Who mugged the toy industry: Was it the economy or was it Wii?

January 16, 2009

Don’t pay too much attention to those who say that the recession was the only culprit in this year’s downturn in toy sales. People did buy toys, they just didn’t buy ours.

To make my point, consider two interesting news items that came out over the last couple of days. The first one: “Toy Industry, Not Recession-Proof, Also Hit in Holiday Season,” appeared January 15 on CNNMoney.com. To quote the piece: “Thought to be the most recession-proof among consumer retailers, [this year] toy companies had trouble avoiding the broad economic downturn, analysts said.”

The other piece, and I think the more telling one, was about NPD’s year end report on electronic gaming hardware and software sales. In an article entitled: “NPD: 2008 game sales reach $21 billion, Wii Play sells 5.28,"Gamespot tells us that “…US retailers raked in $21.33 billion in sales of gaming hardware, software, and accessories during the year (not including the PC market). That’s up 19 percent from the nearly $18 billion brought in over 2007.”

Here is what I think: Let’s not be so quick to buy into the notion that the toy industry is no longer recession proof. That perception may hide the fact that the electronic gaming industry ate our lunch. In fact, Wii with its appeal to Mom’s (our mainstay shopper) may be a paradigm shifter as to who buys and plays with these kinds of products.

One of the things that I thankfully observed in Hong Kong was that some manufacturers are continuing to push into the electronics area and are backing away from what I believe to be the mistaken notion that, “during tough times let’s move away from innovation and go retro.”

This industry has been and is continuing to lose market share to an electronic gaming business that first grabbed the kids and now has the moms. Being lulled to sleep by the notion that forces are at work that are beyond our control (the economy) is mistaken and, when this recession is over, could put us in a hole from which it could take a long time to dig out.

Yes, the economy is tough but the electronic gaming industry may be tougher. The bad economy will go eventually away, our competition won’t.

Posted by Richard Gottlieb on January 16, 2009 | Comments (3)

January 22, 2009

In response to: Who mugged the toy industry: Was it the economy or was it Wii?
Nate Scheidler, Chicago Game Design Grou commented:

A large part of this is interactivity. Once one figures out how to connect and start a video game system, the system itself can provide essential responses to the user in order to facilitate play. A boardgame or toy, on a shelf in a store, does not. No matter how much text you put on a box, it is unlikely to come off the shelf until a person has interacted with it in a positive way or at least received significant reinforcement on the value of the purchase from a trusted source. While Mary's statements above carry significant weight, there is a great deal to be done on the community level. This is the one true and significant marketing edge that the traditional toy and game industry has over the video game industry. You can bring traditional games anywhere, without power, and interact with a wide variety of people. Aside from handheld games (which still require a battery), the video game industry can't claim the same. Brick & mortar stores need to be much more proactive in promoting play to each and every customer that walks in the door. Beyond that, they need to support and facilitate groups in their community that promote play in public venues. Manufacturers may need to increase their involvement in developing these communities as well. These initiatives do not need thousands or tens of thousands of dollars to succeed, but they do need people willing to step forth and build.

January 19, 2009

In response to: Who mugged the toy industry: Was it the economy or was it Wii?
Mary Couzin commented:

The electronic industry is spending millions and millions on promotion as well as on research to prove they are beneficial for kids/adults and getting into schools and libraries. For example, the Verizon Foundation recently gave the American Library Association $1,000,000 to help them get electronic games into libraries. I received a call a couple of weeks ago from a city library to help me get them speakers to promote video games at a symposium they were holding funded by a another grant. Serious games is yet another group that promotes video games in society. There are many. What is our industry doing to promote the benefits of face-to-face play? It is difficult to find information of the benefits of face-to-face play. When you search games and education, you find almost all electronic games. Not quite pronounced with toys. We are working with the American Library Association to get toys and board games in the libraries and with schools through gamesforeducators.com to get toys and games in schools. We need to learn from the Europeans, in particular Essen and Nurnberg Fairs. Essen promotes play to the public. Kids get off school to see the latest toys and games. The 18 largest companies in Germany got together almost 30 years ago and decided to support that show and make it grow. They now have over 150,000 attendees all excited about the newest products coming out. My group is working to promote play via the Chicago Toy and Game Fair, but it has been tough to get support we need to grow. Those 18 companies even banded together and have a website promoting play that the general public visits and they have programs bringing games into the schools. I think that is also one of the reasons why Nurnberg is the biggest trade show in the world. Essen excites the public giving those manufacturers a strong base and the manufacturers have a spirit of working together. Other entertainment industries celebrate their creative talent, we’ve started doing that with the Toy and Game Inventor of the Year Awards this past year, but our industry needs to get behind the concept and be promoting their inventors as celebrities. Tim Walsh is spot on when he says that if you sell 1 million books, you are on the NY Bestseller List, 1 million CDs, the cover of Rolling Stone; but, over 200 million toys or games and no one knows who you are. In Europe people buy games based on the designer like we buy books based on the author. We need to excite consumers about our industry and our products. Pre-release promotions, promote the benefits of face-to-face play to parents and teachers, toy and game reviews throughout the year (a review of a toy/game should be right there with the movies, books and theatre), inventor signings and profiles and so much more. I am not anti-electronic, but I am for more of a balance in our lives. It is time to be aggressive and to reclaim those entertainment dollars. Mary Couzin, Chicago Toy and Game Group

January 16, 2009

In response to: Who mugged the toy industry: Was it the economy or was it Wii?
jimmydash commented:

One must remember too, that the first kids it(the electronic gaming industry) grabbed are now dads imparting their opinion on what the moms are buying and the kids are getting. It's a full on assault on the traditional toy types. Glad I can make some of the old favourites myself. The next generation, I don't think there will be as many that will have that talent.