How Profit and Brand Recognition are Redefining the Toy IndustryPublished: December 13, 2007 in Knowledge@Emory
Much has changed since Mr. Potato Head and many other classic toys were first sold in the 1950s and ‘60s. Today, big manufacturers and retailers care much less about a toy’s imaginative possibilities than its automation and its licensing tie-ins. According to Eric Clark, author of The Real Toy Story: Inside the Ruthless Battle for America’s Youngest Consumers, toys too often “do everything at the touch of a button. The action comes from the toy, not from the child.” Just as disturbing, they encourage play patterns that “are structured by the movies or television programs that spawn them. No one says: ‘Let’s pretend....’”
How did this happen? How did the world of Etch A Sketch, Monopoly and Erector sets become the province of Spider Man and Dora the Explorer? In The Real Toy Story, Clark, an investigative journalist, explains.
The toy business, he says, has changed dramatically since the era of department stores and corner toy shops. Today, just five retailers—Wal-Mart, Target, Toys “R” Us, Kmart and KB Toys–sell most American toys. The first three alone sell 60%, says Clark. Understandably, large toy makers are reluctant to create products that won’t appeal to these mighty merchants.
Similarly, two manufacturers, Hasbro and Mattel, have grown to control about one-third of the U.S. toy market. “They dominate the major store shelves,” Clark says, “and the licensing deals that are conducted to produce toys linked to star properties.” These companies don’t have to depend on innovation to compete. They can rely on surer things: toys based on TV shows and movies and the creation of new toys based on brands they’ve already developed or acquired.
Naturally, Hasbro and Mattel also exploit their economies of scale. They produce toys much more cheaply than their competitors do, and they can better absorb the losses that come from mistakes. Toy development is expensive, and one big flop can destroy a small manufacturer.
The little guys—though they are always afraid of betting on the wrong new toy—have to take that occasional gamble. A big hit would make life much easier for them.
But the retail environment discourages such risk taking, notes Clark. After years of 5% growth, toy sales have generally declined in the new millennium. Factors include falling demographics (the percentage of children under 12 is the lowest in 20 years); competition from movies, television and electronics for youngsters’ time; and the fact that children today play with toys for fewer years than their parents did. Why, then would KB Toys take a chance on an unknown board game when it could stock The Game of Life: Pirates of the Caribbean instead?
The reason is that the industry depends on innovation. New toys give it excitement, profits and possibilities for future spin-offs. The next board game could be tomorrow’s Trivial Pursuit; that new plush toy could be the next Beanie Baby or Webkinz.
During the 20th century a steady stream of new toys came on the market, Clark explains. Many were invented by people outside the industry who managed to sell manufacturers on their ideas. John Lloyd Wright (son of Frank) thought of Lincoln Logs while watching his father at work, and a retired schoolteacher created Candy Land while recovering from polio. The idea for the frisbee came to some Yale students while tossing around metal pie plates, and Joe McVicker turned wallpaper cleaner into Play-Doh.
Clark quotes a “disgruntled, born-again ex-marketer from one of the major companies,” who complains, “Lots of the toys and games developed at the beginning of mass marketing are still the best things about the industry.” Since then, the toy business has grown, in part, by introducing computerized and modernized versions of old toy lines (e.g., battery-operated Little People sets and talking Tonka trucks) and entwining itself around children’s programming.
“Toys and the entertainment industry have become two sides of the same coin–children’s television programs and some movies exist only because of product tie-in and are structured to maximize sales of those products,” Clark declares. Increasingly toy manufacturers see themselves as entertainment companies and “their toys as entertainment or lifestyle properties–the books, TV series, and movies are not purely to sell more toys but rather to enhance and reinforce the brand.”
Such products do not encourage children to exercise their imaginations. Ragedy Ann and G.I. Joe can have an infinite number of adventures because neither comes with a backstory. Children can make up a past and future for them. Transformers, Bratz dolls and Star Wars action figures, however, all come with pre-made stories. The only way children can change such a story, observes Clark, is to discard the toy and “move on to a new one–which, for the industry, is the perfect commercial solution.”
These kinds of toys, marketed through television shows and enticing websites draw children into consumerist behavior at increasingly early ages. They also do nothing to promote the toy industry’s long-term welfare. Barbie will still be selling after she’s old enough to retire to an assisted living facility. Will SpongeBob SquarePants?
Clark’s book is full of tales about a fascinating business: the inventors who struggled to bring their ideas to market, the independent toy shop owner who manages to hang on, the manufacturing executives fighting for market share, and the Chinese factory employee who has destroyed her health by making toys in unsafe and unfair conditions. Well-written, engaging and thoughtful, The Real Toy Story describes an industry that has almost ceased to be fun.