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TOYS Global - Action Figures

A large, growing and changing market

The reason why this article focuses on the U.S. market for Action Figures is two-fold: Firstly, it is the largest market and represents an estimated 30 percent of all Action Figures sold worldwide; secondly, all indications are that similar developments are taking place around the globe.

Graph 1: Movies with Action Figures

On all accounts, the Action Figure market in the U.S. is growing nicely. It is today driven by two major factors – big screen movies and films shown on cable television. On the surface of things, everything looks just fine and action figure movies continue to be released on a pretty constant rate (see graph 1). The same movies are being rerun on the leading TV networks catering to children – the main consumers of Action Figures – backed by advertising there.
All indications are that the Action Figure toy category is growing steadily and­ this in line with the overall U.S. toy market (see graph 2). However, there are clear indications that the strategy of relying on movies to propel Action Figure sales is running into problems. Firstly, cinema attendance is way down and this in particular for children – the primary consumer group for Action Figures (see graph 3).
Also, the same is happening to the second driver, cable TV, and graph 4 shows clearly just how quickly the kids are running for the hills.

You could argue that the fantastic box office result of the Avengers – End Game movie is a sign that things are changing to the better and that movies of the Action Figure genre are making a comeback. Unfortunately, my friends at the Alliance of Motion Picture and Television Producers (AMPTP) whom I consulted on this matter believe that this success comes at the expense of other movies and that the overall negative trend will be repeated in 2019.
However, what concerns us here is less what happens to the film and TV industry but rather how this affects toys – in this case, the Action Figure business. All indications are that movies are becoming less effective in generating toy sales. This may be due to a variety of reasons – kids don’t watch these films nor the ads there and hence are not motivated to get their parents to fork over the money to buy the toys; kids already have too many of these toys at home and do not want any more; or kids are just getting tired of these plastic figures and want something else instead – an iPad for instance.

Graph 2: Action Figure market in the U.S.

Graph 3: Movie ticket sales in the U.S. per year

Let us examine one example – Star Wars and its Action Figure sales in the U.S. There were five movies between 2008 and 2018. Action Figure sales fell for the last four regardless of the box office success of the movie itself (see graph 5). This chart also suggests something else. Toy sales do better if the movie sequels are far apart as is the case between Clone Wars and The Force Awakens. There are two reasons for this. One is that you have after the more than seven years between the two releases a completely different generation of kids who are new to Star Wars. The second is that the Collectors who make a substantial part of Action Figure sales tend to give too frequent movie releases a miss. Again, Star Wars is a good example for this. According to the Klosters Retailer Panel data, Collectors accounted for about 15 percent of all Star Wars Action Figure sales in the case of The Force Awakens. This dropped to half or about seven percent in the case of Rogue and then by another third for The Last Jedi. In the case of Solo, the collectors stayed away completely .

Given all this, we should be seeing a decline in overall Action Figure sales in the U.S. This is not the case as the second chart demonstrates. The reason for this is that a host of new Action Figure brands have emerged that do not rely on the typical “Bang Bang You Are Dead” movies that have propelled the toy business up to now. Four companies stand out – Just Play with PJ Masks; Jazwares with Roblox and Fortnite; Spin Master with Bakugan and Funko with its POP figures. All four rely on social media and successful licenses. PJ Masks focuses on the very young; Roblox and Fortnite on the six to eight year olds, Bakugan the same; and Funko is going after the adult Collector as well as the pre-teen child.
The best way of demonstrating the shift that has occurred is by looking at the shelf space devoted to the Action Figure category by the major mass retailers – for example Wal-Mart and Target. Bandai, Hasbro, Jakks Pacific and Playmates took a beating not just because they lost the shelf space at Toys‘R‘Us but also because they lost shelf space at the remaining two mass retailers as well. The winners were clearly the four companies mentioned above. The only company that had a major stake at Toys‘R‘Us and managed to at least partly compensate for the loss by expanding its presence at Wal-Mart and Target was Mattel (see table next page).

Graph 4: Rebellion of the youth: TV channels for children have lost half of their viewers in the past ten years

Graph 5: Star Wars movies and the sale of Action Figures

The role Mattel plays in the Action Figure category is particularly interesting. Untile recently, they had the licenses for all DC Comics IPs – Superman, Batman, Aquaman and Shazam and Wonder Woman. At the end of last year, Time Warner announced that the licenses for the DC Comics Action Figures would go to Spin Master in 2020. In fact, several buyers told me that Mattel had consulted with them as to whether the company should bid for an extension of the license and then decided to go only after the Wonder Woman rights and not those for the Action Figures.
However, Mattel did go after a different type of license, one that is much more supportive of its main target, preschool children. This license is that of Disney Pixar which includes Coco, Finding Nemo, Monsters Inc., Incredibles and Onward – all animated movies, rated G or PG only, and targeting the two to six year olds. They got this license effective January 1, 2020.

That Mattel is not going after the DC Comics license does not mean that the company is deserting the Action Figure category totally. In fact, they pivoted into a very interesting new tack which promises to change the direction away from the movie-driven concept totally. They obtained the BTS license for Dolls, ActionFigures, Games and Collectibles worldwide and first products will hit the shelves this Summer.
BTS is a seven-member South Korean boy band which continues to be phenomenally successful. They formed in 2013 and released their first album in the same year. “Wings” became BTS‘ first album to sell one million copies in South Korea. By 2017, BTS crossed into the international music market.

Lutz Muller is an expert for the international toy industry. Until 1984 he was a CEO in the manufacturing sector. His consultancy Klosters Trading was founded in 1987, his customers include toy company executives as well as financial analysts. Furthermore, his contacts include buyers for the 30 largest toy retailers of the 17 largest markets worldwide as well as numerous Chinese toy manufacturers. He also publishes a monthly subscription newsletter.

The band is the first and only Korean act as of 2019 to top the U.S. Billboard 200 with their studio album “Love Yourself: Tear’ and have since hit the top of the U.S. charts, making BTS the first group since The Beatles to earn three number one albums in less than a year. They also broke South Korea‘s Gaon Album Chart‘s all-time monthly record and became the first Korean album certified Gold in the United States. In 2018, BTS had the second and third best-selling albums worldwide and were the second best-selling artists worldwide. Since then they have gone from strength to strength. The band has already CDs and Books at the majors and all are doing exceptionally well – Amazon U.S. with 30 SKUs, Target with 15 and Wal-Mart with 3.
There is virtually no doubt in the toy buyers’ minds that Mattel will do exceptionally well with BTS and that the group will have legs for a couple of years at least. The really interesting part about this all is that for the first time in history a boy group will become a major driver in the toy space and has none of the baggage that burdens the Action Figures taken from blockbuster movies. In other words, Mattel is trying to do an end run around Hasbro and Disney and it will be interesting to see to what extent this venture will play out.

Lutz Muller

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