Supply Chain Diversification – The Second Biggest Toy Industry Trend

Supply Chain Diversification – The Second Biggest Toy Industry Trend

Aside from (the hopefully) short-term of impacts there are two massive trends having a massive effect on the toy business now and probably for the next decade. The first is sustainability. If your company isn’t in a sustainable product category or if your products are primarily made of plastic materials, then sustainable initiatives are becoming more and more important to keep consumer onside and buying toys.

Aside from sustainability though there is one major shift happening which does not get the headlines but is nevertheless throwing up massive challenges for toy companies. The shift is coming in terms of manufacturing hubs. Whereas we once relied primarily, or often completely on China for manufacturing at affordable costs and with good efficiency, the situation has changed significantly in that a proportion of production is seeping away from China into other countries.

There are a number of drivers of this, which we have covered in detail in other articles, but perhaps the best way to share that with you is to watch this YouTube video explainer we published a year or so back:

This video explains why China is not going to remain the same primary source for toys as it once was.

The point of this article though is to discuss how toy companies can manage the ongoing change.

There have been ongoing problems in toy supply recently – from the initial shutdowns in China due to Covid-19 through to shipping problems, and before that Trump’s tariffs on China, rising costs and much more.

The bottom line here is that toy companies are going to move from a model of having a relatively easy and efficient sole manufacturing hub to needing to diversify their risk across more regions. We have been advising our clients to set up multi-hub capability.

This comes with some pain though – because there is no perfect solution to replacing what China has become. Despite occasional pain points, China has been very reliable and the easy option compared with many other manufacturing hubs. But what happens for companies who don’t set up the multi-hub set up is that when issues hit like they have in the last 18 months or so, supply gets threatened. By having at least small production already set up with vendors to diversify risk, companies can ramp up more quickly than those starting from scratch.

The reality toy companies need to accept though is that these hubs are not necessarily going to be easier. Moving from China’s vastly experienced factories to lesser experienced companies in areas with less mature supply chain can be painful & take a lot of work. But this is where the trend is heading to whether we like it or not. As per our video presentation above, we believe China will keep around half of the toy production they had at the start of this decade, but the rest is going to dissipate further afield with India, Vietnam, other Asian countries and ‘Near shoring’ taking up some of the slack.

The multi-hub sourcing strategy is going to be an ongoing major factor in the toy business for the next decade.

 

Do you need help to understand the toy & game business? We help people from all around the world to understand and successfully enter the toy business. For more information on how we do this, check out our services here: www.KidsBrandInsight.com/services

 

Have you listened to our Playing At Business podcast? We talk about selling toys & games, interview successful people from across the toy business & we look at key trends in the toy & game business: https://playingatbusiness.libsyn.com/

 

J Is For Japan – A To Z Of The Toy Business

J Is For Japan – A To Z Of The Toy Business

J IS FOR JAPAN

Japan has played a major role in the toy industry globally. At one point in time Japan was a major source of toy production (going back to the 1970s). Following the decline of toy sourcing from Japan as the economy soared and brought Japan to the forefront of the global economy heading into the 1980s, Japan built into one of the major toy markets of the world. For a long time, Japan was 2nd in size only to the U.S. market, before being overtaken by China a few years back. Japan is still today though the 3rd biggest toy market in the world, which is surprising to some people as most ‘Western’ toy companies spend so little time looking at Japan. Japan is so culturally different versus other markets that it can be quite confusing for companies looking to sell their products into Japan, but nevertheless the sales potential is significant if you can find a way to enter the market!

The other major contribution by Japan to the global toy industry is the wave of animation and product concepts which keep on coming out of Japan’s quirky companies. From Tamagotchi to Takara Tomy, and from Pokémon to Power Rangers, Japan has been a major contributor to kids’ entertainment content and toy development. Pokémon of course is one of the biggest toy franchises ever, and with Hasbro acquiring Power Rangers for around $500m there can be no doubting Japan is a good place for western toy companies to go hunting for opportunity.

 

Do you need help to understand the toy & game business? We help people from all around the world to understand and successfully enter the toy business. For more information on how we do this, check out our services here: www.KidsBrandInsight.com/services

 

Have you listened to our Playing At Business podcast? We talk about selling toys & games, interview successful people from across the toy business & we look at key trends in the toy & game business: https://playingatbusiness.libsyn.com/

 

 

Hybrid Movie Releases: Marvel’s Black Widow Delivers At The Box Office & Via Streaming

Hybrid Movie Releases: Marvel’s Black Widow Delivers At The Box Office & Via Streaming!

Marvel’s Black Widow has received a positive critical reception, but perhaps more tellingly, it has also wowed at the box office and simultaneously on streaming! One week on from release and the movie has grossed $173m worldwide already, including just under $100m in the USA. Simultaneously though, Disney+ reported an additional $60m+ in global streaming revenues.

Wow!

Ever since the advent of streaming cinema chains have protested against streaming as a massive cannibalistic factor which threatens their viability. Could Black Widow be the movie which shows that streaming can be an incremental opportunity for movie studios to recoup more money back against the hefty production costs they incur to produce films? It’s maybe too early to reach that conclusion, in a month or two we’ll have a fuller picture of what Black Widow has delivered, but at the very least Black Widow has proved a number of points.

Firstly, that a Marvel movie based on a story about a female lead character can smash the box office, just like Black Panther proved that a movie focused primarily on people of colour could be a $billion+ movie. Secondly, cinema is back – albeit different and not in all places, but cinema as a major commercial force is back. Thirdly, it is possible to release movies simultaneously in movie theatres and to streaming and not to annihilate the box office takings. Perhaps the cannibalistic effect will come later after those real cinema devotees have been to see the movie. Perhaps streaming will capture some of the casual movie goers, but in reality we suspect that what is more likely is that streaming will have only a marginal impact on cinema attendance. Our analysis suggests that simultaneous release – the hybrid model, whereby cinemas and streaming go live at the same time – will just increase consumption.

From the perspective of the toy industry, it will be interesting to see if Black Widow sees a big toy success and creates out of stocks on key lines. But from a broader perspective, one of the biggest media driving toy sales seems to be heading successfully towards a hybrid distribution method which promises to future proof toy demand both in terms of any resurgence of COVID-19 but also in terms of any future crises affecting mankind.

 

Do you need help to understand the toy & game business? We help people from all around the world to understand and successfully enter the toy business. For more information on how we do this, check out our services here: www.KidsBrandInsight.com/services

 

Have you listened to our Playing At Business podcast? We talk about selling toys & games, interview successful people from across the toy business & we look at key trends in the toy & game business: https://playingatbusiness.libsyn.com/

 

I Is For Innovation & Inventors – A To Z Of The Toy Business

I Is For Innovation  & Inventors – A To Z of The Toy Business

INNOVATION

If you look back at old toy catalogues or watch old toy adverts on YouTube, there is an awful lot of similarities between today’s toys and the toys of yesteryear. So much so in fact, that some people in the toy business focus more on sales and marketing spend than they do on innovation and genuinely trying to find something that hasn’t been done before.

What innovation does though is to create more compelling play experiences, and incremental sales opportunities.

Thinking about how innovation applies to the toy business, the most obvious example appears to be Furby. Your very own electronic furry pal, capable of interacting with children and of seemingly coming to life. But innovation is not always about whizzy technology.

An area of the toy business which was once unfashionable for major companies but which now drives the industry overall is pocket money and collectable toys. Before the global financial crisis of the late noughties, major toy companies tended to pooh-pooh selling toys at such low-price points, as it is so much harder to justify product development and marketing against lower priced products…that is unless the lower priced products sell in ridiculous quantities, which is what has been happening for some time now in this category. As such, the ability to deliver great play based on a much more limited spec has led to wave after wave of innovation from Shopkins through to L.O.L. Surprise!

 

INVENTORS

We can’t discuss innovation in the toy & game business without also talking about the mighty role of Inventors in our industry. Those outside the toy business don’t realise the critical role that independent inventors play. The fact that major toy & game companies have teams of Inventor Liaison staff shows just how important external concepts & ideas are in terms of feeding the everlasting churn of product development. With more than two thirds of toys being new on shelf each year, there is a huge volume of concepts needed. Inventing though isn’t a career path for the light-hearted, with many great concepts not finding their way to market, and royalty payments coming a long time after the original work was done by the inventors. We estimate though that there are around 100-200 full time toy & game inventors globally making a full time living from creating toy & game concepts…and after all there are certainly worse ways to earn a living!

 

Do you need help to understand the toy & game business? We help people from all around the world to understand and successfully enter the toy business. For more information on how we do this, check out our services here: www.KidsBrandInsight.com/services

 

Have you listened to our Playing At Business podcast? We talk about selling toys & games, interview successful people from across the toy business & we look at key trends in the toy & game business: https://playingatbusiness.libsyn.com/

The 5 Biggest Toy Packaging Mistakes

The 5 Biggest Toy Packaging Mistakes

Our team has worked on literally thousands of individual toys & games, and across all these products the area where we have seen the most mistakes is most definitely in the packaging.

Packaging is a crucial part of the marketing mix, because often consumers won’t see your advertising. But in store and online they will see your packaging, and therefore, packaging is the fundamental foundational pillar of all toy & game marketing.

Good packaging doesn’t make a bad product good, but it does make it more likely to sell!

Here are the 5 most common mistakes we have observed over time with toy & game packaging:

 

  1. Functional failure

Often times toy companies spend a lot of time on the graphic design of their packaging, but typically leave the structural engineering of the packaging to the factory. This can be a costly mistake. In the last 12 months we have worked on about a dozen toys & games that had a fundamental packaging structural design issue. Issues observed have included packaging that is supposed to stand up on shelf, so that the store can just put product free standing on shelf. Due to either too small a base footprint or due to an inherently unstable packaging structure, several products would not stand up on shelf, which means that they would fall over on shelf either falling off shelf or sprawling over the display space looking bad. This is such an easy thing to fix! Packaging should have a solid base so it can stand up if that is how the product is to be merchandised. #basics!

 

  1. Failure to effectively, clearly and overtly communicate key product features & benefits

Packaging is a marketing tool. The packaging should clearly show a cool product with emphasis on compelling features and benefits. On a recent project we purchased some competitor samples to compare with the products of our client. One of the products from a major toy company (who shall remain nameless to spare their blushes!) was a really good product with a best-in-class TVC. However, the product was completely cocooned in a weird packaging design which probably meant to be intriguing like an upscale blind bag, but with the only text aside from the logo being a multitude of copyright lines and legal lines in different languages it was not clear what the product was, what it did or why the child should want it! That scores 0/10. Before trying to be too clever, packaging designers should be distilling down the key selling points to communicate clearly what they are – either in text or with images. Children are very basic creatures compared with adults – subtlety is not a formula for success typically with toy & game packaging aimed at children.

 

  1. Failing to protect the product inside sufficiently

Packaging exists in the first place to protect the product inside from damage and wear and tear in transit/while on display in retail. Therefore, above all packaging should protect the product inside. There are plenty of examples of packaging which has failed to protect the product, just go into any retail store and you will find examples of someone getting this wrong. Sometimes it is due to cost stripping, but the bigger picture view makes it clear that there is no point saving a couple of cents if the product is not then saleable.

 

  1. Failing to use all the space available

The prevailing merchandising of products varies from country to country. For instance, I was greatly surprised the first time I visited a department store in Germany because due to the number of board games on sale, the products were not merchandised showing the major space & communication point of the front of the box. Instead, just the end or the side of the box was on display, and therefore those games which communicated more on the end and sides of the box sold better!

 

  1. Failing to stand out on shelf

One of the greatest challenges in a market full of competitive products is achieving standout. When you walk an aisle in a toy specialist retail store you are met with a visual explosion of colour. It takes skill and design nous to create packaging which stands out in such a ‘loud’ visual setting.

 

Do you need help to understand the toy & game business? We help people from all around the world to understand and successfully enter the toy business. For more information on how we do this, check out our services here: www.KidsBrandInsight.com/services

 

Have you listened to our Playing At Business podcast? We talk about selling toys & games, interview successful people from across the toy business & we look at key trends in the toy & game business: https://playingatbusiness.libsyn.com/

 

H Is For Hasbro & Hot Wheels – A To Z Of The Toy Industry

H Is For Hasbro & Hot Wheels – A To Z Of The Toy Industry

HASBRO is one of the giants of the toy business and has been for a long time. Not that many people though know that the first iteration of the company started life way back in 1923, when three brothers – Henry, Herman and Hillel – started the company then known as Hassenfeld Brothers. The company began by selling textile pieces, before developing the business into pencil cases and school supplies, and then setting up their own pencil manufacturing facility. The first toy products created were modelling clay and doctor/nurses’ outfits, and the company had effectively become a toy company by the 1940s.

Fast forward to today and Hasbro has a massive presence and impact across the toy business. The array of iconic brands they own or control is vast, including: Play-Doh, Monopoly, Transformers, My Little Pony, Nerf, Kenner, Tonka, Milton Bradley, Parker Brothers, Magic: The Gathering, Furby, Mr. Potato Head and we could go on (and on!).

Today Hasbro is much more than just a toy company – the Rhode Island headquartered business which started out selling textile odds and ends is now a global entertainment content powerhouse, with ongoing interests in movies, TV and other forms of video content.

 

HOT WHEELS is the major market leader in vehicle toys. Over 6 billion Hot Wheels die cast vehicles have been sold since Mattel first launched the brand back in 1968, with more than 800 models and over 11,000 variations of cars produced. Mattel co-founder Elliott Handler instigated Mattel’s move into this space after seeing his son playing with Matchbox cars. Despite the lack of enthusiasm of his wife and fellow co-founder of Mattel, Ruth Handler (most famous for her origination of Barbie), Elliott developed Hot Wheels in conjunction with Jack Ryan and the first Hot Wheels product line hit shelves in 1968. Hot Wheels enjoyed staggering success from launch. Today Hot Wheels is a massive toy brand, with brand extensions a plenty, from track sets to garages for cars, and much more. Hot Wheels is one of the most iconic and commercially successful toy brands of all time.

 

Do you need help to understand the toy & game business? We help people from all around the world to understand and successfully enter the toy business. For more information on how we do this, check out our services here: www.KidsBrandInsight.com/services

 

Have you listened to our Playing At Business podcast? We talk about selling toys & games, interview successful people from across the toy business & we look at key trends in the toy & game business: https://playingatbusiness.libsyn.com/

 

China’s Societal Shift: Increasing The Birth Rate & Impact On The Toy Business

China’s Societal Shift: How To Increase The Birth Rate & What This Means For The Toy Business

In China’s recently released census, it became obvious that China has a decreasing birth rate, and therefore a structural demographic challenge is looming. Needless to say, China’s government is working to change this situation and to stimulate birth rates.

In the last week we have seen a number of media articles looking at this issue. The Wall Street Journal, for instance, highlighted an initiative to reduce education costs. Many interviews have been published with Chinese people stating that it is too expensive to have children, so over time the society has become used to having just one child and putting everything they can into that child’s education and development. This has in turn led to a situation where private and supplemental education has become a major cost for Chinese parents. As such, we anticipate many more initiatives across the board to reduce the cost of raising children across China. Here’s the link to the Wall Street Journal article:

China Takes Aim at Educational Costs as It Seeks to Reverse Birthrate Decline – WSJ

We also came across another article talking about ‘Chicken Parenting’ in China, which highlights how intense and pushy some parents have become in China. Included in this article is a sample daily schedule for a child which basically is all about education and very little about fun and play. In many ways this is concerning because of course we know that playing is an important part of the development of children. More specifically though this suggests that the Chinese toy market would offer a lot of potential for toy & game companies offering educational products. Here’s the article referenced:

Chicken parenting is China’s helicopter parenting on steroids – SupChina

The outlook for the toy business in China looks positive overall. Despite decreasing birth rates, it is clear that action is ongoing to incentivise more births and to reduce barriers or discouraging factors to families having more children. We can’t be sure when all these measures will take effect, but it is clear that significant action is under way to reverse the trend. Moreover though, China’s parents are increasingly investing very heavily in their children’s development, and as the relatively recent advent of consumer society continues to mature, it looks likely that toys with educational and developmental benefits have increasing opportunity in China, especially as disposable income continues to develop alongside further economic growth.

Do you need help to understand the toy & game business? We help people from all around the world to understand and successfully enter the toy business. For more information on how we do this, check out our services here: www.KidsBrandInsight.com/services

 

Have you listened to our Playing At Business podcast? We talk about selling toys & games, interview successful people from across the toy business & we look at key trends in the toy & game business: https://playingatbusiness.libsyn.com/

G Is For G.I. Joe, Giochi Preziosi & Gender

G Is For G.I. Joe, Giochi Preziosi & Gender

G.I Joe is the iconic toy which created the action figure category. And G.I. Joe has been a major presence in the toy business ever since it launched in 1964. Originally, toy executives were not convinced that boys (in the 1960s) would want to play with ‘Dolls’, and this perception led to the invention of the phrase ‘action figure’. An African American figure was introduced the following year, and over the years there have been many different iterations of the G.I. Joe brand. Movies based on the franchise released in 2009 and 2013 performed ok at the box office. Snake Eyes, a G.I. Joe spin-off is due to launch within 3 weeks of the publishing of this article. Generations of children (primarily boys, see GENDER section below!) have grown up playing with G.I. Joe, and the brand looks set to enjoy success in the future.

Giochi Preziosi – founded in 1978 in Italy by Enrico Preziosi, Giochi Preziosi is a powerhouse of the toy industry, especially in Southern Europe. The company owns brands including Gormiti (monster like figures) and Cicciobello dolls. Following on from the acquisition of UK toy company Flair Leisure back in 2008, recent acquisitions of Spanish toy company Famosa and Trudi (a Plush toy company) have increased the presence and power of the company. All those doing toy business in Europe will know that Giochi Preziosi is a company with substantial and growing presence.

Gender as a topic in relation to toys is a very contentious area these days. To try to explain this as succinctly as possible: rightly or wrongly over time toys have been used by parents to help children explain traditional gender roles. Historically speaking, these were perceived to be as follows: boys/men – aggressive, physical play to reflect aggressive, physical persona. Girls/women – a softer, more nurturing outlook. We aren’t going to get into why and how those traditional perspectives of gender roles are right or wrong, but what we can be sure of is that media and social perceptions of prescribed gender roles have changed massively over the last few decades. Toy stores once labelled aisles in store as ‘Boys’ or ‘Girls’, and some toy companies still report their business on these gender specific grounds. Today though the best approach for toy companies is to create toys which they feel the market wants, but without telling people that a particular toy is for one gender or another. That isn’t always easy, but therein lies the challenge for modern day toy people – we are trying to meet the needs of traditionalists and those who are more progressive and finding that balance is really hard. In more than a decade of writing articles on the toy business, this topic of gender and toys is the only one which has consistently delivered angry backlash, so for that reason we’re going to leave this one here for now!

 

Do you need help to understand the toy & game business? We help people from all around the world to understand and successfully enter the toy business. For more information on how we do this, check out our services here: www.KidsBrandInsight.com/services

 

Have you listened to our Playing At Business podcast? We talk about selling toys & games, interview successful people from across the toy business & we look at key trends in the toy & game business: https://playingatbusiness.libsyn.com/

New Entertainment Content Releases Set To Bolster Toy Sales

New Entertainment Content Releases Set To Bolster Toy Sales:

Next Transformers Movie On The Way & Loki Wows Critics

This week news broke about the next Transformers movie – Rise of The Beasts, a movie set in the 1990s and set at least partly in Brooklyn. The movie is currently slated for a June 24, 2022 release date. And while the Transformers movie series seemed to fade away somewhat towards the end of the last phase of releases, with 3 movies grossing more than $300m USD at the box office, this new movie is set to herald a good 2022 for Hasbro.

Hasbro as co-brand owner presumably have ‘1st dibs’ on toy rights and based on previous instalments of the Transformers franchise will be likely to roll out a broad product line across toy categories. They will also benefit significantly from their consumer products licensing program.

What Hasbro really need though above all is a commercially successful movie. They will benefit in the short term anyway even if the movie doesn’t do that well, but they could really do with breathing fresh air into the franchise so that they can roll onto a few more movies across the next 5 years.

Another entertainment content release has been making news recently. Disney+ successfully launched Loki on their platform this month to critical acclaim. But perhaps more importantly from a commercial perspective, Disney CEO Bob Chapek announced that the first episode of Loki was “the most watched series premiere” for the streaming service. While we couldn’t find an extensive toy line based on this new TV series out on the market, we did find some new Funko figures coming to market in August. This leads us to an interesting conclusion – whereas major movies tend to need simultaneous product launch alongside the movie event, it appears that Disney+ is rewriting the rules of licensed toys. Following the content first, merchandise second approach of The Mandalorian which saw massive success for Baby Yoda toys despite delayed availability, it seems that there is going to be an ongoing raft of post release toy launches in conjunction with Disney+.

And of course, alongside these two particular franchises, the rest of the entertainment world is hardly standing still. There is much to be excited about looking forward for the toy business.

 

Do you need help to grow sales for your toy company? We help people from all around the world to sell more toys, both in their home markets and into export markets. For more information on how we do this, check out our services here: www.KidsBrandInsight.com/services

Have you listened to our Playing At Business podcast? We talk about selling toys & games, interview successful people from across the toy business & we look at key trends in the toy & game business: https://playingatbusiness.libsyn.com/

 

F Is For Fun, Frisbee & Factories

F Is For Fun, Frisbee & Factories

FUN

There are many complicated reasons why there is a toy business which is worth only a little under $100 billion globally. But the start point for explaining the size of the toy industry is that children (and adults) love to have FUN! Children are more hedonistic than adults with less concern for implications and responsibilities, therefore toy products which offer them a lot of fun will be very appealing! There are many developmental benefits of playing with toys, and these are quite often used to persuade parents to buy toys they don’t really want to buy for their kids. Developing fine motor skills, dexterity, visual observation, co-ordination, communication skills – all of these are positively enhanced by playing with toys, but it is usually a mistake to forget that toys are all about FUN!

 

FRISBEE

This iconic outdoor toy has a fundamental appeal based on something people love to do – throw and catch objects. With Frisbee though, the aerodynamic design/shape allows even children to throw the ‘disc’ further than they would be able to throw some objects, and even more compelling is the ability to develop skills to throw the Frisbee with fade, curl or even to make the Frisbee return to the thrower. Many a Frisbee experience involves a skilled player teasing the catcher with a fade away throw which appears to be catchable, but in the end just sneaks away due to the skill of the thrower. According to Wikipedia, there was a flying disc product on the market in 1937, but the brand name Frisbee first surfaced in 1957 associated with a product sold by Wham-O, who to this day still sell Frisbee. Total Frisbee sales to date are reported to be in excess of 100 million units, which is phenomenal. Generation after generation have enjoyed playing with Frisbee, and despite all the technological developments society has seen since 1957, this simple but hugely compelling toy is just as much fun as ever!

 

FACTORIES

Not the most exciting end of the toy business, but nevertheless, without factories we would have no toys to sell. There is a saying that ‘Innovation dies on the factory floor’, which is quite a negative perspective, but the reality is that a good idea is no good if it cannot be produced. The toy manufacturing landscape is a few years into a shift from China being the dominant toy manufacturing hub to more of a multi-hub situation with India, Vietnam & other Asian countries picking up toy production, alongside some ‘Near shoring’. Many in the toy business presume that China has always been the place for toy production, but if you speak to the old timers in the business, they will tell you of a time before China’s rise, when they sourced from Taiwan, Hong Kong, Japan & other hubs. Regardless of where the toy factory is based though, a good factory protects the factory workers, complies with all regulations for countries they are supplying and of course manufactures toys at competitive costs in what is a very price driven industry.

 

(N.B. F would also be for Furby, but we already covered that in the previous article in this series, see that article here: https://www.toyindustryjournal.com/e-is-for-etch-a-sketch-elmo-electronics-a-z-of-the-toy-business/

 

Do you need help to understand the toy & game business? We help people from all around the world to understand and successfully enter the toy business. For more information on how we do this, check out our services here: www.KidsBrandInsight.com/services

 

Have you listened to our Playing At Business podcast? We talk about selling toys & games, interview successful people from across the toy business & we look at key trends in the toy & game business: https://playingatbusiness.libsyn.com/