A Thanksgiving & Black Friday Like No Other

Due to the Covid-19 pandemic we’re heading towards the end of what is easily the worst year humankind has faced this millennium and arguably since the end of World War 2. Vaccines are on the horizon and offer a sense of light at the end of the tunnel, although we are probably somewhere between 3 to 6 months away from the end of this pandemic which has ravaged the major economies of the world.

This week as America seems to finally have an agreed President elect we head into a Thanksgiving and Black Friday like no other. Firstly, most people will have plenty to be thankful for, despite the difficult circumstances – the majority of humankind can be grateful family, friends, health and more. The pandemic has shown so many people how much of a gift our normal life is in the developed economies of the world. From the perspective of the toy business we should also be grateful that the demand for toys has been strong throughout this crazy year. So many industries have been decimated by lockdowns, by reduced footfall and by mandatory business closures.

While there is a backdrop of economic hardship for many people due to the negative financial impact of the pandemic, there is the likelihood that parents will go out of their way to make this a good festive season for their children. This prevailing sentiment is likely to ensure at least a relatively good trading season for the toy business. The desire to have a golden family moment in a year full of bad experiences should bring us a Black Friday as big as ever.

There can be no doubt of the massive challenges out there for so many people and for so many businesses right now, but here’s to the longevity of the toy business and to a moment to reflect on a year like no other – because if our industry can thrive in such a difficult year we can surely expect to thrive forever.

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Disney+ Passes 73m Subscribers: Implications For The Toy Business

Disney announced in the past week that their Disney+ subscription-based viewing offering has passed 73million subscribers worldwide. This is a meteoric success for a recently launched product. Netflix by comparison took years to hit a similar level, whereas Disney+ has got there in just one year.

Aside from offering subscribers access to the vast vault of Disney content, the platform also offers the Marvel movie series AND the full collection of Star Wars movies and TV shows. Based on their unrivalled content catalogue, it was always a matter of when not if Disney would launch their own content platform.

The successful launch of Disney+ has to have been assisted by the Covid-19 pandemic and resultant lockdowns. People stuck at home have clearly seen Disney+ as both a compelling viewing opportunity and a bargain at the relatively low monthly subscription.

While Disney’s corporate results will not look so good for the period of the pandemic due to the loss of revenue from theme parks and due to the movie theatre network either being closed or lacking footfall to distribute their new blockbuster movies across, Disney+ stands out like a beacon of high performance during this difficult time.

For the toy business, the impact of Disney+ will be long and mostly positive. In the short term, Disney has a platform for launching new content which is only going to grow. When the pandemic first hit there was not an established alternative to movie theaters, but now Disney will always have the option of going direct to Disney+…in fact they will probably need to do that for at least some lower budget new movies to keep the momentum going. Disney+ is going to keep on growing and growing, and as such will offer an even bigger opportunity going forward.

The original content created around the Star Wars franchise in the shape of The Mandalorian has already proven that Disney+ alone can drive merchandise sales with the success of Baby Yoda products so far (despite their being no product in the market until some months after the content went live).

Longer term, when the pandemic clears and life eventually returns to normal, toy companies will have more opportunities due to the presence and scale of Disney+. For the next round of Marvel and Star Wars movies global cinematic releases should be possible which will see a return to the traditional method of toys based on movie licenses, but with an extra platform and launch window to drive merchandise sales. In fact, the boost to the adoption level of Disney+ may eventually give the toy business a significant boost.

We run a Consultancy business for toy companies. Sourcing and factory finding is one of our primary specialisms. We have worked with hundreds of toy & game companies to support their Sourcing efforts. We have saved our clients more than $10m. We are considered by many to be the leading Consultancy for toy manufacturing in India and other toy manufacturing hubs. From plush to plastics, from dolls to play dough we have worked on nearly every toy category. To find out more: www.KidsBrandInsight.com/services

You can also find out about our work with Indian toy factories here: http://www.ToyTeamIndia.com

How To Validate The Appeal Of New Toys Before Launch

Anyone who has been in the toy business for more than a few years will have launched products that seemed like a good idea and which garnered strong retail listings, but which died an agonising death on the shelf. Some products just don’t sell and have to be marked down to ever greater levels to get rid of them so that the next round of new products can have space on shelf.

If we could routinely predict which products would fail as badly as this, we obviously wouldn’t launch them, and every toy company would be a roaring success going from strength to strength. In reality though, for every 10 products that a toy company launches, one or two are likely to fail badly.

One of the key success factors for the toy business then is raising the hit rate of successful new products versus unsuccessful products, as well as being well prepared to deal with the downside when a product doesn’t work.

There are four primary ways in which successful toy companies seek to validate the appeal of new toys to reduce the risk of launch failure:

1. Test the product with the target consumer – this should be blindingly obvious, but if we had to estimate the percentage of new toy products which have not been anywhere near children at any stage before launch, we would estimate at least 95% of toys won’t have been consumer playtested with children. That seems like a ridiculously high number, but aside from the top 5 toy companies, where consumer playtesting is integrated to varying degrees in the product development process, for most toy companies it is an afterthought or only an occasional consideration. Formal consumer research with an established research agency can be expensive (although not in comparison with the tooling, marketing and inventory costs of a new product, and not in comparison with lost sales and margin from failed products!), but anyone can conduct rudimentary testing with the children of office staff or via local schools, after school clubs or via directly recruited research participants. Unless you actually want your products to fail why wouldn’t you test them with children?

2. Benchmark against other products – other products have undoubtedly been launched in a similar space to the one you are trying to inhabit. How did they perform? Did they sell into retail well but then fail to sell out of retail again? To what extent were they a quick sales win versus a carry forward item? What was their marketing message and which marketing media did they focus on? Did the products sell better in some retail channels or markets versus others? There are a whole host of questions that should be asked by way of due diligence before significant expenditure is committed to a new product.

3. Milestone product reviews – because large companies tend to be run under strict financial protocols, they tend to have a formal process for evaluating new products ahead of launch as a matter of financial risk management. Depending on the company these product evaluation milestones allow the company to evaluate and if needed redirect product development to ensure the end product is more likely to succeed. Smaller companies tend to lack the formal disciplines and structure to implement the same type of process, but strong management teams often do periodically review products in development to keep things on track. Companies that routinely throw stuff out there with little evaluation are less likely to achieve launch success.

4. Retail input – if the first time you preview a toy to your customers is when you have already made it, then you take massive risks. It is quite common for new product initiatives to be cut from product lines if they do not preview well. There is though an art to managing retail feedback. Retailers are not always right on products, but if enough of them won’t list your product whether they are correct or not you can’t make much progress.

We run a Consultancy business for toy companies. Sourcing and factory finding is one of our primary specialisms. We have worked with hundreds of toy & game companies to support their Sourcing efforts. We have saved our clients more than $10m. We are considered by many to be the leading Consultancy for toy manufacturing in India and other toy manufacturing hubs. From plush to plastics, from dolls to play dough we have worked on nearly every toy category. To find out more: www.KidsBrandInsight.com/services

You can also find out about our work with Indian toy factories here: http://www.ToyTeamIndia.com

For more articles & insights on the toy and games business, sign up here for our free e-newsletter sent straight to your inbox: https://forms.aweber.com/form/54/1325077854.htm

Why Increased Toy Sales In Q2 & Q3 Won’t Result In Less Toy Sales In Q4

 Toy sales have been up year on year throughout most of 2020, despite the most disruptive global emergency of several generations effectively locking down billions of people around the world and at least temporarily shutting down key retailers.

One of the repeated speculations has been whether increased toy sales in the earlier part of the year will reduce toy sales in the critical Q4 peak selling season. The clear and obvious answer to that question is no way!

The reason why we can be so equivocal about this is that toys and games are effectively throwaway purchases for consumers in this day and age. Even for those families sadly affected by losing their jobs or suffering poor health due to the pandemic, repeated history suggests that children around the Western world will still wake up on Christmas day (and other celebrated days) to find a bumper crop of new toys waiting for them.

We have conducted endless focus groups with children and parents on the subject of toys and games. For some of these studies we had the parents show us how many toys their children had, and in every instance, the answer was measured in the hundreds! Over time as price points for classic toy items have stayed static, they have been devalued by inflation to the point that a $9.99 or even $19.99 purchase is considered throwaway to most of the population of developed countries.

Therefore, the idea that because the child had a few extra toys in April or May they would be left short for Christmas is frankly laughable.

Consumer demand is likely to be stronger not weaker in this Q4 based on our calculations because history again suggests that even in really tough times, parents don’t skimp on treating their kids in the festive season. Moreover, it is possible that this need to give children a great Christmas or Thanksgiving or Three Kings Day will be amplified in the toughest year humankind has faced on a global basis since the end of World War 2.

There may be challenges finding shops open or online retailers with courier capacity on the other hand, but any lost sales this Q4 are very unlikely to result from a dip in consumer demand.

We run a Consultancy business for toy companies. We work with major toy companies through to start ups and one person bands. For more information on how we help toy companies grow their distribution around the world: www.KidsBrandInsight.com/services

For more articles & insights on the toy and games business, sign up here for our free e-newsletter sent straight to your inbox: https://forms.aweber.com/form/54/1325077854.htm

Has The Pandemic Been Good For The Toy Business?

In writing this provocatively titled article, let’s first make one thing clear – things are very tough for some toy businesses right now, not everybody is winning. But overall, there is a viable argument to be made suggesting that the global toy business has benefited overall from the pandemic.

There are two primary ways in which the toy business has benefited from the pandemic (despite the stress, uncertainty and threat to health and wellness):

Firstly, in purely financial terms, in most major toy markets reports made by respected sources in the public domain suggest YTD sales growth. This is both seemingly miraculous but yet in some ways logical. The toy business growing during 2020 is miraculous because so many retail outlets were locked down at some point and because of the biggest disruption to human society and our way of life since World War 2. Some companies haven’t seen sales growth and in some categories things have been really tough. But overall, parents have bought more toys across the world because they want to gainfully occupy their children so they don’t feel so scared or depressed about their changed situation but also because lockdown means more home time which means more screen time, and toys are generally seen by parents as a potential antidote to screen time.

The second way though in which the toy business has benefited is in a shift in balance between sales of licensed and non-licensed toys. Historically we would occasionally see a year which was really light on blockbuster triple A movie releases, which would in turn see the toy market dip or at least fail to grow. In 2020 though, we’re seeing a lack of cinematic releases due to the pandemic lockdown closing movie theatres as well as reducing footfall, but yet we have still seen sales growth.

The great news for the toy business overall is that typically when movies aren’t driving toy sales the industry reverts to pushing evergreen brands and new products. The focus on selling more own brands generally leads to higher profits per unit sold, and if overall sales are still up that means someone somewhere in the toy industry is making more profit. The need for new product ranges without licenses should lead to more new toy product lines eventually turning into evergreen brands.

Above all though the toy business is enjoying a less damaging impact from the pandemic than many other industries, and for that we should be thankful. We can also be grateful in time for a rebalancing of the product mix towards our own non-licensed toys which should be to the long-term benefit of the industry.

We run a Consultancy business for toy companies. We work with major toy companies through to start ups and one person bands. For more information on how we help toy companies grow their distribution around the world: www.KidsBrandInsight.com/services

For more articles & insights on the toy and games business, sign up here for our free e-newsletter sent straight to your inbox: https://forms.aweber.com/form/54/1325077854.htm

How Many Of This Year’s Big Toy Launches Will Make It To Year 2?

 The toy business is a very wasteful business. We have this huge churn of products each year and an annual massive product development effort which sees ongoing yearly investments in tooling, marketing materials, marketing media and manufacturing costs all spent before the product launches.

The holy grail of the toy business is to acquire or build perennial (i.e. selling every year on an ongoing basis) products and brands. These well-known products are easier to get listed by retailers, they are more likely to be bought by consumers and they are far more profitable as they need less marketing investment and far less development investment versus new products.

The challenge is that these products are not easy to come by. There are only so many established brands out there like Rubik’s Cube, Monopoly, Barbie, & Lego. Moreover, most toy companies who try to build their own brands fail to build meaningful brands with genuine consumer recognition. Those who find some degree of success in terms of evergreen products tend to have strong product formulas to keep on driving sales every year versus mass consumer brand awareness, but at least they have some element of recurring busines each year which can only be a good thing. The fact that it is hard to build massive brands or even just established perennial products shouldn’t stop us from trying.

After the investment of $billions in 2020’s toy product line, the global toy business will have to replace at least 60-70% of the product line again for 2021, which is both wasteful and imprudent if there is an opportunity to invest in new products with a better chance of hitting year 2 and beyond.

If we take a mid to long term view, over 5 to 10 years a reasonably sized toy company should be able to launch at least 1 or 2 potential perennial brands each year, and in doing so, over the course of a few years is fairly likely to find something which sticks and comes back again year after year. Then again this takes effort and commitment to creating solid foundations under your business despite the fact it’s a gruelling process.

The choice is yours – chase the quick easy wins each year and stick with the standard hamster wheel approach to the toy business or work really hard to create something permanent and recurring.

We run a Consultancy business for toy companies. We work with major toy companies through to start ups and one person bands. For more information on how we help toy companies grow their distribution around the world: www.KidsBrandInsight.com/services

For more articles & insights on the toy and games business, sign up here for our free e-newsletter sent straight to your inbox: https://forms.aweber.com/form/54/1325077854.htm

D2C: The Growing Importance of Selling Toys & Games Direct To Consumer

It has become ever easier for toy companies and even toy inventors to connect directly to their end consumer. This trend is both highly disruptive and arguably in the best interests of a vibrant toy business.

The closer product originators can get to commercially validating their products the better the variety of products on offer will be. In the old way of working, toy companies would screen out a lot of ‘risky’ concepts before developing a fraction of the concepts they looked at to begin with. Then risk averse retailers buying large amounts of stock at significant financial risk would filter out even more of the products which were deemed too risky or a bit ‘out there’. As a result, the whole toy business operated with more narrow parameters than they do today.

The difference today is that we can so much more easily develop a product and test the waters of consumer demand a long time before we need to consider talking to those larger organisations who can help us drive large sales volumes but who are structurally and inherently unlikely to take big risks.

Clearly crowd funding is one much vaunted method of validating and funding a new toy or game idea. If you don’t get it funded you drop it, but via platforms such as Kickstarter and Indiegogo the key decision makers are consumers of products, not all those distribution gateways which used to sit between an original concept and the consumer.

But even for toy businesses themselves, it has never been more important to have a direct to consumer offering alongside a community of fans of your company, products and brands. Needless to say, potentially cutting out your major retailer customers and selling directly to their customers is combustible (!) and needs to be handled strategically and with tact. The point though is that there should be an opportunity for win-win on that front. By interacting directly with the end consumer you can connect your company more closely to consumer demand, and in the end without consumer demand neither you nor your retail partners have a business.

Following on from our previous article looking at the opportunities and challenges offered by Amazon, we should also consider the question of what Amazon actually is (read that article here in case you missed it AMAZON – THE CHALLENGING POWERHOUSE OF TOY RETAILING …is it a retailer, or is it more of a search platform for consumers to find the products they want? Amazon’s massive product range and (comparatively) easy to access platform allows even the smallest of businesses to step up and start selling to consumers.

The reality of the toy business today is that we have never been closer to understanding consumer demand, which is a good thing. We now have platforms and media which allow us to test new products and perhaps more importantly let the consumer get closer to selecting our product lines and new directions for us. The challenge with selling direct to consumer is that it becomes even more of a marketing challenge. Amazon can be a powerful selling tool, but you need to understand and execute good marketing to avoid your product being lost. Successful crowdfunding requires a heavy marketing program to gain as much support as possible for the moment when you go live.

So D2C offers a significant opportunity and advantages for the toy and games business, but it requires a strong marketing driven approach.

We run a Consultancy business for toy companies. We work with major toy companies through to start ups and one person bands. For more information on how we help toy companies grow their distribution around the world: https://www.kidsbrandinsight.com/blog/toy-co-growth-booster-program/

For more articles & insights on the toy and games business, sign up here for our free e-newsletter sent straight to your inbox: https://forms.aweber.com/form/54/1325077854.htm

5 Key Elements of A Successful Toy TV Commercial

Toy marketing campaigns are multi-faceted and multimedia, but at the core of most campaigns for hit toy products listed in national retail chains you will still find the TVC as the central marketing tactic. The reality is that while TV is not as effective as it once was, it is still effective for toy companies to pour $millions into buying TV media spots.

There are a number of reasons why TVCs were so powerful historically, and why they remain a much-used marketing tactic. Firstly, kids’ media spots on TV are substantially cheaper than adult targeted media spots, which gives our industry an advantage over other consumer product industries. Secondly targeting is easy because there are typically multiple specialist kids’ TV channels in most countries as well as timeslots for children’s programming on terrestrial TV. Thirdly, and this is the least palatable of the reasons for the effectiveness of TV advertising to children – children are very suggestable and don’t filter out advertising to quite the same extent as children. Finally, while TV audiences may not be quite what they once were, they can still be significant and tend to offer fairly good value in terms of cost versus reach overall.

In terms of the TV advert itself, there are typically 5 key elements:

1. A Great TV Advertisable Product – a really strong product feature or features is one of the fundamental features of successful toy TVCs. Something which can be made to look really ‘WOW’ to a child of the target age in a few seconds of footage is perfect. If your operating model is to TV advertise your major product launches, then you should be only selecting and developing those products which are well suited to TV advertising.
2. Tonality & style fitting the product – if you look at a typical TV commercial for an action-oriented product you will observe a dynamic tone of voice and camera work. The whole impression the advert gives will be of speed, dynamism and excitement, which is exactly the type of feeling this type of toy is designed to give to children who are interested in this type of product (the target market for this type of product is normally boys, whether that is socially acceptable or not!). On the flip side, if you look at a Plush toy which is all about being soft and cuddly, then the entire feel of the TVC will be softer and will make you feel ‘fluffy’.
3. Heavy focus on the product – ignore those advertising moguls looking to win awards for great story telling and avant garde production. For decades toys have been sold off the back of a simple formula: set the scene, show the WOW features of the product and communicate a few bullet points on top of additional ‘WOW’ features. Above all you need a strong product shot at the end of the advert clearly showing the product packaging and not just the toy itself so that people watching the advert can clearly recognise the product if they see it in your TVC first and then later see it on shelf.
4. Where to buy/call to action – the key commercial call to action should include where the products can be bought, but manage the list of retailers with care, those who are not included may not thank you!
5. Website & social media destinations for more information – it takes very little production effort and will not detract even a little from the core message of the advert to add a Brand URL or a social media identity. You can add a URL along the bottom of the advert throughout or put it all in the end scene. Why wouldn’t you draw your consumer further into your brand and your brand communication levels? You’re paying for hundreds of thousands of eyeballs to look at your TVC, why not maximise the impact? If you don’t drive a sale you may recruit a kid into your brand which can be more valuable over time.

We run a Consultancy business for toy companies. We work with major toy companies through to start ups and one person bands. For more information on how we help toy companies grow their distribution around the world: https://www.kidsbrandinsight.com/blog/toy-co-growth-booster-program/

For more articles & insights on the toy and games business, sign up here for our free e-newsletter sent straight to your inbox: https://forms.aweber.com/form/54/1325077854.htm