<i>This locks toy companies into a challenging bet. Every year, they have to a) predict trends, b) invent them, and c) commit capital to them. All without knowing how the rest of the year will turn out. Since toy trends exist, but don’t last for very long, they have to invent new products every year—but the technological state of the art doesn’t advance very fast. It has all the volatility of tech, without the progress.</i><p>Insightful post. This succinctly explains why most toys are movie-related. It's the easiest trend to predict.<p>EDIT: This article keeps getting better and better. I had no idea Skyrim was almost set in Game of Thrones. <a href="https://www.tor.com/2011/09/16/how-skyrim-was-almost-set-in-westeros/" rel="nofollow">https://www.tor.com/2011/09/16/how-skyrim-was-almost-set-in-...</a> It left me wanting more.<p>The author is apparently Byrne Hobart, and they've written a variety of things: <a href="https://diff.substack.com/people/112633-byrne-hobart" rel="nofollow">https://diff.substack.com/people/112633-byrne-hobart</a> Looks like I'll be spending too much time reading them.<p>They also write a post ... <i>double checks</i> ... every day?! For a week straight, sometimes? Wow.<p>Sadly, most of their work appears to be locked behind a $20/mo paywall. It all looks very interesting though: <a href="https://diff.substack.com/p/dropbox-information-asymmetry-and" rel="nofollow">https://diff.substack.com/p/dropbox-information-asymmetry-an...</a>
Because most toy companies don't / can't understand vertical integration and increasing value capture.<p>Or, in other words, they don't have their own version of this strategy chart: <a href="https://johnaugust.com/wp-content/uploads/2014/07/disney_chart.jpg" rel="nofollow">https://johnaugust.com/wp-content/uploads/2014/07/disney_cha...</a> (Disney corporate synergy, dated 1957)<p>Your primary consumer has the attention span of a 10-year-old, and no disposable income. Why are we surprised this is a terrible industry?<p>A smarter approach would be what Tim Sweeney is talking about with Fortnite (and Amazon infamously does): you have to do everything you can to pivot any initial success into a durable advantage, by aggressively expanding into adjacent opportunities, even if they're very different businesses (e.g. movie theaters).<p>They've made token moves towards this with the physical toy + computer game mash-up genre, but from an external perspective I don't think any of them quite <i>get</i> how it's supposed to work. Efforts seem under -capitalized / -resourced / -inspired.
Demographics is a big one.<p>As the population pyramid changes to a rectangle, the latent toy:child ratio continues to increase.<p>Every day I see piles of free toys around the neighborhood being given away for free.<p>People with 1-2 kids are drowning in toys.
It also doesn't help that 80% of toys is cheap plastic tat. There's a lot of stuff but most of it is junk. For those who reach London at some point, I can't recommend enough V&A Museum of Childhood. It's a large museum with a substantial collection of toys,some as old as 300 years or so. It has it all: from PS1 to some wooden doll house an affluent Victorian family would have spent a small fortune on. The older toys are fabulous and nicely made. I think it's probably better to have a few quality ones than some 20 transform er cars that brake after 10 days of playing with them.
As a kid in the 80s I would get excited each Christmas by watching ads with new toys on the tv.<p>Do kids still watch regular tv? My youngest nephews only watch YouTube and Netflix. They only want iPads and consoles for Christmas.
I don't understand this. I'd prefer to give children the same things that I enjoyed as a child. (E.g. meccano, technic Lego). But the problem is that these companies "modernize" their offerings to such extent that I don't like them anymore.<p>Also most of the good Lego sets are either cars or airplanes. This gets a little boring after giving these sets for a few years in a row. Lots of good sets become retired, which is a pity.<p>I think I will be moving away from Lego for my next gifts because there is only very limited choice left in the $50 price range.
There’s an interesting angle about which definition you use for constitutes a good business. There is robust demand for good quality toys (e.g. LEGO, Brio, Melissa & Doug) but it’s relatively stable because not everyone wants to buy in the higher price ranges, demand is finite, and making quality toys means you’re competing against yourself because many toys are passed down to siblings and resold or gifted locally.<p>If you’re a parent that’s good, but if you’re trying to serve market expectations of constant growth you’re always under pressure to cut corners, and thus the long-term future of your brand, since the business can’t grow rapidly without a baby boom. LEGO clearly hit escape velocity but they seem more like an outlier.
Toys are /not/ a bad business. If you're an investor looking for 10x returns on millions in capital, sure. If you're a maker/designer, it's a GREAT business for as long as you embrace the holiday sales cycle and can command a healthy margin.<p>I designed a game with my brother a few years ago, and we've been growing steadily every year.<p><a href="https://llamadrama.com" rel="nofollow">https://llamadrama.com</a><p>This business only required a few thousand dollars to get started. If you're a maker, go make your toy/game!<p>If you're an investor, go away. You'll probably ruin the business. It's so incredibly cheap to get an idea into the market place, we don't need you anymore.
Don't forget that large manufacturers also manufacture trends as well as best as they can. That's the easiest way to sell. Someone I knew that worked in clothing design said that all the big manufacturers decide either by observation, discussion in industry journals, or collaboration that e.g. olive green (not the current example) is going to be the thing this year so customers are essentially forced to buy the newest "trend" due to lack of choice.
> TV ad campaigns, too, tend to be purchased in advance. About half of TV ad spending is allocated to the upfronts—booked March through May to be delivered by the end of the year.<p>I wonder how that's been in this game-changing year...
> Video game prices have been declining in real terms, in part because of cheaper manufacturing and distribution<p>and competition from "free to play" and mobile games
I would like to call BS on this entire "analysis" and presume that dropping fertility rates (and child births) across all of the developed world with enough discretionary money to spend on toys might be the single biggest reason why toy businesses are stagnating and perhaps reduce over the long run.