Are the Sony Playstation and Nintendo Switch Eating Up Toy Industry Dollars?

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How is it that video game sales are up so significantly despite the loss of Toys R Us?

A great deal of handwringing has taken place, and rightfully so, about the sharp drop in revenues experienced by Hasbro, Mattel, Jakks and other toy companies. The prime culprit has been seen as the demise of Toys R Us as well as overhanging inventory problems for Hasbro in Europe (Star Wars) and for Mattel in China (Fisher-Price).

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There is, however, another source for the lost revenues and that is the surprising success video game companies are experiencing in 2018. Here is how NPD's Mat Piscatella put it in his July 9, 2018 artice, "Video Game Industry Predictions for Holiday 2018": "The impact of Fortnite has been felt across the industry, lifting hardware sales while also pushing the market to achieve record highs in such areas as headset and game card spending."

When video games are hot, traditional toys suffer. Family money targeted for play gets invested in new products like gaming consoles and accessories as well as in hot selling video games like "Forttnite", "God of War", "Red Dead Redemption II" and "Spider-Man".

As a result of Fortnite's popularity (125 million players worldwide, source: Statista) and that of other video games, console sales are also up. Nintendo shipped 3.2 million Switches in the 3rd quarter. At an average price of $300, that comes to close to $1 billion in retail sales.

Nintendo is not alone, Sony, the maker of the Playstation shipped 3.9 million PS4 gaming consoles in the same quarter. At an average price of $300 that comes out to almost $1.2 billion in retail sales. Sony is doing so well that it has increased its annual profit projection by 30% since it last reported in July.

But here is something else for all of us to think about. How is it that video game sales are up so significantly despite the loss of Toys R Us? Were they less dependent upon the chain than tradition toy sellers or is it simply that product is king and this year they have the hottest products? 

 

One thought

  1. its because you can get games and hardware everywhere and cheaper than toys r us ever offered. places like gamestop have upped their exclusives and brick and mortars like Walmart and target have done the same. plus the toy market is too saturated with fly by night items. games and consoles develop a franchise and fan base following. toys r us is a great loss, don’t get me wrong, but 75-80% of their products sat on the shelves. they focused a little on everything as opposed to more of what was selling. while great to look at, no one bought it. video games are just like phones, they keep pushing for the next bigger and better advancement or story or experience. that’s how they survive and will always trump toys. games interest spans generations, 5-70+ years of age all play video games. toys looses its fizz in pre teens unless your an adult collector, which you would buy more than half of your things online because its not available in stores or through manufacturers themselves.

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