Yesterday, Richard published an article detailing Jerry
Storch’s divisive presentation at PlayCon 2013. Storch was both controversial
and committal, unabashedly preaching his views on the larger problems facing
the toy industry today, particularly that of channel management. Storch’s
temporary CEO replacement was announced on Monday, Antonio Urcelay (current
head of European Operations). We all know it’s easier to speak your mind when
you have nothing to lose. But it makes me wonder: if more long-time leaders in
the toy industry were put in that unenviable position, what keen and unabashed
insights would we garner?
It might be play politics suicide to start printing “Storch was
right” T-shirts, but Storch’s points are founded on basic principles of channel
distribution. The bigger issue is the conscious intra-industry self-censorship
we accept as law. How is directly stating that the toy industry has seemingly
abandoned channel management best practices controversial? These changes have
made sticky new brands like Monster High a rarity. We’ve reduced product to
month-long shelf life and weakened brands by a half-life. If products cost more
to produce and market each year, how can we justify fruit fly product lifetimes
and diminishing returns?
Drawing a cross-industry analogy, film industry box office
analysts never expected a modern film to out gross James Cameron’s 1997
Titanic. Between 1997 and 2008 the film industry “eventized” film release
opening weekends, resulting in frontloading. Titanic remained the #1 film in
North America for 15 weeks (still a record) on its way to grossing over $2.1
billion worldwide. The film’s single highest grossing day fell six weeks after
it opened in theaters. In
contrast, Warner Bros.’s The Dark Knight launched in 2008, grossing over $1
billion. The Dark Knight’s highest grossing weekend was its first weekend,
tallying almost $200 million and only lasted four weeks in the #1 spot.
Concentrating on opening weekend gross rather than lifetime worth has left
significant money on the table. James Cameron’s 2009 film Avatar proved an
exception, but even inflation hasn’t helped film studios compete with their
forerunners and younger selves. Avatar bucked trend and remained in theaters far longer than most modern films. Between 1997-2012 only one film (Avatar) out
grossed Titanic; the previous 15-year period featured three all-time top
grossing successors (Star Wars, E.T., and Jurassic Park).
Frontloading may help toy manufacturers and retailers capture
quick sales, but only at the cost of potentially rich lifetime sales value.
What Storch discussed is a key component of our industry’s future best-case
scenario: ongoing iterative development. Storch recommended launching products
exclusively at specialty retailers, followed by mass market in year two, and
discounters and severe discounters only afterward. His approach allows for
periodic capturing of new consumer insights and production efficiencies
throughout product lifecycle. Software developers have produced iteratively for
decades but the toy industry continues to take a “wait and see” approach. Today,
“waiting and seeing” only lasts weeks or months before the big discounters
decide a product isn’t worth its shelf space.
Storch’s perspective reveals an important distinction between
specialty and discounters like Wal-Mart and Target – toys are not a loss leader
for toy stores! Low, low price helps Wal-Mart (at least in the short term) but
doesn’t help anyone else. Toys R Us, or any retailer, should openly and
emphatically embraced Storch’s plan. But, sadly, too few of our leaders will
choose to buck trend in favor of logic and best practice. Please, prove me
In his roles as Digital Strategy Director of Consumer & Entertainment Brands at Manifest Digital, Co-Founder at toy invention studio Otherdoor Entertainment, and ChiTAG committee member, Brian Torney is an innovator in the play industries, kids entertainment, and product/brand initiatives. Refusing to grow up, Brian has been contributing to the play industries since the age of 15, when he worked at a Chicagoland Toys R Us store. Brian spearheads ground-breaking creative and interactive projects for industry-leading entertainment and toy companies including Cartoon Network, Fox, Nickelodeon, Step2, The Marketing Store, McDonald’s, THQ and Hasbro. He specializes in cross-platform brand storytelling. Brian also practices ancient Jedi techniques of mind control… These are not the droids you’re looking for.