Recession Busters
The toy biz looks to board games to shrug off economic woes
By Dave Gerardi -- Gifts and Dec, 3/1/2009 12:00:00 AM
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Hasbro doubles the challenge in its latest version of Connect 4: Connect 4 X 4 |
William Rayment, owner of Toy Crossing in Harbor Beach, Mich., often plays hearts with his wife and business partner Robin, along with their two kids, ages 8 and 13. Sometimes it's for an hour, other times it's an hour and a half. It's a chance to laugh, joke around and reconnect as a family. In the face of 2009's grim conomic outlook, game makers and retailers are hoping a trend towards family game nights like these will reinforce the long held industry adage that the game space is recession proof.
"I prefer 'recession resistant,'" says Phil Jackson, the global head of Hasbro's games division. "People are looking for home-based entertainment, and families turn game night into a family ritual." After the September 11th attacks and the popping of the tech bubble, families cut back on travel and unnecessary spending to spend more time with each other, a psychological trope called 'nesting.' Board games benefitted. Now, in the midst of an historic recession, Jackson notes, "For games, our time has come."
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Fundex takes Scrabble where no man has gone before: the Star Trek license |
Classics are king
Joe Sequino, vice president of Winning Moves, Danvers, Mass, agrees. In 2008, his business held quite steady, he says. "We hit our number. We didn't have a banner year, but we reached projections."
Winning Moves concentrates on classic games and classic brands, such as Super Scrabble, a larger version of Scrabble, and Risk 1959, a replica of the original version of the game, including its wooden pieces. Risk 1959 is not a light purchase at $40, but so far in 2009, it's been Winning Moves' second best seller. Sequino cites the nostalgia factor and the quality of the wooden pieces as the driving forces behind its successs. "Consumers are more confident to purchase something that has a brand they already know," he explains. Retailers, meanwhile, benefit not just because of the classic branding but also because they know big box chains "won't be selling the same product for $10 less," Sequino says. "The opening order for certain brand games is prohibitive. With us, it's not."
Game maker Briarpatch, Millburn, N.J., is also enjoying smooth sailing despite the inclement economic weather. "I'm almost leery to say this: Our business is doing well," says Marc Shinderman, general manager. The company is neck deep in recognizable, evergreen licenses such as Thomas, Goodnight Moon and Scholastic's I Spy series.
"These are classic children's properties," Shinderman says. "Unless people stop reading all together and stop having children, I think we have a long future in this business." He expects classics to lead the market in 2009. "Classics are strong year after year. Consumers will gravitate to them."
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Playroom Entertainment's German-style series adds Benjamin Liersch's Livingstone |
For Endless Games brand recognition has also been important. The South Amboy, N.J.-based company has been holding steady due at least in part to growing popularity for CBS' Million Dollar Password with Regis Philbin, for which it produces the home version. "Regis is a major reason why people are going back" to TV game show games, the company's Brian Turtle tells PLAYTHINGS, noting that "holding steady is like going up in this economic climate." But while Turtle predicts that many game companies will also play it a little closer to the vest this year, he says there is still a need for "that shoot-for-the-moon attitude or else there will be no innovation."
He adds (with a bit of gallows humor), "Monopoly was created during the Great Depression ... I don't know what this year's Monopoly will be."
Room for growth?
A few game companies are indeed hoping to rely on innovation and the uniqueness of their offerings to attract new business in this economy.
"It has to be something no one else does," says Stuart Kaplan, founder of U.S. Games Systems, Stamford, Conn. "You can't go with the same (cash) cow every year because it will dry up. You have to capture the imagination of the buyer."
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Mattel's new Preschool Pop-up Games assortment includes Rainforest Safari |
Case in point: the website Politifact.com is tracking the 500-plus promises it says President Obama made during last fall's campaign; Kaplan has snapped up the license to turn the site's monitoring efforts into a deck of cards. "It's a challenge this year," Kaplan admits, though he also notes, "We've been in business 41 years. You have to be creative. If we can come up with unique products, we'll do fine. I wake up every day excited to get to work."
Other companies are relying on party games to round out their offerings, though the nesting theory still applies, they say. Five-year-old North Star Games, Bethesda, Md., is a good example. Though the economy is currently in turmoil and unemployment rates are skyrocketing, North Star predicts 100 percent growth in 2009, according to company founder Dominic Crapuchettes.
"Our revenues have been growing an average of 135 percent a year," he says. "That doesn't mean much for the first few years when you start out at $0 revenue, [but] last year we grew at about 125 percent." His staff grew as well, from two to five people, plus he recently landed shelf space at Target. Crapuchettes—and, yes, he's already heard all the jokes about his last name—attributes his company's lofty expectations to two important factors. The party game market—which is North Star Games' bread and butter with offerings like Wits & Wagers (a combination of trivia and friendly gambling) and Say Anything (where players jot down answers and try to guess each other's favorites)—is not as price sensitive as family games. Secondly, he's banking that budget-conscious consumers will opt to spend $30 on a board game they might use 10 times over the year rather than $50 per person for one meal at a restaurant. "$30 or $40 is not a huge expenditure for a party game. For a family game, $30 may be too much of a risk considering the child may never play it again."
Priced to move
Appropriate pricing will likely play a big role for game makers in 2009, they tell PLAYTHINGS. According to Shinderman, consumers will be spending smarter, using coupons, seeking lower price points and curbing impulse buying. "Instead of a 'grande' coffee, it might be a 'tall.' Instead of a $30 game, it might be a $20."
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Winning Moves updates the classic Go To The Head of the Class |
U.S. Games' Wizard, at a low SRP of $8, is the company's best-selling card game, Kaplan says. Sales have increased in part due to this price point, he says, "but value is more important. If you have something with perceived and real value, you'll find a price for it."
Finding ways to keep price points consumer friendly without hemorrhaging value is also the plan for Endless Games, Turtle notes. The company's Quick Picks line of travel-sized offerings retails at $10. "It's an impulse buy, and it's environmentally friendly because you're not shipping air," he explains. New to the line this year is Quackgammon (speed backgammon) and X-Ceter-O (a version of tic-tac-toe in which a player always wins; it never ends in a tie).
Retailers concur: Consumers are now extremely price sensitive. "Where people would normally spend $20 on a birthday present, now they want the present, the card, the wrapping and tax below $20, so they'll buy at around the $15 range, " says Debbie Smith, owner of Toys that Teach, Richmond, Va. At her two stores, Bananagrams has been "huge, huge" thanks to a price point under $20, portability and "killer packaging," she says, while Mindware's Qwirkle (a cross between dominoes and Set) has also been in high demand.
Bananagrams has also sold well at Toy Crossing. Rayment keeps a tree on the counter and "about one in 10 customers walks out with one," he says. Travel-sized games, like magnetic parcheesi and chess, and on-the-go versions of staples like Battleship, have also moved extremely well, helping keep his store's sales about even with last year. "Games with simple rules but complex play work best with us," he notes.
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I Can Do That! Games' Curious George line includes the Hide and Seek Zoo Game |
Retail relationships
At the end of the day, keeping afloat in this economy requires strong partnerships between game makers and the retailers on which they rely, a balancing act when games draw the attention of big box chains.
Genevieve Collonge, floor manager at The Wooden Horse, Los Gatos, Calif., says her store probably won't restock Cranium games now that they're owned by Hasbro. "We stopped carrying Hasbro games because we couldn't keep up with the quantity they wanted us to carry," she says. "It's a shame, because Cranium makes great games." The same thing happened with LeapFrog when the electronic learning toy maker transitioned to mass retailers, she tells PLAYTHINGS. "They outgrew us," she says sadly.
North Star Games faced a similar situation, Crapuchettes says. Although the company has a "problem" many game makers only wish for—Target likes its products, especially the multiple award-winning Wits & Wagers—specialty retailers typically steer clear of products that are discounted at big box chains.
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Endless Games' X-Ceter-O adds a new twist to tic-tac-toe |
"[Retailers would] say, 'We're happy to see you're doing well, but not happy about [Target],'" Crapuchettes says, laughing. The danger is that customers will seek the product for less at Target and avoid specialty stores. Fortunately, Crapuchettes negotiated a deal that helps everyone; Target agreed not to sell the game below MSRP; in exchange, North Star won't sell to another mass retailer.
"Once the specialty retailer learns he won't be undercut, most are okay with it," he says. In fact, because of the relationships North Star has built with independent shops, in-store demos helped drive an average of 94 games per store for December 2008, whereas Target moved about 40 per store, he says.
Briarpatch has also been able to straddle both the specialty and big box channels of distribution by staying true to its pricing structure. "If a retailer wants to sell for a short price, that's their choice," Shinderman tells PLAYTHINGS. "We haven't changed our business model or cut corners in order to get into mass. Could we have had better volumes? Probably. But we decided to stay true to who we are."
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University Games puts a duplicitous spin on word gaming in Take A Letter |
Specialty strategies
Endless Games' Turtle emphasizes the importance of embracing specialty retailers. "We try to accommodate [them]," he says. "We have only two items at the mass market level. Independent toy stores can really demo an item, hold game nights and educate the floor staff. In mass market, they want it all on the box."
These specialties of specialty—knowledgeable staff, in-store demos, game nights and gift wrapping—will keep game customers coming back, regardless of the economy or competition from mass, independent retailers say.
At The Wooden Horse, management focuses on keeping staff and customers well informed. "Massive amounts" of training educates staff on the stages of child development, Collonge says. The store also holds community events, including educational lectures about what makes a good toy. "When times get tough, this helps us maintain a good customer base," says Collogne. "You can't buy word-of-mouth reputation."
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Pressman adds a Rummikub Large Numbers Edition |
Customer referrals have also been key for Toys that Teach, says Smith. Though customers are spending less, positive feedback has kept her two stores busy. "We really have not seen a huge downturn," she says. "We might not have had larger sales [recently], but we've had more of them." Smith relies on a strong birthday business, and says gift wrapping is essential. "Ten months out of the year we exist on birthday parties," she says. "Parents rush in and say, 'I need something for a 5-year-old, and I'm leaving in 10 minutes. Wrap it.'" Smith also dedicates as much of her store to floorspace as possible, and has begun keeping a little less inventory in stock. "You've got to economize. Save where you can so you can make it through to the next recession," she laughs.
Shinderman recognizes times are tough for specialty retailers but he urges them to "ride it out." There will always be a place for the independents, he says. "If you start to run scared and worry the customers won't come in, it's a self-fulfilling prophecy."
Connect To Kids With Games
By Al Waller
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Al Waller is CEO of Out of the Box Publishing |
Parenting can be stressful for parents and their children. As a father of five, I deal with many parenting challenges, including listening to my teenager tell me why she has to wear a skirt 12 inches above her knees or why my other daughter needs to stay out past 1 a.m.
To alleviate some of this tension, I have looked for ways to connect with my kids ever since they were toddlers. Lately, I find myself asking, "What can I do today to connect with my teenagers?"
This search for connection is one of the main reasons I am in the game business. Games are a social activity that allows you to connect with your kids on a different, more relaxed level. Games bring my family together and make us all a little happier. I want to bring that connection and happiness to others, especially during these stressful times.
We've developed all kinds of ways to communicate with one another—from email to texting to Facebook. These forms of communication serve a purpose, but an important face-to-face connection is being lost. I believe we can make that connection through playing great, fast and fun non-electronic games. The results can be amazing!
Let me tell you how I formed my philosophy on games and happiness. Before starting Out of the Box Publishing, winning was the most important thing to me, whether it was a business venture, tennis, backgammon or playing a board game with my family. Then, one day a co-worker and I played a game called Bosworth. After we finished, he asked me what I thought, and I replied, "It was okay, but I didn't win." It was then that I experienced a turning point in my life and my career. He said to me, "If you are going to make it in the game business, you have to look at the process of play as more than just winning and losing!"
From that point on, I began to learn to enjoy playing for its own sake—not just to win. I found it fascinating, not only professionally, but within my own family, to observe the changes that can take place when people "just play a game."
I started to have some great "Aha!" moments—like the one during Christmas at my mother's house, a few years back. All the presents had been opened, and there we sat in a room full of people, ages 12 to 75. "What do we do now?" I pulled out a prototype of Backseat Drawing, a game we had in development. It's a game where teams race to identify drawings done by one of their own team members (who has no idea what he or she is being told to draw). It was great fun when my mother, by following directions given by my 13-year-old, was able to correctly guess she had drawn a cat. Soon, everyone joined in the game, laughing and sharing and making memories. My kids still talk about the magic of that Christmas.
I began to have other "Aha!" moments in which I learned to recognize that the process of play is fundamental to our growth as individuals. When my oldest daughter was in middle school, I chaperoned one of her field trips. A group of girls were playing kickball and I joined in. When I began to keep score, they told me not to. I couldn't believe it—how could they not want to keep score? But they just wanted to connect and have fun together. Understanding that concept led to a quantum shift in my thinking and planted the seed for a new perspective on life. Perhaps, this world would be a little stronger and happier if we all just played together a little more.
In my quest to connect with my own family through games, I have found a concept that reaches beyond my own home. People email me or come up to me at trade shows all the time and say things like "Your games changed our lives and playing games has really helped our family bond!" Moments like these are why I am in the game business.
Al Waller is CEO of Out of the Box Publishing, Dodgeville, Wis. For more information about his company's products, go towww.otb-games.com.
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