The Toy Industry Is Dead; long live the Play Industry

RipThis article, which appeared in February, was by far the most widely read and controversial article we have ever posted.  It led to the creation of the World Congress of Play and a change in my world view and maybe yours.  

The Toy Industry is dead. 

It existed back in the 20th Century when it was the only game in town for those who wanted to play.  In the 21st Century, however, toy companies are just one part of the greater Play Industry which consists of those who create video games; develop apps; manufacture tablets; and create immersive digital worlds.  And just wait; we are going to soon have to include 3D Printing companies as well.  In other words, the Play Industry includes any entity that seeks to provide play or a platform for it to take place.

If you think that what we call our industry is just a matter of semantics, think again.  Let me assure you that if you believe you are in the Toy Industry you are going to get steamrolled by any company that recognizes that the battles are no longer for shelf space in a toy department but for time and mindshare in an 8 year old’s brain. 

The challenge that we all face is that our institutions have not yet caught up with that reality.  Retail stores continue to separate play products into different departments rather than merchandising them in one big family play center.  The Toy Industry Association continues to put on a Toy Fair which is still almost entirely a showcase for traditional toys.  NPD provides industry analysis that puts traditional toys in a separate $16.5 Billion category from the $13.3 Billion Video Game hardware and software sector.  Euromonitor, on the other hand, counts Video Game hardware and software and Traditional Toys and Games together ($42 Billion estimated for 2012).

As a result, the toy industry is currently like one of those 15th Century explorers whose maps included whole parts of the globe that were marked "Unknown."  In short, we don't just need a "bigger boat;" we need a better map.

What can be done?

The industry first must recognize who its true competitors are.  Once done, it must demand the data and analysis it needs to effectively compete in a 21stCentury world of consumer play that is far vaster and

weirder than anyone in the 20th Century ever imagined.

NPD needs to emulate Euromonitor and start tracking the entire Play Industry as one sector.  If they do not, the lack of true competitive information will continue to have a negative impact on toy industry decision making.

The Toy Industry Association needs to provide everyone with a Play Fair that includes all the “players” and not just those who deal in the material world.  If they don’t someone else will.

The Toy Industry is dead. Long live the Play Industry. 

10 thoughts

  1. Russ Crupnick
    Senior Vice President
    Industry Analysis
    Global Toy News has played an important role elevating the concept of “play” to its readers. I’ll admit though, that each time I read or hear a pronouncement about the “play” topic, it causes some inner conflict. Looking at the total customer or child experience, or what gets labeled as “play” makes a lot of sense. My only disagreement, as expressed during my PlayCon presentation this year, is that this is really nothing new. In that talk, I cataloged my own childhood experience to illustrate that the concept of “play” didn’t arrive with apps and smartphones. I experienced it nearly half a century ago when conflicted between playing with my James Bond spy suitcase, reading Hardy Boys, racing Aurora HO cars, or riding my bike.
    GTN also (indirectly) raises the question of whether the research firms need to do more. I’d agree that, as researchers, it’s our responsibility to understand the ecosystem beyond toys. Nearly a decade ago, NPD began looking at cross-entertainment trends, an endeavor that led to ongoing tracking across movies, music, games and other activities in a service known as NPD Entertainment Trends. There’s a lot of evidence that NPD and other research companies “get it”.We used those first cross-entertainment studies to understand how blossoming home video options and home theaterwere impacting movie box office, or if a DVD launch would be hurt by a blockbuster video game release in the same week.Today, at NPD, we regularly look at the cross-effects between traditional toys, video games, devices and apps in order to understand potential cannibalization or positioning opportunities.
    These are interesting studies – my favorites, in fact. Who can resist, as a research analyst or strategist, the intellectual challenge offered by these questions? No wonder the “play” landscape is such a compelling target.
    But, to borrow from Richard’s blog, it’s a commercial black hole. At the recent Dallas Toy Fair, I didn’t hear one manufacturer ask about “play”, or videogames, or music streaming, or Netflix, or Instagram. No, they asked simple fundamental questions like “how do I get this toy into (insert retailer here),” or “Where do we rank among kid’s puzzles,” or “How big is the market for this type of doll/action figure”?
    Commercially, the industry needs to sell-in product, then sell it through. At most retailers, especially the larger specialty, big box or online retailers, the toy, electronics, videogames, music and home video buyers are not the same individuals. The selling discussion isn’t about “ecosystem”, it’s very specifically about growth trends,assortment, shelf position, pricing and deals on very specific toy items. I’m sure the buyers are as intellectually stimulated by “play” as Richard and I, but it’s not how the business is run.
    So here’s the conundrum: Intellectually, it’s hard to disagree that“play” is a powerful concept. Commercially, however, it is not how the toy industry does business I’d suggest that the industry would benefit even more from optimizing the toy buying process,using data to better utilize limited shelf space, managing pricing and promotion to improve margins, and localizing marketing for targeted regional campaigns. Until toy retailers evolve to accommodate the “play” business as a whole, that seems like the bigger win.

  2. The future of action figures in the near term is obviously in the direction of the Skylander game and static figure-statues. These statue-toys are cheap to produce (no articulation) and highly profitable and will certainly finance the incoming flood of freemium games that will use them. Disney creating some kind of free and casual Star Wars MMO game (like Disney Infiniti) that uses these types of statues as a way to upgrade virtual characters has to be part of their plan. Even Mcfarlane pushed back the next wave of Halo action figures to Sept. to add game codes to each figure to use in Halo 4. So the future of action figure will be they will no longer be played with because they will become statues (purchased trophies) displayed on the shelf while all the playing is done on a video screen. Not a huge fan of this trend, but see it becoming rather popular regardless.

  3. Good points Richard, and one of the problems is well noted in the comments afterwards by Sonia and Richa and 360KID- there is a lot of same-old same-old out there, tv and movie licensed crap floods the market,so parents are weary trying to look for the gems that will challenge and stimulate their kids minds. For sure we are all trying to get a piece of the time the 8 to 15 year old has when s/he is not going to school, eating etc. and I might suggest that the “toy industry” which is an elephant at best, never leads, they take the safe route. I presented two new toys at the Canadian Toy Fair that have never been done and one will be a very compelling toy that won’t sell millions (which is fine by me) but will challenge kids to make their own toy from it. Lots of confused retail managers as I explained that we have to challenge our kids to be truly creative, get back to using scissors, markers and glue, and steer clear of branding. In the end they realized the value of the toy, but they initially had difficulty with the fact I respect the intelligence of kids and wanted to take them to a place that spoke to them – absent of slick advertising or movie hero/tv brands.
    The toy industry as we know it is not dead yet, but dying a slow death as industry giants don’t respect the intelligence of the kids they are shilling to, and upstarts like me can target the niche areas that are not lucrative enough for them to pay attention to. We are nibbling at the edges.
    Two things. The internet has levelled the playing field for smaller companies like mine to reach the world. Also, I designed for a large company who wanted to sell some of my simple kits to the mass (Wal Mart) market a few years ago. I had to dumb down the toys for them so it would reach the mass market so much, even I didn’t want to play with the toys…
    If you look at the beer industry, the major beers that taste like water (who will go unnamed) are buying up the smaller micro breweries that make good tasting beer. If I was a big forward thinking toy company I would start looking, because that is where the growth is- innovation. Not sure if you have seen this in the toy industry as in others, but I’d like to hear your opinions! Good conversation Richard, I have missed a lot of your points, but this is already too long… and just the word “industry” beside toys makes me uncomfortable (I’m a micro-guy by choice).

  4. I like the term “Play Industry”. It seems a great umbrella. For example, Bandai has just re-released the classic Tamagotchi as an app. It just made sense. There is bound to be overlap.

  5. I agree with Richard in many ways, it’s like the old John Lennon quote “how can you forward if you don’t know which way you’re facing”

  6. I agree with Sonia’s comment on “Isn’t it time we are not bombarded with licensed products with very little play quality”. And this holds true, whether it is toy or Richard’s broader definition of play.
    I must also admit I do not have an answer of how this can be avoided without affecting the economic interests of parties concerned.
    But still to know that deficiency of the current system, is a first step.

  7. Three thoughts. First, there are a small number of forward thinking toy companies that realize they are not about toys, they are about play and entertainment. That subtle shift opens doors in terms of creativity, new product development, and how to compete for an 8 year old’s attention.
    Next, please know that just because it’s a game or an app or software, there’s still plenty of crap products in that space. It’s a small handful of thoughtful, creative, and experimental, risk taking companies that are willing to develop new playthings in return of thin margins. Video didn’t kill the radio star, but don’t get comfortable about staying the same old toy company with that knowledge.
    Finally, I’m discovering that the older the industry, the greater the challenge to break out of historically tried and true revenue models. I see it greatest in the world of book publishing. The toy industry is not far behind. Broadcasting is also in the same boat. The newer the industry the greater its willingness to experiment with new revenue models.
    It’s worth pointing out that doing nothing will not help anyone in the toy space. Having the courage to reinvent everything is what the toy industry needs, in large doses, right now. Just my 2 cents.

  8. You talk about social responsibility of the toy industry? Moving forward? Isn’t it time we are not bombarded with licenced products with very little play quality? It seems that the US fronts the TV themed toys industry and will continue to do so, with total disregard or commitment to social responsibility. Yes, there is a lot to be learned from Europe.

  9. The purpose of Toy Fair is for toy companies to sell products to retail buyers and introduce products to the public. Why on earth would you want to invite other industries to compete for attention?

  10. I think we have yet to see an entity emerge as the “modern play company.” And maybe we never will. Toy Manufacturers are not the leaders of the play space, though they still might bring in the bulk of the revenue.
    The problem is that the various skill sets involved in producing play experiences on various platforms requires substantial staffing and restructuring. I think the play company of the future will be structured differently, and we’re evolving in this direction anyway:
    Brand/IP company
    – toy
    – Apparel
    – entertainment
    – platform / console play
    – mobile play
    – social play
    – etc.

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