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In 2014, licensing continued to grow in importance as a catalyst for sales of traditional toys. Manufacturers reported a distinct and sustained increase in the number of products at retail derived from film, television or video game intellectual property to 30% of value in 2014 (2008: 23 %). The ongoing expansion of licensing within UK traditional toys and games has been driven primarily by the requirements of the dominant business model that has emerged within the US film industry.
Led by Disney, major film studios began in the late 1990s to achieve unprecedented growth through the concentration of resources into fewer and higher value films each year. Furthermore, they devoted greater capital and effort into the production, marketing and distribution of an individual film.
This formula worked to amplify the reach and impact of the film and its characters, extending its average life cycle from one year to three, reaching more fans and increasing their willingness to pay. License owners are then able to earn higher revenues for longer from a single piece of intellectual property. In addition, they afforded greater flexibility to use the earnings from one stable cash-generating property to invest in the uncertain future of another.
Well into the forecast period, there is little to indicate that licensing will be displaced as the most dynamic driver of UK traditional toys and games. It is clear that in the UK, the most popular play themes will, over the long run, continue to revolve around extending or recreating some aspect of the storytelling within film, television or video game intellectual property.
One mitigating factor is the potential emergence of new play themes as a result of significant technological innovation. However, it is highly unlikely that any new toy technology will, independent of a license tie-in, be able to recreate the high level emotion that fans attach to their favorite superheroes, princesses and monsters.
For toy manufacturers, greater levels of investment in the development of intellectual property will be necessary. More importantly, promotion and marketing of original content will be essential in order to resist the growing competitive pressure placed upon them by license owners.
While firms have invested quite heavily in the technical specifications and mechanics of their products, few have made as large or as successful investments in the development of their content and characters. In order to create intellectual property that can exist as viable competition to content from Disney, firms will be required to develop proprietary entertainment. They need to connect fans to the brand beyond retail and engage with their customers.
In 2014, Disney’s hugely popular Frozen was the single most important licensed property of the year according to industry experts. Frozen was closely followed by Disney Princess, a perennially successful, or “evergreen”, property that has driven strong toy sales for decades as new generations of children are introduced to classic Disney characters.
Peculiar to the UK, Harry Potter retained a strong position in 2014 and will continue to do so over 2015 and the forecast period. The property was a global success for many years, becoming a key British cultural export. More than three years after the release of the last film, its pronounced usage of British cultural themes have sustained UK sales of boys and girls licensed toys. Manufacturers reported strong sales growth of Harry Potter dressing-up and role play items coinciding with the rising UK popularity of World Book Day.
As toy companies move away from hypermarkets to smaller local convenience stores, pocket money toys grew in importance as a driver of impulse purchases. Requiring minimal shelf space, their low entry point became ideal for stimulating purchases from UK shoppers.
In 2014, shoppers increasingly opted for multiple small value trips to a local convenience store each week over large single weekly or monthly visits to a supermarket or hypermarket. As the value of a shopper’s average grocery purchase fell, so too did the value of the toy likely to trigger an impulse purchase.
As an efficient generator of regular impulse purchases for UK retailers, blind bag collectable toys at the pocket money price point will continue to present a highly lucrative source of potential revenue for traditional toy manufacturers. Blind bag collectable toys are typically character figurines contained in opaque packaging such that, until opening, the buyer would not know which character had been purchased.
The remarkable success achieved by Magic Box Int, Mind Candy and Moose Toys had at its core, a community of highly active fans. This community supported a high-volume secondary market of barter and resale and provided the competitive aspect of collecting, fostering rivalry for the most complete or most valuable collections. In order to grow and sustain this community of participants, successful players have made continuous, well-timed additions to their product lines, encouraging new sales without making a complete collection unattainable.
This is an extract from Euromonitor International’s Toys and Games in the United Kingdom report. For more information, please click here.