Kidult toy opportunity

By Steve Reece

The adult collectors’ Toy market has always existed. However, the increase in the scale and market share of this segment has been one of the key macro level industry changes over the last decade. With some major markets seeing nearly 1/3 of the market being classified as “Kidult”. 

However, we need to look beyond these headline statistics to identify where the opportunities lie.

The incredible D2C opportunity is boosting the kidult market

One of the fundamental opportunities and challenges of this adult collector market is that the old retail channels do not necessarily offer the bulk of the market opportunity. A physical store selling baby products is less likely to be the place to buy a €200 adult collector targeted Toy versus a €10 Infant Toy!

The mighty online platforms allow us to target and access niche audiences in a way we once could not. And of course it isn’t just Amazon, there are strong local players in a lot of countries, especially Asia. This immediate online access to adult collectors with disposable income is a fundamental driver of the growth in this area.

Social commerce is also an important factor. Nearly every adult is now signed up for and addicted to various social media platforms, all of which have an e-commerce platform. You can go from watching videos based on your favourite leisure topics to buying merchandise. In theory at least, this shouldn’t be happening with the Kids Toy market. Since the typical age of consumer there is 4-7 years of age, and in most markets, they are not supposed to be on social media at that age yet. 

Crowd funding is the third critical pillar of the retail channel mix for adult collectors. Some of the big Toy companies now have their own D2C portals which allows them to do a multitude of things: 

• build incremental revenue channels/reduce retail listings risk
• build deeper affinity with their brand followers and fans
• build community and direct communication platforms and
• to derisk product development investment.

It is not uncommon to see a €300 or €400 item on these platforms, and while you might think that very few people would want to buy at those prices, these ultra-high-end items often have 10,000 or 20,000 fans willing to sign up and pay for the product many months in advance of it being ready to ship. You just have to run the calculation there to see the size of that opportunity - €400 x 20,000 units = €8m. if you run one of those per month, that’s a €96m revenue stream built completely without mass retail and all the challenges that brings.

Understanding and embracing the adult collector opportunity

There are 2 key perspectives here:

• A company which can easily adapt to the Kidult opportunity.
• A company that can’t.

A company already producing the genre and categories of toys most of interest to adult collectors would tend to have the lowest hanging fruit to access. OK, they probably need to up spec and build on the depth of the narrative and universes they have, but an action figure is an action figure – and the same company could produce a €15 and a €150 action figure for the same brand without too much disruption – they may need a different factory or even a different product design approach, but they don’t need to reinvent the wheel.

Whereas a company which historically has only produced Infant and Preschool Toys will have more work to do and need to take bolder steps to access the Kidult market.

The one key concept to maximise this opportunity which not enough companies have taken the time to understand so far is that of Total Customer Lifetime Value (TCLV). Most companies set their marketing budgets to sell units, and they can often tell you exactly what their marketing spend is, their new consumer acquisition cost is and much more. If you plan and allocate your marketing spend based on one sale, you are clearly missing the point with this audience. An adult collector, an avid fan, is by definition not just buying one product. If you are already playing in the Kidult space, can you prove the total value you get from each fan over time throughout the full lifetime of their affinity for your brand? If not, your next step should be to work that out and begin work on growing a purchasing fan base versus selling Toys unit by unit.

What does the future look like for the Kidult space? We can be sure that there will be adult collectors for as long as there are adults – the whole Kidult thing is not going away.

About the author

Steve Reece has been in the toy industry for 25 years. He started out at Hasbro where he was responsible for the brand management of key brands such as Monopoly, Play-Doh and Trivial Pursuit. He now runs a consultancy called Kids Brand Insight, which helps toy suppliers to build robust and diversified supply chains and find the right staff.