Consumer Spending on Toys and Games
In a recent news article published by the financial media company The Motley Fool, it was reported that the amount being spent on traditional toys and board games in the United States had fallen from $85 per person in 1998 to its current level of $60 per person.
The article went on to discuss the ramifications of this decline on the stock price of Hasbro and Mattel. While the stock price of Hasbro and Mattel doesn’t interest me all that much, what caught my eye was the impact this decline would have on our industry as a whole.
Today, kids don't have the same desires for toys and games that we had when we were younger. Most wish lists these days are full of hi-tech gadgetry and mobile devices. So where does this leave the “traditional” toy and game industry?
Some toy manufacturers and toy retailers are getting in on the trend. Toys ‘R’ Us recently introduced a low-cost tablet called the Tabeo. The Tabeo comes preloaded with dozens of games and learning apps. Hasbro and many other companies are going hi-tech, converting their traditional games and toys to mobile apps and other electronic forms.
Of course, some toy manufacturers and toy retailers are throwing in the towel. Every year, the number of suppliers exhibiting at the New York Toy Fair declines. Every year, we have fewer toy retailers to sell to, as more retailers shut their doors and fewer new doors are opened.
However, most toy manufacturers and toy retailers have recognized this shift and have adapted accordingly. Not by going hi-tech and not by throwing in the towel, but simply by recognizing this shift and by adapting accordingly. Whether this means new marketing strategies, developing new products that consumers actually want, or other such organizational changes, there are still lots of opportunities for “traditional” toy and game companies. The toy industry in North America is still worth over $20 billion. Since 1998, our revenue at Outset Media has grown every single year with the exception of 2011. Indeed, our revenue is up nearly 25% this year alone.
Many parents and grandparents understand the value of “traditional” toys and games. The social interaction that people have when playing board games cannot be replaced by electronic gadgetry. The tactile benefits of playing with toys simply are better for kids than staring at computer screens.
Yes, the industry is shrinking. But, the industry is still large, and there are plenty of opportunities for companies that are making products that today’s parent and grandparents want for their kids. The companies that will survive are the ones that are proactive and persevere. The days of simply opening a business and expecting customers to come are gone!