Content is king in Toyland
Toys have become inextricably linked to kids’ screen time
Movies, TV shows play key role in which toys hit the shelves,
As this summer wound down, Hasbro Inc. was feverishly ramping up for the winter holidays.
The toy maker added airfreight services and shifted its warehousing operations to get toys based on two new Walt Disney Co. movies, “Frozen 2” and “Star Wars: The Rise of Skywalker,” to retailers in time for the holiday shopping season.
The toy launches were “critically important,” and the company hustled to “ensure shelves were stocked” ahead of the opening of “Frozen 2” in theatres in late November and the “Star Wars” opening Dec. 20, Hasbro chief executive Brian Goldner told analysts last month.
Hasbro’s effort illustrates the central role movies and TV shows play in shaping which dolls, action figures and other toys hit the shelves. But licensing of others’ intellectual property, or IP, is now spreading beyond films and TV to include toys tied to video games, home video streaming, music, YouTube and other platforms that are increasingly part of kids’ free time in the digital age.
“We’ll continue to see a proliferation of licensing in the toy industry based on the content kids are watching,” said Juli Lennett, vice-president for toys at the research firm NPD Group. “There are so many different places where kids can go now” for entertainment.
Conversely, the toy makers also are licensing their popular in-house toys to film studios and other entertainment platforms to bolster sales and otherwise generate more revenue.
Mattel Inc. has a live-action Barbie film in the works. There have been Lego movies. Hasbro is paying $4 billion (U.S.) for the studio Entertainment One, and Hasbro teamed with Paramount Pictures a year ago on the movie “Bumblebee,” based on the Transformers character. Spin Master, the Canadian company that makes Hatchimals and “Paw Patrol” toys, has produced six TV series around its brands in the past decade, including “Paw Patrol” on Nickelodeon.
Mattel chief executive Ynon Kreiz repeatedly has talked about transforming the El Segundo firm into an “IP-driven” toy company whose strategy includes licensing Barbie, Hot Wheels and its other popular brands to others while also licensing outside IPs.
Case in point: Kreiz has said its toys based on “Jurassic World” from Universal Pictures “exceeded all expectations in 2018.” Mattel also has licensing deals with Sanrio’s Hello Kitty and Disney’s Pixar Studios, including the “Toy Story” and “Cars” franchises, among others.
“They realize that building these IPs brings immediate brand recognition, builds licensing revenue and is essential to help a toy company grow,” said Jim Silver, chief executive of TTPM, a toy review and research website.
Hasbro, Mattel and others also keep designing new toys they hope will catch fire, including some that merge physical toys with the digital world. Mattel, for instance, rolled out Hot Wheels ID, which enables kids to use an app to track how their Hot Wheels cars perform, along with a line of gender-inclusive dolls called Creatable World.
MGA Entertainment Inc., the privately held creator of the popular L.O.L. Surprise! dolls, takes a different route, preferring to create its own toys while eschewing making toys based on movies and other outside IPs.
But MGA aggressively promotes its toys on digital media to attract kids and their parents. L.O.L. Surprise! has a YouTube channel with 1.2 million subscribers, and fans can watch L.O.L. Surprise! on Amazon Prime’s streaming service. There also are teasers on YouTube for a new MGA toy doll, Na Na Na Surprise, due for release Dec. 1.
All of the toy makers’ various strategies are playing out in the face of two overarching trends.
First, although toy makers and some analysts reject the oft-repeated notion that kids are ditching toys for tablets, smartphones and streaming video at ever-younger ages, they do agree that those technologies heavily influence what toys will be popular and how those toys are marketed.
“Kids are now so influenced by entertainment” they consume not just in theatres and on
TV, but on a variety of platforms such as streaming, video games, YouTube and elsewhere on the internet, Silver said.
“All these IPs on different platforms greatly affect purchases” of toys, he said.
For instance, two popular toy lines are based on video games: Jazwares’ “Fortnite” and Lego’s “Minecraft.”
Second, U.S. toy sales overall have been relatively flat for years, ranging from $20 billion to $22 billion, according to NPD. That puts pressure on the toy makers to have hit products — including products based on movies and other outside IPs, or by licensing their own IPs to outsiders — to take market share from competitors because the total market isn’t growing much.
Yet the industry’s consistent sales also point up that although technology has changed how kids spend their leisure hours, it hasn’t severely disrupted overall demand for nonelectronic toys. Barbie remains a $1-billion business. Monopoly and Uno games are having strong years. L.O.L. Surprise! dolls have been one of the topselling toys since their debut three years ago.
L.O.L. Surprise! exemplifies both sides of the changes swirling around the industry. The toys feature several layers to unwrap — with each layer having its own surprise — and finally there’s a small, wide-eyed plastic doll at the centre.
Yet this physical doll “was born on the internet” because “we were watching what kids were watching, and they loved unboxing” — that is, watching videos of kids taking toys out of their packaging, said Hailey Wu Sullivan, MGA’s chief marketing officer. “We delivered what they wanted without them asking explicitly what they wanted.”