Facebook To Hire 10,000 People To Build The Metaverse: What Is It & Implications For The Toy Biz?

Facebook To Hire 10,000 People To Build The Metaverse: What Is It & Implications For The Toy Biz?

Facebook have just announced their plans to hire 10,000 people in the EU in order to develop the company’s offering in the Metaverse space. It isn’t just Facebook though, many other companies are working on the Metaverse, including other giants like Microsoft.

So, what is the Metaverse? Well as per usual, this isn’t entirely defined in an agreed way, but loosely speaking it can be described as a digital reality whereby people can ‘meet’ and interact with each other or with artificial elements combining social media, AR/VR and online gaming. (Wow that’s quite a mouthful).

In laymen’s terms think the Star Trek holodeck…but with more interaction with the outside world. Sounds kind of mind blowing doesn’t it?

PRACTICAL APPLICATIONS OF THE METAVERSE

Many of the tech companies looking at the Metaverse are looking at social and work interactivity functionality. If we can already do Zoom or Teams meetings, imagine working in a 3d reality where concepts and physical renders can be shown, I guess this is where the Metaverse meets Iron Man – those scenes where Robert Downey Jr uses his hands on a virtual screen to move complicated diagrams and specifications around.

The one massive application of the Metaverse of course which may concern those involved in the business of Play is Gaming. Many of the companies looking at this space are working on delivering all-immersive gaming experiences. I remember trying out a VR Gaming headset in the mid-1990s, and frankly while it was very clunky it was also incredibly compelling. It also gave me motion sickness! It has been something of a mystery as to why VR/AR haven’t taken off more quickly and become more integrated into standard gaming experiences. The Metaverse promises to revolutionise gaming as those early VR headsets suggested was possible.

For those of us in the toy business, successful gaming normally takes away revenue and play time from our target market, so this is a big potential impingement on the toy business. Having said that though, the deeper the experience, the more affinity is felt to characters in games the more merchandise and toys sells. Physical gaming stores like GAME in the UK now have extensive amounts of this type of merchandise as they lose sales to downloads and need to find other physical products to sell which fit their consumer base.

Moreover though, let’s not forget that the bigger toy companies have these days morphed into entertainment companies, and should be well set to benefit from the opportunities presented by the Metaverse. Products which can be incorporated into the Metaverse could well become massive hits, think Skylanders but with much deeper interaction – WOW!

There will surely also be Metaverse movie releases to look forward to, with some degree of immersion and perhaps even interactivity possibly. Whereas 3d seems to have been a gimmick which came and went quite quickly in terms of mass popular adoption, the Metaverse is likely to be with us ongoing. Therefore, those of us in the toy business should be keeping an eye on developments going forward.

 

Our Managing Director, Steve Reece, works with a limited number of companies as a non-executive director, independent board director and as a board adviser. If you are interested in finding out more about this, just click here:

https://www.kidsbrandinsight.com/services/board-advisory-service/

 

S Is For Stan (Lee), (FAO) Schwarz, Star Wars, Scrabble, Spin Master & Slinky

S Is For Stan (Lee), (FAO) Schwarz, Star Wars, Scrabble, Spin Master & Slinky

STAN LEE

Has there been a single person who has had as much influence on the toy business as Stan Lee? Aside from Walt Disney & George Lucas perhaps there aren’t many obvious objections to declaring Stan Lee to be the single most influential person in the history of toys. Stan created (or co-created) Spider Man, the Hulk, Iron Man and The Fantastic Four, X-Men, Ant-Man, Black Panther, Dr. Strange and Black Widow. These comic book superheroes have yielded some of the best-selling toys of all time. Hats off to Stan Lee for his monumental impact on the world of family entertainment and toys especially.

 

FAO SCHWARZ

This iconic toy store started out in Baltimore in 1862 before moving to New York City. The company was founded by a German immigrant whose name was Frederick August Otto Schwarz. The company expanded through the 1990s, building up a store portfolio of around 40 stores. The company then hit some hard times and there were multiple changes in ownership (including famous toy retailer Toys R Us). The FAO Schwarz brand is still operating today, with the flagship store now based in the Rockefeller building in Manhattan.

 

STAR WARS

Star Wars was the first movie to create a merchandising and toy licensing phenomena. The depth and breadth of the movie and the broader Star Wars ‘universe’ have supported a massive cross category toy program ever since the first movie came out way back in 1977. The total franchise has thus far grossed more than $10bn USD at the global box office, with more than 300 million Star Wars action figures sold during the first cinematic trilogy wave from 1977 to 1985. Even when there were no movies for years, Star Wars still remained a top toy property throughout.

 

SCRABBLE

Scrabble is one of THE classic board games of all time, with more than 150 million games sold to date and with more than 1 million games selling each year still in North America. The game was originally invented by American architect Alfred Mosher Butts in 1938. The game was originally titled ‘Lexiko’ before Busts changed the name to ‘Criss Cross Words’. Butts struggled to make a commercial success of the game though and sold the rights to entrepreneur James Brunot. Scrabble’s timeless appeal lies in its softly educational topic and format, alongside the competition to win by laying down the highest scoring words.

 

SPIN MASTER

Spin Master is now one of the world’s biggest toy companies with offices around the world and a full portfolio of brands including newer entertainment properties such as Paw Patrol, alongside an ever growing portfolio of classic toys & games – including Rubiks Cube and Meccano. Original started in 1994 by two childhood friends – Ronnen Harary and Anton Rabie, with 3rd co-founder Ben Varadi joining not that long after, the company has seen meteoric growth over time.

 

SLINKY

The Slinky was invented by a Naval Engineer in the USA – Richard T. James – way back in 1943. The Slinky has sold in excess of 300 million units, and even had a supporting role in the Toy Story movie franchise! Generations of children have wowed at Slinky moving down the stairs in a controlled way all on its own. The simplicity of play combined with the cleverness of the technical design make Slinky an iconic, classic and timeless toy!

 

Our Managing Director, Steve Reece, works with a limited number of companies as a non-executive director, independent board director and as a board adviser. If you are interested in finding out more about this, just click here:

https://www.kidsbrandinsight.com/services/board-advisory-service/

 

 

 

 

Why The Current Cost Inflation May Be A Good Thing For The Toy Business In The Long Run

Why The Current Cost Inflation May Be A Good Thing For The Toy Business In The Long Run

The news is currently full of stories about how rampant inflation is, and pandemic ravaged governments seem to have caused this inflation partly by printing unprecedented amounts of money. Alongside this the variance in demand from the usual cycle caused by a world in lockdown have wreaked havoc on global supply chains and further fuelled inflation.

There is plenty of evidence of inflation, but just as one example China’s PPI (producer price index), which tracks factory cost inflation, shows that factory gate prices in Sept 2021 were more than 10% higher versus Sept 2020. Added to this of course would be exorbitant shipping costs which have seen 500%-1000% cost inflation.

So, consumers are having their savings eroded if they hold them in cash, and their purchasing power reduced, which is not normally a good thing for companies in the consumer products space because reduced ‘real’ spending capacity tends to reduce consumption. The difference though in the toy business is that we have had ridiculously low-price points for so long due to vicious price competition in retail leading to huge pressure on toy companies to hold pricing despite all the upward pressures on pricing.

By way of an anecdotal example, a basic action figure or fashion doll in the UK might retail for £9.99, and if you went back 20 or even 30 years, that toy would have been a similar price. In that same time in the UK, if you want to buy a pint of beer, the cost has gone in the same period from c. £1.50 to £2.00 a couple of decades back to £5+ today, which is a massive increase. Yet toy companies have been expected to hold the line, to find cost savings and to reduce not increase costs while all other categories increase pricing year on year.

This year’s trials and tribulations have finally allowed toy companies to increase pricing with retail support. And typically, when prices go up they never come back down unless there is some sort of crisis of demand. Hopefully all the stress and pain our industry has felt this year will be good in the long term because when variable costs like oil and shipping reduce (which they will, eventually!), the price points are unlikely to come down.

 

We run a Consultancy business helping toy & games companies get ahead. For more information, check out www.KidsBrandInsight.com/services

Our Managing Director, Steve Reece, works with a limited number of companies as a non-executive director, independent board director and as a board advised. If you are interested in finding out more about this, check out the link to our service above.

 

R Is For Rubiks Cube, R2D2, Rainbow Loom & Ravensburger – Toy Industry A To Z

R Is For Rubiks Cube, R2D2, Rainbow Loom & Ravensburger – Toy Industry A To Z

RUBIKS CUBE

One of the most iconic toys of all time, Rubiks Cube is reported to have sold more than 400 million cubes over time. Originally invented in the 1970s, the cube was brought to market by Tom Kremer (a true legend of the toy industry) and businessman Tibor Laczi. Generations of families have experienced the frustration of trying to solve the puzzles conundrum, and a much smaller number have enjoyed the sheer pleasure of getting those sides of the colourful cube to match up!

R2D2

While we cover Star Wars elsewhere in this series, we would be remiss not to mention perhaps the most impactful toy robot or ‘Droid’ to ever grace the toy aisles. When Star Wars first come to the fore, the most surprisingly love characters were the non-living characters like R2D2 & C3PO. For more than 40 years toys based on this much-loved droid have been selling well in the toy aisles. The more recent success of characters like BB8 owe it all to the granddaddy of them all, R2D2!

RAINBOW LOOM

Rainbow Loom launched one of the biggest toy trends the world has ever seen. The Loom Band phenomenon was just gigantic, with children across the world buying huge quantities of elastic bands & creating their own bracelets and other items. Rainbow Loom was created and brought to market by Choon Ng – you can find out more about his story on our PLAYING AT BUSINESS podcast episode, when we had the pleasure and honour of interviewing Choon, listen here:

https://playingatbusiness.libsyn.com/how-to-start-a-global-toy-trend-with-choon-ng

RAVENSBURGER

Ravensburger has been in business since 1883, with the company being famous across Europe and beyond for puzzles and board games. Notable products from Ravensburger include the highly innovative Puzzleball brand, Gravitrax and Memory.

 

We run a Consultancy business helping toy & games companies get ahead. For more information, check out www.KidsBrandInsight.com/services

Our Managing Director, Steve Reece, works with a limited number of companies as a non-executive director, independent board director and as a board advised. If you are interested in finding out more about this, check out the link to our service above.

Brian Goldner – A Tribute

Brian Goldner – A Tribute

Sad news this week, with the passing of Hasbro’s CEO & Chairman Brian Goldner.

The outpouring of love, respect and emotion on LinkedIn since the sad news was announced has been overwhelming, with touching tributes and personal anecdotes flooding the platform from the very many people who worked with Brian Goldner.

I did not know Brian personally. My only interaction with him was to sit in one meeting he chaired at Hasbro shortly before I left the company, and after he had effectively been handed the reins to take the company forward (this would have been late 2005 or early 2006 I believe). My memory of him in that meeting was of a charismatic leader with passion, vision, energy and purpose, but also someone who listened and meaningfully interacted with the people around him. I thought at the time that things were going to get a whole lot more interesting with Brian at the helm.

Many toy people today may not know or remember that Hasbro had some turbulent times in the late 1990s and early 2000s, leading to CFO Al Verrecchia becoming CEO for some years to steady the ship and to focus the company on profitability and the large stable of core brands Hasbro owned. When the time was right for Hasbro to take an expansive approach again, Brian Goldner came to the fore. Mr. Goldner’s remarkable leadership was clearly displayed in the transformation of Hasbro from a toy company who had chased licensing to an unhealthy and unprofitable extent to a multi-faceted entertainment company who are in themselves a major licensor as well as so many other things today. Bold moves have been typical of Hasbro under Brian’s leadership – the acquisition of Power Rangers, Entertainment One and others through to the Transformers movie franchise and the steps ever further into the world of content and entertainment have worked out to be brilliant moves, leading the company to success and stability.

Old time ‘Hasbeens’ remember working at Hasbro when the share price hit as low as $8 or $9 before Brian Goldner’s leadership of Hasbro began, versus the current price of ten times that (!). While the share price and financial results only tell one side of the story in terms of corporate leadership, the outpouring of emotion at his passing surely tells the other side.

Rest In Peace Brian Goldner – a giant of a man whose impact on the toy business and on Hasbro will long be remembered and cherished.

 

Why Toy Catalogues Are So Effective For Retailers

Why Toy Catalogues Are So Effective For Retailers

Here in the UK, the nation’s children historically pulled together their Christmas wish lists with the assistance of the bulky Argo catalogue. Argos reportedly printed 20 million of these copies until they stopped the catalogue in 2020 – just to put that in context there are estimated to be around 28 million households in the UK, so they were printing nearly one for every household.

On a recent visit to a Smyths Toys store in the UK I picked up a copy of their catalogue, which was pallet stacked on 2 pallets outside the entrance to the store. The print and production costs of this type of catalogue are obviously significant.

So why would retailers be producing catalogues in this day and age of social media and online media consumption?

Well, the answer to that is the way children choose what toys they want for Christmas. I have conducted several research studies historically looking at how and when children pull together their wish lists – this is obviously critically important for toy companies to understand, because media buying may need to be adapted to make sure communication is maximised at the point in time when children are actually making their choices, which is often surprisingly far in advance of purchase by parents. This varies significantly by market, but in the UK, Christmas lists can be finalised anytime from September onwards, with the October half term holiday (around the 3rd week typically) is normally the kick-off point for peak season sales for toys.

What catalogues allow children to do is to review a significant selection of toys, so they can enjoy the experience of looking at lots of aspirational products, before eventually making a choice and passing that onto their parents. From the parental perspective, this exercise and the catalogue itself are very helpful, because not only can they see whether the toys their child requests are appropriate and meeting with their approval, they can also see the price and how that and everything else compares with the obvious competition. For example, some households may prefer to buy a generic version of something over a higher priced brand, or to change their child’s choice for some other reason of values, taste, socialisation or play value.

So, while the UK may still be getting used to the absence of the Argos catalogue, there is no doubt that catalogues will continue to be effective for retailers both in the UK and around the world.

 

We run a Consultancy business helping toy & games companies get ahead. For more information, check out www.KidsBrandInsight.com/services

We also run a Strategic Sourcing Consultancy advising toy & game companies around the world on their Sourcing strategies, reviewing their vendor base & suggesting improvements. To date our Sourcing services have saved our clients $tens of millions. For more information on how we can help, just go to: www.ToyTeamAsia.com

 

P Is For Play-Doh, Princess, Power Rangers and Pokémon – A To Z Of The Toy Business

P Is For Play-Doh, Princess, Power Rangers and Pokémon – A To Z Of The Toy Business

 

PLAY-DOH

Not many people know that Play-Doh started life in the 1930s being marketed as a wallpaper cleaner. Today millions of children play with Play-Doh products, with a mix of the dough as a stimulator of the touch sense, combined with entertaining plastics addons by which the child can extrude dough and create interesting things. Over time there have been various ‘brand icons’ for the brand, with the Play-Doh Pixie featuring in the early days, followed by Play-Doh Pete a beret wearing chirpy cherub of a character through to more recent times when the Doh-Doh’s have come to the fore. Play-Doh’s timeless play pattern and the fact that the brand is so strong in a marketplace with strong ‘me too’ presence makes Play-Doh one of the most effective brands in the toy business.

 

PRINCESS

Whether Disney or otherwise, Princesses have had a huge impact on the toy business. The topic of gender and toys is very contentious these days, but what is indisputable is that hundreds of millions of girls have played with Princess dolls over time. So many movies, classic books and other media forms have been very successful by being all about Princesses. Over time, the character, temperament and behaviours of Princesses have adapted to the changing times in terms of gender equality. For many little girls, playing with Princesses allows them to develop their identity.

 

POWER RANGERS
Power Rangers has been a top selling brand since the 1990s. According to Wikipedia the brand had generated more than $6billion in toy sales by 2001. The basic premise of Power Rangers is a group of ‘goodies’ constantly battling with characterised monsters and baddies. The Power Rangers are all martial arts experts who can fight with great skill and courage. The TV series output is already up to 27 series, and there has also been several movies released, with more potentially in the offing. While some parents and commentators question the violence featured, multiple generations of children have loved this franchise. Major toy company Hasbro acquired the Power Rangers brand in 2018 for a purchase price in the region of $500m USD.

 

POKEMON

Pokémon has some similarities with Power Rangers – Pokémon also came out of Japan and has largely been driven by TV content over time. Pokémon trading card games have been a massive and consistent seller for more than 20 years. Pokémon Go gave the brand a massive boost and brought the brand to a whole new generation of kids. Pokémon toys have also been very successful over time, with more than 34 billion cards sold over time (!).

 

We run a Consultancy business helping toy & games companies get ahead. For more information, check out www.KidsBrandInsight.com/services

Our Managing Director, Steve Reece, works with a limited number of companies as a non-executive director, independent board director and as a board advised. If you are interested in finding out more about this, check out the link to our service above.

 

 

 

Lego To Be A Major Beneficiary Of Ongoing Shipping Chaos?

Lego To Be Major Beneficiary Of Ongoing Shipping Chaos?

We knew this Q4 was going to be crazy, we knew this earlier in the year when the massive shipping cost increases and container shortages came to the fore. Now we have just begun the key selling period of the year in retail, and things are just crazy out there. We are hearing stories about toy companies having stock sat out in factories and ports without any way to get it transported to market. Air freight traffic into the USA for the first 7 months of this year was more than double of normal levels according to Reuters, but can’t offer the critical mass to provide the solution to the current crisis.

So, what does all this mean in practical terms? Well, it is already starting to mean some gaps on shelves, as consumers heed the warnings to buy early. Resupply is by no means guaranteed, and heading into 2022, many toy companies are going to be receiving shipments on products which have already launched and presumably in many cases already launched. So, we may well see stock coming in and going straight into clearance channels. Normally in business cash is king, and for this reason toy inventories are normally kept very tight to avoid leaving too much cash in stock. Now though the issue is potentially too little stock at the required time and far too much afterwards!

Looking on the bright side though, consumer demand remains very strong, and anyone who does have stock should end up pretty clean heading into 2022, even if some stock has to be marked down on arrival (!).

There could be one major beneficiary of the current chaos – Lego (along with some other companies) because they own their own factories close to market. Lego have their own production facilities in China, Mexico and 3 in Europe, which means that they are not in the same game as all the other major toy companies in shipping the vast majority of their production from Asia via scarce and overpriced container. Which means that when other hot toys start to run short this Christmas, Lego should have less issues on this front. Because of ‘near shore’ manufacturing they are also in a better position to respond to demand levels without the need for lengthy (and currently indeterminate) shipping around the world.

The reality is that toy manufacturing is changing, and China is seeing some toy manufacturing slip away to other Asian countries. What hasn’t really happened yet though is a significant uplift in ‘nearshoring’ of manufacturing. Perhaps this crazy year will push more toy companies to reconsider their Sourcing strategies and to look closer to home?

 

We run a Consultancy business helping toy & games companies get ahead. For more information, check out www.KidsBrandInsight.com/services

We also run a Strategic Sourcing Consultancy advising toy & game companies around the world on their Sourcing strategies, reviewing their vendor base & suggesting improvements. To date our Sourcing services have saved our clients $tens of millions. For mor einformation on how we can help, just go to: www.ToyTeamAsia.com

 

 

 

 

O Is For Outdoor Toys, Ole Kirk Kristiansen, Optimus Prime and Operation – A To Z Of The Toy Business

O Is For Outdoor Toys, Ole Kirk Kristiansen, Optimus Prime and Operation – A To Z Of The Toy Business

OUTDOOR TOYS

This category brings to mind sandy beaches, playing fields and back yards, along with boisterous energetic children playing with outdoor toys. The benefit for toy companies of course in running products in this category is counter seasonal cashflow. While most toy companies tend to have minimal revenues in the first half of the year, companies selling outdoor toys can achieve significant sales to balance out the cashflow challenges of being reliant on back end of year sales. Brands like Nerf, Frisbee and Bunch O Balloons enjoy strong sales at a time of year where most other toy companies are in the red.

 

OLE KIRK KRISTIANSEN was a Danish carpenter who founded Lego way back in 1932. Understandably based on his profession, Lego’s first products were wooden toys. The move to plastic toys came about when the company purchased an injection moulding machine in 1947. Not all was plain sailing though, the Great Depression hit Denmark and hit sales of non-toy products which acted as the spur for Mr. Kristiansen to enter the toy business. Then in 1942 the Nazi’s occupied Germany, and soon after a fire destroyed his factory and stock. From these humble beginnings, Ole Kirk Kristiansen and his successors have grown Lego into the largest toy brand in the world. Therefore, it would be a strong argument to make that no other individual has had a bigger long-term impact on the toy business than Mr. Kristiansen.

 

OPTIMUS PRIME

The Transformers brand has been with us since 1984, and the most prominent character in the Transformers universe is of course Optimus Prime. The leader of the Autobots in their endless struggle against the evil and duplicity of the Decepticons, Optimus Prime is an iconic character and toy. As the Transformers brand evolved into a successful movie franchise, so Optimus Prime stepped to the fore of the movie world – bringing Transformers to a whole new generation.

 

OPERATION

When thinking of classic board games, Operation is normally towards the top of the list. Invented by John Spinello (an industrial design student) back in 1964. The game features fairly basic technology whereby players have to try to remove ‘organs’ from a patient without causing the buzzer to buzz and the nose to glow red. In more recent times licensed co-branded versions of the game have launched with a fair degree of commercial sense. Licensed versions brought to market include Star Wars, Shrek and Spider Man as the central character/patient.

 

We run a Consultancy business helping toy & games companies get ahead. For more information, check out www.KidsBrandInsight.com/services

Our Managing Director, Steve Reece, works with a limited number of companies as a non-executive director, independent board director and as a board advised. If you are interested in finding out more about this, check out the link to our service above.

 

5 KEY FEATURES OF SUCCESSFUL NEW TOY LAUNCHES

5 Key Features Of Successful New Toy Launches

Every year hundreds of thousands of new toys come to the market globally. The majority of these toys achieve an acceptable amount of sales, but comparatively few – probably as little as 5% or 10% achieve real success. Partly this is due to statistics, with so many new toys many will not achieve full distribution, and even fewer will achieve physical prominence in retail.

There are though 5 key features of most successful new toy product launches. None of these are likely to surprise – these are quite basic points, but they are so fundamental that we feel it is worth running through them:

 

  1. Obvious & compelling product features

Children are not that complicated…unlike adults with all their social niceties, angst and complexity. Toys for children should therefore usually offer a very straightforward product concept/proposition which is clear, obvious and above all compelling. A classic example of this would be the Hatchimals Wow product from Spin Master, where the character has a large extending neck which extends to a very surprising extent – the clue is in the name ‘WOW’! Children find this type of WOW very compelling. If your product concept is very complicated and takes a lot of explaining the odds are that you won’t achieve success with it.

 

  1. Packaging which showcases the best of the product

Packaging is the most fundamental marketing tool in selling toys & games. The bottom line is that anyone looking at your product will decide to buy or not based as much on the packaging as the product itself. Complicated packaging which fails to show what the product is about usually does not work. We recently worked on a project running a ‘post-mortem’ on why a major new product launch didn’t work. The reason for launch failure turned out to be the packaging. The product was basically cocooned in an artsy container which said nothing about the product or why a child may want the product (!).

 

  1. Effective marketing to the right target market

Note that this is not necessarily about the biggest budget, because money is easily wasted in toy marketing. The critical success factor is effectiveness, how can you present the product to the most potentially interested consumers for the most efficient cost, with a message and product demonstration which is both compelling and clear?

  1. Retail support

Not every product will achieve full mass market distribution, and sometimes that’s fine based on how niche the product and product category is. But without retail support, success is unlikely. One of the major risks toy companies face is developing and investing in products which don’t get picked up by retail. The bigger the company, the more likely it is that major product launches will be picked up, but every toy company can tell a story about a major retailer refusing to back a big new product launch and effectively killing the product in the process.

 

  1. Effective merchandising

There are so many products on the market that trying to stand out from all the other brightly coloured and eye-catching toys can be very difficult. Aside from the joys of trying to rank online via complex algorithms, actively investing time, effort and marketing funds at the point of sale is a critical area of concern. From ‘Try Me’ features on products which need to be played with to close the sale, through to CDUs, FSDUs, video displays and more, this area typically yields much greater ROI on marketing investment by way of increased sell through than traditional broad blast marketing.

 

We run a Consultancy business helping toy & games companies get ahead. For more information, check out www.KidsBrandInsight.com/services

Our Managing Director, Steve Reece, works with a limited number of companies as a non-executive director, independent board director and as a board advised. If you are interested in finding out more about this, check out the link to our service above.