top of page

Innovation Versus Following The Formula In The Toy Biz...

Innovation Versus Following The Formula In The Toy Biz...

We talk about ‘Innovation’ often in the toy industry. The need to innovate to compete is supposedly paramount - when between 50% and 75% of all toy SKUs are new each and every year, there is indisputably a need for a relentless product development or product sourcing pipeline. Yet we often confuse the terms ‘innovation’, ‘blue sky’ and ‘ground breaking’ as being exactly the same as ‘new’.

The reality is new products are not always that original. I have been unable to find a robust analysis of what percentage of products in market are completely fresh and original versus following an already proven formula, but experienced toy people tend to have seen the ‘same old thing’ work time and time again. And so then the question becomes why would we ever originate something fresh with all the inherent risk involved, when we can follow the ‘me too’ approach?

When we look at the consumer lifecycle in the toy business, this becomes even more of a salient question – because we are dealing with children at a particular time/age in their lives, they come into our product ranges, and then comparatively quickly versus other industries they move on. This leads us to a new generation of toy consumers. This cycle occurs every 3 or so years, meaning that the new generation of kids experiences our brands and product ranges for the first time in their lives. So why would we ever bother to create completely ‘new’, when we can rehash the ‘new’ from a few years back and continue to sell our products?

The most striking counter argument here is that hit product often provides the impetus for growth in the toy industry, and those companies with massive hits on their hands can experience a huge sales uplift, or at least see gaps in their business filled by the all new innovations. So clearly there is a place for the kind of brilliant innovation which brought us new inventions such as Furby or Connect 4. In the case of Furby, we have recently seen a new generation of consumers introduced to the brand anew, with the product itself being hugely enhanced by new technology. This shows that yesterday’s completely new news can become tomorrow’s perennial brand (with updates and tweaks) in an industry where known brands are the pillars of long term stability for toy companies.

There is clearly a downside to chasing the hits though – that being the high level of investment including: R&D/royalty costs, inventory risk, marketing expense, opportunity cost and risk to retail goodwill if products fail. We operate in a classic ‘hit or miss’ industry, and alas the misses will nearly always significantly outnumber the hits over a period of time. So if you are in that business, be prepared for a roller coaster ride, and ensure you have the capital to place multiple bets on new product lines in order to increase the odds in your favour over a number of product launches. Nevertheless, if you choose to play that game, you are only ever as good as your last hit, so be prepared for a bumpy ride!

One fact I have seen proven over and over again in my time in this business is that those companies which ONLY play the ‘hit or miss’ game are the companies who see the wildest swings between success and misfortune or as Frank Sinatra put it “You’re riding high in April, shot down in May.”. The companies that secure a significant proportion of their sales (to at least cover their overhead) on proven product formulae, while placing a few carefully considered bets to chase the hits are normally the companies enjoying most longevity.

So overall, while we often speak of innovation in our industry, we should be clear about the part this plays, and also be clear about what is innovative in reality. Fundamentally we should be clear what the goal of innovation is – otherwise we may be safer (in business terms) replicating a known formula. Perennial themes such as monsters, dinosaurs, zombies, ponies and horses, good versus evil, super heroes and villains – all of these known perennials can be seen as safer bets, as they have been proven time and time again. Of course, execution is still key, and if you can follow part safe formula and part innovation by adding technology or functionality/positioning value, then you can seek the right balance for ongoing success.

We run a Consultancy business helping toy & games companies get ahead. For more information, check out

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:


Recent Posts

See All

Which Toy Trade Shows Should You Attend?

The following is the script for Episode 107 of our PLAYING AT BUSINESS podcast. It's written to make the podcast work as best as it can, so it doesn't read like a typical article, but some of our foll


Post: Blog2_Post
bottom of page