Part 2: Consumer Spending on Toys and Games is Down 30% Since 1998; What Can be Done?

Richard Gottlieb – New York

In my last posting, I wrote about a report from Euromonitor International stating that the consumer purchases of toys and games were down by 30% since 1998.  Based upon that information,Goldman Sachs analyst, Michael Kelter stated that “… traditional toys and games are likely in the early stages of secular decline in developed markets.”  

In my last posting I raised some questions about the accuracy of the numbers and Michael Kelter's conclusion.  In this posting, I want to see what the toy industry needs to do if it turns out that Michael Kelter is correct in his prediction.

Change the game

If the toy industry sees itself as an intact, autonomous business then it is in big trouble. It needs, rather, to accept  the reality that  it is part of something much bigger, the business of play.  The play industry consists of many platforms whether it is playing through a console, in an amusement park, on a game board or via a mobile phone.  If the industry recognizes that it is in the business of play, not toys, it will make the necessary adjustments to compete in a world that has redefined what play is and who gets to play (adults too). 

Hire the best and brightest

The toy industry as an association and as individual companies needs to aggressively attract the best and brightest coming out of our schools.  These are the people who best understand where play is going and who have out of the box ideas. 

Develop the adult market

Roughly 15% to 18% of toys are purchased for adult end use.  The toy industry accomplishes this feat despite that fact that it largely markets toys as if they are only for kids.  A concerted effort to build on what

Barnes & Noble and Marbles the Brain Store have done in attracting adult players could go a long way to making up lost sales with children.

Grow developing markets

China, India and many other countries beckon as under-developed markets for toys, particularly traditional toys.  Entering these emerging markets is more than a good idea; its an essential.  Smart companies will go there and grow their business.

Get educated

The toy industry is under-educated on play and business.  The very fact that there are virtually no educational programs are presented at Toy Fair or the Dallas Fall Toy Preview says a great deal.  The industry must get smarter about raising capital, international markets, newest technology and emerging play platforms.

What do you think about the future of traditional toys and whether we are looking at a period of decline?


3 thoughts

  1. Just had this conversation with a small chain here saying their educational games are down 35% over last year so they won’t be providing space for them. When you change your focus from a store that traditionally only sells TV advertised mass goods and one decides to change tact; you need to promote it! When McD’s decided to offer healthy options on their menu, they told people…You can either buy market awareness or be proactive in the PR arena. Our games sales have increased and in fact our overall bus has increased again about 15%. This year is about the sub $50 xmas though!!!
    Parents are more aware that buying the really cheap stuff is a disposable option; they don’t go the distance…From our experience, parents more than ever are willing and able to pay more for quality educational content….

  2. A big part of this is about strategic partnerships with strong Mobile and Web Social Commerce plays which are now leading the charge on brand building. Opportunities with Etsy, Pinterest and especially abound, as each is providing specific (and largely free or cost effective) ways of connecting to new fans, collectors and moms. If you aren’t working to establish 3rd party social proof for your products you are missing the boat.

  3. It may be down 30%, the reason being there have been no inovative toys and games produced. It is the same old stuff re-packaged or a “chip” has been inserted in an old product to make it new. The assortments being offered are “boring”.
    The 30% is going to phones, computors and new game platforms that are exciting although much more expensive !!

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