Steven Reece

The Future Of Toys

This year I was privileged to give a presentation at the Toy Business Forum at Spielwarenmesse-Nuremberg Toy fair.

The topic was “The Future of Toys: Toys In 2020″.

At the risk of giving away one of my attempts at humour in the presentation, this is a golden opportunity for me, because clearly everyone will have forgotten what I said when we actually get to 2020, so if I get it wrong…!

Anyway, here’s the video:

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Toys in smart clothing

Smart moves boost sales of electronic toys

Regular readers of this Blog will have become attuned to our ramblings. However, today we’d like to share with you a highly insightful article written by Journalist & Consultant Peter Feuilherade, published by the International Electrotechnical Commission.

Electric and electronic toys form a small but growing part of the toys and games industry. They are defined as products designed specifically for children for the purpose of entertainment or education, and that require a power source (e.g. batteries or power cord) or to be connected to another powered product (e.g. TV or computer) to work. Several IEC TCs (Technical Committees) and their SCs (Subcommittees) prepare International Standards on the safety aspects of toys that use electricity in any form and on the transformers and batteries used with them.

Intelligent toys on the march

As well as electrically-powered and motorized toys, the sector also includes tablets and other ‘educational’ toys aimed at children as well as ones that work with mobile apps and devices such as iPhones. It excludes computer games and gaming consoles.

Many categories of toys, particularly traditional ones, are in decline because of the global recession. But interactive and ‘intelligent’ toys, accompanied by game applications for tablets and smartphones, are taking an increasing share of the market. Surging sales in these categories are helping maintain the whole industry’s presence. Adults seeking games and toys to relieve increasing stress levels caused by modern life are adding to market growth. And companies such as global software developers are also investing in the lucrative market of intelligent toys, which are popular with computer-savvy youngsters and adults alike .

Reinventing traditional toys

As people of all ages adopt new types of media and virtual behaviour, traditional toys such as puzzles and building blocks are being reinvented with integrated high-tech and/or digital components. Children go online at an earlier age, causing the boundaries between toys and electronic devices to become blurred. The main drivers of growth are toys featuring a high degree of innovation and superior technological features. Game applications for smart phones and tablets are increasing in popularity, especially in the “tween” (age 9-12) market. In the UK, one third of all children are online by the age of seven, and 97% by the age of 13. This trend can be observed in other countries too.

A typical seven-inch touch-screen tablet aimed at children is likely to be Wi-Fi enabled, with a built-in camera and microphone, USB connection and an SD card slot. Preloaded with music tracks, e-books, creative activities and dozens of apps including popular digital games, it will usually also include an MP3 player and video and photo viewers. Parents can synchronize tablets with a PC via a USB cable, customize different levels of internet access and monitor which games and activities a child has been using from an activity log. Children’s tablets cost from USD 100 upwards. Typically they use rechargeable LiPo (lithium polymer) or Li-ion (lithium ion) batteries.

International Standards for electronic displays, such as those used in touch-screen tablets are prepared by IEC TC 110: Electronic display devices. The MP3 audio-specific data compression format was designed by MPEG (Moving Picture Experts Group), which was founded by IEC and ISO (International Organization for Standardization) as part of ISO/IEC JTC1 (Joint Technical Committee): Information technology.

IEC TC 21: Secondary cells and batteries, prepares product standards for rechargeable batteries.

Learn as you play

Manufacturers are keen to stress the educational benefits of their toys and devices. They say that combining the latest technology with an offering of dozens of learning games, book apps and videos designed to enhance the curriculum helps children to personalize their learning experience while extending their skills across a range of vital subjects including spelling, maths, science, music and languages.

Advanced multifunction handheld devices for children often include built-in auto picture rotation and gravity sensor controls to support motion-based games.

Applications can connect products that look and feel like traditional ‘stand-alone’ toys to digital devices like smart phones and tablets to enable children to interact between the digital and the real world. According to US market research company The NPD Group, in May 2012, mobile devices to which children had access contained an average of 12 apps; 88% of those apps were acquired for free. Manufacturers use a combination of interactive programming (usually through free apps) and robotic engineering to allow customization and enable toys to develop a distinct ‘personality’ depending on the way they are played with. Toys interact with one another using infrared and Bluetooth technologies.

Sound and light show

Musical toys are just one category of toy that is highly focused on electronic products. They include not only enhanced sounds and flashing lights but other extras such as pre-recorded tunes, mixer functions and touchscreen technology.

As well as electronic versions of traditional board games and memory skill games, longer-established electric toys include model train and car racing sets, cars, boats and aircraft controlled by infrared remote control handsets, while the latest ‘flying toys’ can be flown indoors or outside, controlled by an iPhone, Android handset or tablet computer. There are also electric toys incorporating glow-in-the-dark elements, LED light-up effects and infra-red sensors and controllers. Kits that include light and touch sensors allow children to create various kinds of electronic circuit and build toy intruder alarms, water sensors or metal detectors.

Several IEC TCs prepare International Standards for the components such as LEDs and infrared, light or touch sensors that are integrated in these toys.

Market forecasts

The toy market is forever recreating itself as populations expand. Every generation of children demands new toys, whether these are traditional favourites in electronic ‘clothing’ or entirely new products.

Child-targeted electronic versions of adult technology are showing growth in more or less every major market, says UK analyst Steven Reece, who runs a toy and games industry blog.

In 2010, global toy sales of all kinds totalled USD 83,3 billion, up 4,7% year on year, with the Asian toy market notching up strong growth of 9,2% on average. In 2011 the United States remained the leading market for toys and games in general. Asia edged into second place, overtaking Europe.

The emerging economies of Asia-Pacific and Latin America are forecast to account for the bulk of growth of the global toy industry in the short term, fuelled by growing GDPs and an increasing shift towards a more Westernized lifestyle. China is the largest manufacturer of toy products, producing over 70% of the world’s total, while Japan remains the global leader in the video games market.

In 2011, toys for pre-school children (three to four-year-olds) and infants and featuring electronic components took impressive percentage shares by value in several markets: 40% in the UK, 45% in the US (pre-school), 52% in Russia (pre-school) and 43% in Japan.

IEC International Standards central to safety

The IEC’s involvement in the toy industry is not limited to the preparation of International Standards for components and systems that are used in toys and games, but also covers conformity and certification as well as safety issues.

IECEE (IEC System for Conformity testing and Certification of Electrotechnical Equipment and Components) plays an important role in the certification of electric toys – one of the 19 categories of electrical equipment covered by the system.

ISO/IEC Guide 50, published jointly by the IEC and ISO (International Organization for Standardization), sets out safety guidelines covering a wide range of equipment intended for use by children, including toys.

IEC 62115, Electric toys – safety, prepared by TC 61: Safety of household and similar electrical appliances, deals with the safety of toys intended for use by children under 14 years of age and with at least one function that is dependent on electricity. Products covered include construction and experimental sets, toys which replicate the functions of appliances used by adults (such as tablet computers), video toys and toys using electricity for secondary functions, e.g. containing lasers or light-emitting diodes.

IEC 61558: Safety of power transformers, power supplies, reactors and similar products, prepared by TC 96: Transformers, reactors, power supply units, and combinations thereof, covers – among other things – the electrical, thermal and mechanical safety aspects of transformers for toys and power supplies incorporating transformers for toys. Protection against electric shock, overloads and short-circuits is a major consideration.

While one of the primary aims of these International Standards is to reduce risks to children, there are unavoidable risks that attach to the use of some toys. Batteries, for instance, can pose a serious health hazard if swallowed, and safety standards require that batteries in toys must be made inaccessible to young children. The IEC notes the vital role of parental responsibility in the selection of appropriate toys.

Through its International Standards and IECEE, its conformity testing and certification system, the IEC helps toy manufacturers produce toys and games that are safe for children and ensures the growth of an industry worth billions across the world .

Thanks again to Journalist & Consultant Peter Feuilherade for writing this article, originally published by the International Electrotechnical Commission.

Understanding The European Toy Market

We thought we’d share this presentation Steve gave at the Nuremberg/Spielwarenmesse International Toy Fair last month.

The presentation essentially offers a brief overview of the European Toy market as a quick reference guide.

For more detailed insight, tips on how to get things done and helpful resources, our published report “The Practical Guide To Doing Toy Business In Europe” is available here: http://www.toymarketingacademy.com/practical-guide-to-doing-toy-business-in-europe/

New White Paper Launched – Kids Tablets: Creating Competitive Advantage & Moat Building

You may be interested in the fast growing category of kids tablets.

We’ve just released a white paper on this topic, and specifically how companies can & are creating sustainable competitive advantage in this space.

To receive the white paper, please just click here, fill in your details & we will send to you…

http://www.stevenreece.com/white-paper-kids-tablets-competitive-advantage/

What Technology Means For Toys

Doom, doom, gloom! Technology is going to kill the toy industry apparently. Errr I don’t think so!

Technology and toys are a great mix. For me as a late thirty something, my Texas instruments ‘Speak and Spell’ was a favourite toy back in the ‘80s. I particularly enjoyed annoying everyone with the very American sounding voice (which was not so common at the time).

So I struggle to align my views with any particular new technology heralding the ‘end of toys’. Because technology just enhances the opportunity for toy companies. Over time, what was once cutting edge £million tech becomes every day mass market consumer tech. Which is great news for the toy industry, and always will be.

I once asked a friend working in Ministry of Defence procurement why MOD projects so often (according to tabloid newspapers at least!) seem to be very late & massively over budget, his response was that they are developing cutting edge technology, that is not a precise, predictable process, hence the unpredictable nature of development. That isn’t such an issue for the toy industry, as by the time we get to apply an existing tech to toys to hit a sharp price point we (mostly) already know it works & can bang it out for an attractive price.

Toys have never existed in a vacuum. There have always been other forms of entertainment available to kids. Yet the argument today that kids spend so much time on smartphones, tablets, apps etc., and therefore the death knell of the toy industry is upon us seems ludicrous to me. Surely this actually opens up opportunity for the toy industry rather than takes it away i.e. look at all the licensed toys based on app brands currently flying through retail, or the whole app toys fad.

We also have to consider the tech backlash which has been long in effect, but which has accelerated in recent years. Back in my mis-spent youth, we were told we’d get square eyes from watching too much TV, nowadays there may be more screens, and more addictive things to do via screens, but the natural reaction of any good parent to too much screen time is still the same – ‘No more screen time today, go and do something else, play with your toys instead!’

Technology the end of toys? Not likely, it’s just the beginning, and what exciting times these are!

Toy Product Development Masterclass – London April 19th 2013

We’re running a Product Development Masterclass in London, England on April 19th 2013.

This is not about the creative side of the product development process i.e. it’s not a day about how to create really cool Toys!

The focus is on creating a robust product development process from a commercial, marketing and brand point of view to ensure efficient development and to maximise the success of new product launches.

For more details on the masterclass and for ticket booking, please click on this link:

http://www.eventbrite.com/event/5667517698#

Social Media For Toy Marketing – The Mystical Veil Disappears!

We’ve got a real sense of late that at last the opportunity for charlatans and purveyors of over priced smoke and mirrors has receded.

Because the thing that counts with social media is being social i.e. investing time and effort in interacting with people over a period of time.

The over priced, under performing Apps and other bells & whistles that were all the rage for Facebook & other social media have receded somewhat as toy companies have begun to realise more and more that it’s doing the basics right, and above all consistently, which returns the best results.

For sure, as with all marketing, the startpoint is still the marketing objectives i.e. what are you trying to achieve. But once you have that, the confusion that abounded a year or two back is no longer prevalent. People have finally seen through the ‘slick Nick’ sales types and are doing it for themselves.

Even more imporantly, the need to respond and meaningfully interact with end consumers has largely been acknowledged and recognised. Those ‘Luddites’ who yelled ‘where’s the return on investment’ with social media have now largely been put in their place…

…because social recommendation – either via social media or online retail reviews – has been proven to have a massive positive effect on Toy sales. Still don’t believe that? You need to wake up & smell the coffee on this one…! Last year was the first year when research proved that over half of all Christmas purchases in the UK were influenced to some degree at least by social recommendation.

If you still need help on how to effectively utilise social media for your business, feel free to get in touch – we offer a full Marketing service from Brand Strategy through to Execution…serious (professional!) enquiries only please, we tend to be booked for some months in advance.

Today’s Kids, Today’s Technology

Here’s the thing we all need to understand about how today’s kids interact with technology – zero tolerance applies!

We may have grown up with malfunctioning barely working technology that promised so much, yet delivered so much frustration.

Today’s kids have not! They just won’t tolerate it!

The iPad generation have caught technology at the first point in time when delivering on the promise, as well as selling the dream have become as one!

This is at least partly due to the effect of online retail/reviews, whereby there is literally no hiding place for products that don’t perform. In previous years, poor quality products, or glossy products which didn’t deliver to expectations could hide to a degree, as there were fewer places / less accessible sources of more independent feedback available.

Today, everything is reviewed and rated, so god help something that doesn’t come up with the goods!

The reality is that today’s Tech products are fantastic in general. Kids of today interact with ease, pleasure and convenience with the ‘smart’ devices that are prevalent.

For my generation who embraced Technology but saw it fall short in terms of user friendlines and reliability, we had to make peace with the fact that interactive Technology came with as much frustration as pleasure/convenience/utility. Our natural impatience had to be tempered by the reality we faced.

Not so today’s kids!

Recently I took my kids to see Disney’s fantastic Wreck It Ralph movie. What a spectacle, what fantastic characters, what mind blowing backgrounds. Anyway, this isn’t a movie review blog, so I’ll leave the film review there…but one of the most interesting features of this film was the struggle that kids had with understanding what a ‘glitch’ is. (one of the characters on the film is described as a ‘glitch’). It dawned on me that these children, mostly born between 2004 and today have had no reason to learn what a glitch is, or to understand what that means.

It took me about an hour of continued effort to explain to their understanding!

So here’s the moral of this story – those companies developing and supplying Tech driven Toys & other products, who use their own perception of what’s acceptable, cool enough or functional enough…WISE UP! You need to look at your product from a Kids viewpoint if you want your product to have a chance of succeeding!

All the best

Steve

P.S. We run Focus Groups with Kids most weeks, and can easily arrange groups with kids of any age.

If you’d like us to help you take a kids eye view of your products, drop us a line…(serious enquiries only please, this is a professional service )

Interview with Brian Goldner, Hasbro’s CEO

In case you didn’t see it, this is a great interview with Brian Goldner, Hasbro’s CEO, on Fox Business.

While parts of this are a bit fluffy for those in the industry, the most striking part is the part where they discuss and show the graphs for Hasbro’s progress from the start of the noughties through to now, which includes originally Al Verrecchia’s time as CEO as well as Goldner’s.

One thing is clear, over the last decade or so, Hasbro have made great strides with their strategy of building their own brands and controlling more of the Entertainment Brands & Entertainment Brand distribution that their products are based on.

Guess the bit missing from this interview is what the encore will be for the next decade, but I’m sensing from the little hints dropped into this interview that there is much more to come!

http://video.foxbusiness.com/v/2160582650001/

What Toy Companies Care About

There are in essence 3 main things that Toy companies care about in my experience.

Frankly, everything else is pretty much just the fluff around what counts.

The reason for me writing this post is that I’ve recently had a spate of rather random experiences and enquries from 3rd parties looking to sell something to Toy companies (which by the way I welcome), but in most of these cases, the real benefit to the Toy companies was missing i.e. it was a bunch of benefits that weren’t really that interesting/exciting to Toy Co’s.

So, for anyone interested, here is our take on the 3 things Toy companies care about:

1. Having cool product to sell – Toy companies are very product driven/lead. The stronger the product portfolio, and the more ‘must have’ cool products they have the stronger their business will be and the more likely it is that retailers will list their products.

2. Selling as much of it as they can – clearly they want to sell it at profitable margins, but without sales there is nothing else to worry about, as the company won’t be in business long. So pursuing new sales opportunities and new proftiable/viable customers/markets is always interesting.

3. Effective financial management  – all of the above is very well, but Toy companies have harsh cashflow challenges due to the seasonal nature of the Toy sales cycle i.e. they have to cashflow the entire year round, but most of the sales are in a fairly limited portion of the year. They also trade with considerable risks relating to inventory and highly demanding/margin eroding customers. So in short, prudent and effective financial management is critical for toy companies.

All of which is pretty obvious, and all very well, but so what…well firstly if you work in a Toy company, is your company getting it’s eyes drawn off the ball towards other fluffy stuff which doesn’t positively contribute towards these 3 areas?

If you are looking to work with Toy companies, regardless of what service or product you offer, you would do well to build your pitch around one of these 3 key areas if you want to successfully recruit Toy companes as clients and customers!

All the best

Steve and team

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