Is the Glass half full or half empty for the Web-Connected Toy Market?

noreply@blogger.com (Cieo Creative) — Fri, 21 Aug 2009 16:43:00 +0000

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Is the Glass half full or half empty for the Web-Connected Toy Market?

noreply@blogger.com (Cieo Creative) — Fri, 21 Aug 2009 16:33:00 +0000

Stats, stats and more stats. We are a people that love numbers. We love them because they help to verify who we are & what we’re doing. We rely on stats to let us know that we’re productive, profitable, that we’re reaching our target audiences, completing projects faster and how of course: how this all compares to our competitors.

Companies commission studies that are designed to create stats and validate their offerings. These studies are often biased or poorly executed with small sample sizes, but they serve their purpose in legitimizing an entity with numbers.

Just to give you one example on how much we value these numbers, just take a look at the Cosmetics & Toiletries USA 2009 report completed by Kline. (http://www.klinegroup.com/reports/cia4h.asp ). They value their report on the industry at $22,000. That’s a lot of dough for what could very well be a lot of hot air.

I spent a great deal of my time at McGill University in Montreal in stats classes trying to understand how you can really execute a valid study on a topic. The answer is that it is way more complicated than the numbers would have you believe. What is statistically significant is often a factor of how you define constructs the constructs you’re testing, and of course: the types of individuals that are used in study and the context they are tested in.

Recently the NPD Group released their stats on the first 6 months in terms of sales for the Toy Industry. These numbers painted more of a grey picture then a black one overall. Simply put:

“Toy sales totaled $7.81 billion, versus $7.95 billion a year ago, for the period Jan. 4 through July 4, NPD said Monday. The biggest sales gains came in the action-figure, building-set and board-game categories. Demand fell for Web-connected toys. Action-figure sales rose 13% to $650 million. Building-set sales increased 20% to $340 million. Board-game sales were up 10% to $353 million. Sales of Web-connected toys -- which combine a physical toy with an Internet site -- dropped 43% to nearly $149 million.” (http://www.marketwatch.com/story/us-toy-sales-down-2-this-year-2009-08-17 )

Now, sales figures are a lot more reliable than a lot of industry statistics. Sales figures don’t lie. They simply tell it like it is. This sold. This didn’t. Here’s how much total sales were. Period.

Many toy manufacturers, buyers, designers and industry experts are going to interpret these numbers over the next few days, weeks and months, and this is going to yield some interesting results in terms of the web-connected toy sector.

Although it is true that sales were almost cut in half in this sector in the first 6 months of this year compared to last, let us not forget some of the basic rules of stats that we reviewed above. For example: If you have 1,250 different doll products and sales dropped 43% overall for that category, this could mean many different things. If Barbie accounted for 85% of the total sales for those 1,250 companies combined, we’d have to conclude that its really just Barbie that’s taken a dive. Or, perhaps about 600 companies saw a small amount of growth, and a certain type of doll company was bringing total sales down.

In the case of web-connected toys, the stats are going to be gaudy and inflated, simply because there are so few companies who are playing in this space, and so few products on the market (let alone: quality products).

You have a small sample of major players that include Mattel (Fairy Toys & Funkeys) Irwin Toys ( Me2) Ganz with Webkinz, a host of other similar plush related web-connected products, Hidden City Games (Bella Sara) Chaotic USA and some new players who have yet to launch. There are of course a few others, but this sector of the industry is in its infancy. It is small, touch-and-go, and is still exploring how children engage with the computer, what their expectations & needs are, and how to go about developing compelling products in this category.

Another issue is, do these sales figures even understand the complexity that is web-connected gaming and products? For example: Disney has released a line of Club Penguin toys to the market. This toys aren’t “web-connected” per-se, but their popularity is based entirely on a children’s virtual world. Shouldn’t the sale of these products be incorporated into these stats as well?

Even if these numbers were considered, what would be more interesting at this point would be to see which of the above mentioned companies have the biggest market share in this category? My guess would be Webkinz, so perhaps these numbers are actually indicating that sales for Plush Web-Connected toys are declining, and perhaps others are not.

I really believe that the glass is half full regarding the sale of web-connected toys. These toys also tend to be somewhat more pricey, and as we all know, times are tough and consumers have been extremely careful about the kinds of products they want to commit to at the moment. Come Christmas time, I have feeling that when shoppers are looking for that new and cool toy for their sons, daughters, nieces and nephews: they’ll take a good hard look at the web-connected category. This category can offer engaging, personalized and in depth play experiences for both the child and the whole family. I really do believe that this 43% means 0%.

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Is the Glass half full or half empty for the Web-Connected Toy Market?

Is the Glass half full or half empty for the Web-Connected Toy Market?