The companies that don’t have the resources to invest in development will always lag behind. Retailers, though, like that because it provides a range of prices to appeal to their diverse customers, so there will always be companies to pick up the me-too opportunity.
Every once in a while a really innovative company does come along, and in this sector it’s a comparatively small company called Zing. They make foam arrows, slingshots, and shooting toys of all types. Focusing on high performances and active play, they have made serious inroads into the category in just a few years. They have taken classic play patterns that parents might object to (a slingshot or bow and arrow, for instance) and made them safe, fun and satisfying to play with. Getting the “wow” factor into the toys has helped them distinguish themselves in the market.
Plush—AKA Stuffed Animals
History
This category traces its modern history to 1903 when the Ideal Toy Company created the Teddy Bear, based on a legend that Teddy Roosevelt had refused to shoot a baby bear cub on a hunting trip in Mississippi. The incident was made famous by a political cartoon in the Washington Post, and Morris Michtom created a toy out of “Teddy’s bear,” and getting permission from Roosevelt to use his name, the Teddy Bear entered the culture. (To be fair, the Steiff company in Germany had been making stuffed toys for about 20 years at the time of this incident.) The same year, the first licensed plush toys were introduced—based on Beatrix Potter’s “Peter Rabbit.” A decade or so later, Raggedy Ann and Andy became popular toys, and there were stuffed toys made of many popular characters, many now obscure including The Yellow Kid and Mutt and Jeff.
Traditionally, there have been basic plush toys and licensed plush toys. Companies such as Steiff, Gund and, more recently, Ty and Aurora have become major brands in the category, known for basic plush toys. Ty, of course, is famous for the Beanie Babies fad from the mid-1990s.
Licensed plush toys have been made by the holders of the licenses based on virtually every kids’ property over the years. Care Bears, Teletubbies, Disney characters, and countless others have been highly profitable for their manufacturers.
The mid-1990s saw the rise of electronic or feature plush. The legendary Tickle Me Elmo was introduced in 1996. Furby followed in 1998, and Zhu Zhu Pets in 2009 each were runaway fads and inspired all kinds of imitators and annual introductions as companies tried to answer the question, “What’s the next Tickle Me Elmo?”
In 2005, Ganz introduced its Webkinz line of plush, small toys that had codes on the tags that kids could enter to get access to an online world, touching off another rush to have toys that integrated in some fashion with the web.
More recent innovations have sought to integrate even more sophisticated electronics with varying degrees of success. At the end of the day, though, this category is still about favorite friends for children to hug, cuddle, and with which to form an emotional bond.
The Market Today
With the exception of certain years propelled by fad-like performance of individual products such as Zhu Zhu Pets, Tickle Me Elmo, or Furby, this sector has remained flat over the past 10 years.
Licensed characters have made—and continue to make—the greatest contribution to this category with new licenses such as large plush characters based on Shopkins from Just Play, sitting side-by-side with classics like Care Bears and basics. Hasbro’s FurReal Friends line has continued to perform well, marrying classic pet play with animatronics. In 2012, Hasbro relaunched Furby, and while it didn’t approach the 40-million plus pieces the original sold, it was one of the best-selling toys of the 2012 holiday season. Spin Master has acquired the rights to Zhu Zhu Pets, and a 2017 reintroduction is planned.
Pricing continues to be a challenge in the feature plush aisle. In the years since Tickle Me Elmo laughed all the way to the bank, manufacturers created more and more complex and feature-driven items. Elmo did the Chicken Dance, Hokey Pokey and got increasingly more complex. In 2006, Hasbro introduced a $300 plush pony that was about the size of a real Shetland Pony. After Fisher-Price lost the Sesame Street license to Hasbro in 2009, the company created elaborate Rock Star Mickey, while Hasbro introduced a $70 Elmo, which when all the accessories were purchased cost more than $125. Prices got beyond what the market would bear, and there was a consumer backlash against what were considered to be “watch me” toys—toys that went through their paces and didn’t require the interaction of the child. The category was getting bloated, and parents were looking at the growing prices and saying no, or at least waiting until the prices came down. Retailers were quick to mark down the items, and once they dropped below $50, they started to sell. There is still a market for so-called feature plush, but it is increasingly price sensitive, and manufacturers are finding that fewer bells and whistles are actually enough to deliver a solid play experience for the child.
Plush toys are comparatively inexpensive to manufacture and the lead times on them are shorter than molded plastic toys. It’s easier to get basic plush toys into the market when a license gets hot rather than a figure or a playset. For the most part, they are not TV advertised, though the addition of the shaking to the original design for Tickle Me Elmo was specifically done to give the toy motion that would play well on a TV commercial.
St. Louis-based Build-A-Bear Workshop combines experiential marketing (create the toy in store) with an expanded online and pre-made retail business. They do a big business in licensed lines as well as their own characters and narratives.
Retail outlets for licensed plush are mostly the mass market, while generic plush toys are sold in specialty stores as well. Given that these are not always purchased for children, they are sold in a wide variety of gift shops, florists, chain drug stores, and so forth. Chicago-based Ty has consistently limited its distribution to the specialty channels, resulting in unprecedented channel loyalty because these stores aren’t forced into competition with mass-market outlets.
There is also a significant market for plush toys in the amusement category. These are usually tracked separately from the mainstream toy industry, but these include items created specifically for theme parks, game machines, and other nontraditional retail environments. It is a big business for licensed properties in particular.
Some companies have sought to integrate apps with the plush toys, so that, presumably, the child can continue the play experience on a mobile device when not with the physical toy. This has had mixed success, and it works best when the play is enhanced by the app and requires the device and toy to be in proximity. With its Furby Connect in 2016, for example, Hasbro introduced a feature that lets the app update the firmware inside the Furby toy, creating ongoing novelty through new features.
Plush—What It Takes to Succeed
For licensed plush, a strong property is absolutely essential. Even that isn’t a guarantee that a line will be successful across the board. Producing a line in different sizes and with different features can broaden the potential for distribution. From a retail channel perspective drug stores may carry smaller, lower-priced versions of a stuffed character versus larger versions sold through mass market retailers.
Today, you’ll find these toys in diverse sizes, price points, and constructions utilizing an unprecedented variety of new materials that allow diverse printing methods. These are generally high margin products, often bought as impulse items, especially in the smaller sizes, that can make a solid contribution to a licensed product program.
For basic plush, outside the known brands mentioned above—Steiff, Gund, Ty, Aurora—retailers buy based on price and margin and the appeal of a product. These are the same criteria consumers use when they purchase, by the way.
Vehicles
History
It should come as no surprise that toy cars have been around as long as real cars have been. The romance of the automobile when it was new completely captivated the culture—and it has continued to do so for nearly a century. Wooden cars, metal cars, and later plastic cars brought the sense of freedom to kids and allowed collectors to dream of owning an expensive car, or revisiting the classics of a bygone era. In the middle of the 20th century, Corgi created miniature replicas of favorites, leveraging advances in manufacturing technology to make better and better models. In 1952, Matchbox was launched and soon became a dominant toy car company, specializing in 1:46 scale toys and costing about 99 cents. In the late-1950s, advances in battery technology made powered toy cars possible, and rudimentary (i.e., tethered) remote control vehicles. Throughout the 1950s and into the 1970s, America’s love affair with cars grew and grew. The unveiling of new models was big news, and going to dealerships to see new models was a popular pastime. In 1968, vehicle toys got an injection of energy as Mattel unveiled its Hot Wheels line, and a whole new generation of kids was captivated. Hot Wheels added tracks and racing to the play, and quickly became established as a leading boys’ brand.
One can’t talk about this market without mentioning Tonka. First introduced in 1947, the Tonka line features classic construction vehicles and rescue themes and has been a major part of children’s play for 70 years.
But this category was—and is—much more than just scale models and replicas. Advances in remote and later radio control opened up new opportunities and markets. The category also came to include licensed toys (the Batmobile, for instance), and as the auto racing property NASCAR continued to grow in the adult world, there was a concurrent boom in branded toys. Monster Trucks figured in the mix as well.
“Vehicles” doesn’t just refer to automobiles. The category includes toy versions of anything that’s motorized and moves. Airplanes, helicopters, fantasy vehicles and more are all considered in this broad category.
Like the other sectors that we’ve discussed, the toy vehicle business has remained fairly constant in terms of its size, at about $1.6 billion. In the middle of the 2000s, there was a boom in the category, occasioned by several concurrent factors: a boom in NASCAR, the popularity of miniaturized radio control vehicles, a boom interest in die-cast collecting and the popularity of Hasbro’s Transformers (though not all these toys are tracked in this category), surrounding the opening of the first two movies. Ultimately, these ran their courses, and the market returned to its historic sales pattern, demonstrating once again the impact of the individual product on the overall category.
The Market Today
As we’ve seen throughout the toy industry, the vehicle category comprises many different products and different consumers. Like dolls that have an adult collector component, there is a portion of the vehicle segment that appeals to adults, whether as collectors or in the higher end radio control vehicles. So, let’s look at these individual segments.
The basic, die-cast vehicles business is in flux in 2017. Cultural changes have affected the Hot Wheels business. It’s still the largest selling toy brand in the United States based on unit sales, but the fascination with cars that was so pervasive in the culture in the 1960s, 1970s, and, to some extent, the 1980s has passed. Mattel has put a lot of focus on track sets, different play patterns and has invested in entertainment. The challenge is to maintain viability in the market, particularly in changing competitive environment where vehicle play has to compete with action figure play and entertainment for boys’ attention. What we’ve seen in this category has been a compression of the core ages, and with some exceptions, kids have given up these vehicles by age six. In recent years, after some failed forays into different types of play patterns incorporating tablets into track sets for example, the brand has been refocused on basic track play, creativity in building tracks, stunts, and competition.
The changing role of cars in the culture has had an impact on toy sales as well. In the 1960s and 1970s “car culture” thrived in the United States. New models were greeted with enthusiasm every year, and muscle cars and other high performance cars sparked imaginations. With low gas prices, power was prized, and collecting miniature versions of the hot, high-performance cars represented freedom and, for kids, being not just a grown up but a very cool grown up. Fast-forward 50 years, and style has a totally different meaning. Cars are promoted on the basis of economy, comfort, or luxury. That’s hardly the stuff that kids’ dreams are made of, and collecting different models of cars because they reflect the grown up world fell out of fashion. As cultural interest in cars has faded, the focus on classic vehicle play has had a positive impact on both innovation and sales performance.
Nonetheless, other basics, including the Tonka line, have stayed strong within the sector, building on the heritage of the brand and kids’ fascination with powerful machinery and construction vehicles that have never dimmed. (Kids are always affected by what they see around them in the culture.) Hasbro, which owns the Tonka line, has licensed it to Funrise, a small, nimble California-based company that has produced a strong line of basic trucks that can be sold at a very attractive price point. These are the kind of toys that can deliver high margin to the retailers and an attractive price to consumers, building on the heritage of the Tonka brand, which resonates with parents and grandparents, important players in the toy-buying world. There are also a variety of other manufacturers producing basics in what is a very price-sensitive category.
Vehicles based on entertainment properties will change based on the movies and TV shows in a given year. Transformers remains a staple brand, with sales fluctuating in movie and nonmovie years. Broad-based licensing programs for movies and TV are often tracked by the property, but for some movies there are some that have more vehicles than others—and, to throw another wrench into this—there are vehicle toys that are considered playsets. Again underscoring how difficult it is to get a consistent read on the category. In the current market, the NASCAR license, though still popular as entertainment, has fallen off in popularity among kids.
In the years since the first edition of this book, the radio control (R/C) category has undergone a tremendous transformation. Key to this has been advances in technology that have allowed greater sophistication and greater integration of app-driven toys, but advances in technology have also facilitated the development of greater functionality and more consistent performance in all types of R/C. And then there are drones. Having taken the culture by storm, the diverse offerings of drones at all sizes and price points have necessitated tracking these as an entire subcategory of the R/C business.
A side note that’s important for developers: With the penetration of mobile devices especially among more affluent consumers, at an all-time high, creative manufacturers are finding a way to leverage the powerful computing power within a tablet or smartphone so that they can invest more heavily in the technology resident in the actual item.
Drones at a variety of price points from toy to hobby grade, quad copters and interactive racing or battling drones and the ability to capture and even stream video have added new levels of engagement and play to this category, with a commensurate increase in retail prices. However, companies like Spin Master with its Air Hogs brand, the largest player in this category, have successfully developed entries at a variety of price points. Smaller companies like Skyrocket tend to target higher performance models, and all manufacturers have invested in making the drones easier and more satisfying to fly.
A comparatively new company, Anki, which has its roots in the tech sector rather than in toys, has created cars that can drive with artificial intelligence using app-based control and largely targeted to the older, more affluent audience. With an opening price of $149 for the starter set, these were positioned more toward tech fans who like racing, and the design reflected a higher aesthetic than in traditional toys. These were initially sold online and through the Apple Store, a new and growing channel of distribution for high-end products that integrate with apps.
Not to be outdone, Hot Wheels introduced a lower priced version of a similar type of racing system in 2016. Traditional R/C remains strong with entries running the gamut from simple preschool vehicles (often tracked in preschool toys or in an entertainment category) to more complex vehicles that have one or two features in many different sizes.
As for the future of this category, look for technology to play an increasing role in product development. We are already seeing drones and other R/C toys that can interact with one another through infrared and Bluetooth. In addition to making these easier to fly, these advances allow for greater variations in the play pattern—and a reason for many techsavvy adults to purchase toys.
All Other Toys
Yes, that’s really a tracked category in the toy business. At about $1.3 billion (wholesale), it’s about 5 percent of the business, and it encompasses thousands of individual toys not covered by any of the super categories. Walk through a toy store, and you’ll see these toys that include promotional items, impulse items, bubble toys, accessories, and so much more. This category is as big as action figures, plush and close to the size of vehicles and building sets. It can be frustrating to a student of the industry, and it underscores both how different this business is from other industries and the importance of the individual product.
This category is almost impossible to track year over year, as it changes regularly. It can’t accommodate a boom in science toys, for example. Though some science toys may also be listed in arts and crafts or building sets. It almost doesn’t matter, however. The focus is on individual products, as we’ll see in the next chapter, and for publicly held companies, they account for these toys within their established categories, which don’t always mirror these traditional super categories.
After all, it’s from this category that Silly Bands came. And, yes, those were animal-shaped rubber bands that were hugely popular and made a fortune. Could anyone have predicted that? Absolutely not. And since when is a rubber band a toy? That’s what keeps people in this business—and potentially drives them crazy or makes them very rich … or both.