As if Walmart eating the toy business' margins werent bad enough, let's become a tech company and go up against Apple, Google and Samsung. Yeah, how can we lose?
That is the future facing the toy companies as young families and their indulgent grandparents decide that there is nothing cuter - and potentially better for their future prospects of entering Harvard or Oxford - than a brand, new tablet computer.
Model planes? Barbie dolls? Even Legos? Not happenin.'
Kids want to play grownup. And what better imitation of mom's and dad's obsessive behavior than plunking away on a tablet (to say nothing of watching pudgy little fingers attempting to text).
Now, it would seem the logical approach would be to partner with someone tech-ish and copyright the digital manifestations of childhood. As if the tech-ishy world hadnt already thought of that. And even if you can make that dream come true in Disney-esque fashion, guess who controls access, marketing - and margins? That's right, not you.
The toy business will not go away. In the adult world, clothes, books, cars and scotch still count. But as we live more of our lives online, our children will surely follow - whether we mean for them to do so or not. JL
April Dembosky reports in the Financial Times:
Step aside Barbie. The hottest gift for children this holiday season is not going to be a doll or a toy truck. It’s a tablet. Whether a new Kindle Fire, or a hand-me-down iPad, analysts predict 2012 will be the year children as young as three-years-old will unwrap tablets at trendsetting rates. And that has the traditional toy companies scrambling to stay relevant.
“The top two guys, Mattel and Hasbro, they are terrified,” said Sean McGowan, managing director of equity research at Needham & Company, an investment banking firm. “They should be terrified, but the official party line is they’re not terrified.”
Toy companies have seen the trend coming, but have struggled to adapt to the new environment quickly.
At Mattel, the largest toymaker by revenues, its number-one selling product this year is a plastic cellphone case, said a person familiar with the company’s sales, raising concern about the fate of Barbie dolls and Hot Wheels cars.
Some analysts are lowering their forecasts for fourth-quarter toy sales, currently estimated at $1.41bn for Hasbro and $2.29bn for Mattel, after sales in the first three quarters of the year declined compared to the year before.
The main danger for toy and board game makers is not just that their physical products are being displaced, but the amount of time children are spending with technology devices has skyrocketed. They watch free content online and play free video games for hours on end.
In the last year, the image of a toddler trying to swipe a print magazine page like a tablet has become a real-life viral meme. Now that parents are likely to upgrade their own devices to the new Apple iPad mini or another of the various gadgets released for Christmas, many will be more than willing to pass their old one on to their children.
“Everyone I know who has a kid under 10 has a tablet in the house. And that tablet is the babysitter,” said Dylan Collins, an investor in Fight My Monster, an online gaming company.
Up against tech companies that make such engaging entertainment, the toymakers cannot compete, Mr McGowan said.
Mattel almost went bankrupt in the 1980s from its attempt to move into video games, he said. Hasbro, which makes popular board games like Monopoly and Scrabble, has been outpaced on several fronts by Zynga, the social gaming company built on Facebook.
“Clearly, young people have an aptitude for and expectation with digital platforms that we need to recognise,” said John Frascotti, chief marketing officer for Hasbro.
This Christmas, the company has high hopes for the reinvention of its popular 1990s plush toy, Furby. The new interactive version comes with a free mobile app that kids can use to feed Furby, and translate the things it says in “Furbish” to English. The toy is also built with artificial intelligence, so its behaviour changes depending on how it is treated, whether its tail is pulled or it is tickled.
Mattel did not comment.
0 comments:
Post a Comment