The last five years

There has been significant consolidation in the toy business. For example, Mattel acquired both Tyco Toys (makers of Matchbox, Tyco RC and Magna Doodle) and Pleasant Company (home to the American Girl book and doll series). During the same period, Hasbro purchased Galoob and Tiger Electronics.

In a trend that precedes the last five years, toy brands have increased in importance. Toy companies with their own strong brands have continued to grow, and Mattel’s marketing of its powerful brands has made it the largest toy company in the world. As toy brands have increased in importance, the ability to drive outlicensing has dramatically increased. Film properties have, with some important exceptions, declined in importance as a foundation for toy sales. TV is still important, but declining ratings have made it difficult for anything less than a strip to drive sales. However, kids’ play patterns haven’t changed, kids still love to be hugged, and parents still stop what they’re doing for a moment to watch a child play with a well-loved toy.

The next five years

In the next five years, we will see further consolidation in the toy business. Toy brands, especially those with global reach, will continue to increase in importance. With fewer toy companies, and with those companies focusing on their own brands, it will continue to be harder to secure a toy deal than a television deal, and thus the importance of the toy company in the children’s entertainment equation will continue to increase. While there will be important exceptions, toy companies will rely less on one-time film properties.

With an increase in the number of children’s TV stations around the world, and with the advent of broadband, the media market will keep on fragmenting, making it even more difficult to drive new properties with entertainment alone. The hits will be multiplatform. It will matter less and less where a property starts: Book, toy, video game, or television concept. And, happily for all of us, kids’ play patterns will still not have changed, kids will still love to be hugged, and parents will still stop what they’re doing for a moment to watch a child play with a well-loved toy.

Rob Hudnut is VP and executive producer at El Segundo, California-based toyco Mattel.