Over 20,000 Toy Town professionals hope new ideas and innovations will help them brave the hard times as the industry gets ready for Toy Fair in New York City this month.
Although the toy business hasn’t been hit as hard as the savings and loans or housing sectors, many analysts noted that shoppers spent at least 5% less than previous years during this past holiday season. That’s why toy pros will be fighting more than just the cold-weather blues as they gather at The Javits Center in New York City (Feb. 15-18) to check out over 100,000 products that will shape the rest of 2009.
You know these are dismal times for toy sales when even the powerful RC2 Corp issues a warning that its sales and profit for the fourth quarter would fall short of expectations. RC2, which sells Bob the Builder, Thomas & Friends and Sesame Street toys, said that sales for the quarter which ended Dec. 31 were $121 million, 10% below last year’s numbers’excluding recalled toys and discontinued product lines.
Two of the other trends affecting the industry this year are the increasing popularity of Nintento Wii and similar gaming options and the growing number of kids who engage in digital behavior at an earlier age. According to a recent report by leading market research company NPD Group, gaming is the most popular activity with an 85% usage penetration among device users, followed by music which has been adopted by 60% of device users; about one-third are watching videos (movies, online video clips and/or music videos) and 22% download ringtones/tunes.
‘Although the most dramatic increase in usage of these devices happens at about age nine, playing games appears to be an activity that first engages young kids with the digital world,’ NPD Group’s analyst Anita Frazier told CNN.com. ‘Our study finds that 82% of kids ages two to five play games on one or more of the devices surveyed.’
Shape of Toys to Come
Of course, more traditional movie-related toys will certainly oil the wheels of retail sales in the next few quarters thanks to much-anticipated releases such as Monsters vs. Aliens, Up, Harry Potter and the Half-Blood Prince, Dragon Ball: Evolution, Star Trek, Astro Boy, Ice Age: Dawn of the Dinosaurs and The Princess and the Frog. (Not to mention the merchandising muscle of Disney TV mega-stars Hannah Montana and the Jonas Brothers, who are both showcased in 3-D offerings this year!) Then, there’s that absorbent, yellow guy known as SpongeBob who will help Nickelodeon unleash a typhoon of 10th anniversary tie-ins and exclusive memorabilia for his joyous birthday this summer!
Meanwhile, Warner Bros. and Mattel will continue to reap the rewards of the Caped Crusader line with a slate of new Batmobile toys and action figures based on Cartoon Network’s new Batman: The Brave and the Bold show. NECA offers a new thermal mug and playing card set inspired by next month’s Watchmen movie, and Hasbro introduces a new Clue game in conjunction with this summer’s Harry Potter outing.
‘What we can say about the current environment is that action hero movies are still popular with the consumer and translate well into toys,’ notes Kelly Gilmore, Warner Bros.’ senior VP of global toys and themed entertainment. ‘We saw The Dark Knight, Iron Man, Speed Racer and Indiana Jones all release in the same year, and the toys at retail did sell in a variety of categories. Some were stronger in male action, some in construction and some in wheels, but the demand was definitely there.’
The busy toymakers at the Mouse House are also hoping that tried and true brands such as Disney Princess or Cars will continue to cast a spell on those eager little consumerlings.
As Robert Marick, VP of Disney Toys points out, ‘Retailers are taking a more cautious approach to shelf space and product assortment and are looking for brands with a proven track record that will deliver the highest return for their respective dollar. Fortunately, the Disney brand and its stable of properties offer the most compelling opportunities across all consumer segments from preschool properties such as Mickey Mouse Clubhouse and Handy Manny; girls’ properties such as Disney Princess and Disney Fairies; and boys’ properties such as Cars and the re-introduction of Toy Story.’
Marick says he’s looking forward to the fall, when Disney Princess welcomes its newest princess in more than a decade’Princess Tiana from the holiday 2009 release The Princess and the Frog. ‘The toy line will reflect the film’s New Orleans setting and will be inspired by elements from the film including the bayou, jazz music, masquerade balls, food and hospitality,’ he notes. ‘Products will include dolls, feature dolls, dress up, play sets and more.’
Die-hard Disney aficionados can also look forward to a new Snow White Mattel doll this fall, in time for the release of a new Platinum DVD and Blu-ray edition of Snow White and the Seven Dwarfs. ‘This is the first ever Snow White Doll that truly captures that magical scenes from the movie where she is sitting in the woods surrounded by all of her forest friends,’ says Marick. ‘The Snow White doll has ‘poseable’ legs, allowing her to really sit and she comes with three of her animal friends’a blue bird which when she holds it in her hands magically sings and a raccoon and bunny who make animal sounds when placed in her hand.’
The Battles Ahead
While there are many complex realities influencing the health of the toy business, Gilmore believes that increasing costs is the sector’s biggest challenge. ‘Oil (although currently decreasing) and resin costs rose steeply in 2008,’ she says. ‘These rising prices increased the cost of toy production and the price at retail. China raised the minimum wage and those costs were passed on to manufacturers. In addition, the Chinese government is moving towards high tech industries, creating a labor migration of workers to Northern China and leading to the closing of approximately 900 factories last year. The decline in value of the dollar makes it more difficult to purchase the products needed to manufacture toys. Even products like cardboard and corrugate which are used to make packaging are being increased, so it’s not only the toy itself that is challenging, but the packaging is an issue, too. Lastly, additional quality control adds costs to the toy process making it difficult for all manufacturers to produce toys.’
Industry veteran Joy Tashjian, president of the Joy Tashjian Marketing Group, who is introducing new Top Chef, The Biggest Loser and The Office merch at the Fair, brings up another point: ‘In this economy, manufacturers and retailers will wait until a license has proven product strength, meaning it will require a licensor to be persistent and allow a property to mature,’ she notes. ‘The fact that a film or a TV show is a success doesn’t mean it will generate a licensing program: The license must be a great product. It will be challenging, but, hopefully, will lead the way to better licensing programs and success at retail.’
Let’s just hope that this doesn’t mean we have to wait too long until Cartoon Network Consumer Products will let us dive into our own Flapjack inflatable swimming pool!
For more info about this year’s Toy Fair, visit www.toyassociation.org.
Toy Biz at a Glance
‘Source: NPD Group / Consumer Panel Tracking / Retail Tracking
Holiday Season Winners
Jakks Pacific’s Eyeclops night-vision stealth goggles
Blokus classic board game
Wild Planet’s Hyper Dash
Imaginext’s Spike the Ultra Dinosaur
Hasbro’s Star Wars
Spin Master’s Bakugan toys
Indiana Jones LEGO