Toy Industry Association's PlayCon 2012 Explores "Business of Play"

Toy experts discussed the toy tech revolution - and why toymakers should proceed with caution

By Kristin Morency
June 2012

Leaders from the toy, play and entertainment industries joined together from May 16-18 in Washington, DC to hear from expert panelists, take part in interactive workshops, and network with colleagues at the Toy Industry Association's (TIA) PlayCon 2012.

The annual event explored cutting edge research and topics that are currently affecting the business of play – including licensing, creative retail strategies, tools for doing business in China, and global research about childhood and family decision-making.

"Participants walked away from PlayCon with renewed insight and refreshed perspectives about the ever-evolving toy industry and its most important consumers – parents and kids!" said Marian Bossard, TIA vice president of meetings & events.

A common theme threaded throughout the presentations was the relationship between technology and play. While the prevalence of apps and the rise of digital play were acknowledged, speakers across all sessions underscored the enduring value of physical toys.

The following are some highlights from PlayCon's various presentations and workshops:

The Digital Storm

In a presentation called "What the Data Tells us About the State of Kids and Play," Anita Frazier, analyst from The NPD Group, shared statistics about play before tackling the subject of the "digital storm."

"Toys [have] a very stable place in kids' lives, with a participation rate of 85% for children aged 2-12," said Frazier, adding that licensed toys stand out as increasingly popular – about ¼ of all purchases for children are licensed.

Referencing today's "digital kids," Frazier said that 75% of kids still long for physical content, and cautioned toymakers against adding technology "simply for technology's sake. Only use it if it makes the experience better."

Frazier concluded: "Toys are generally well-suited to weather the digital storm. Some of the more successful new toy products have been decidedly low-tech. Keep it simple, keep it fun."

Evolving Business Models

Industry analyst Sean McGowan of Needham & Company, LLC said that retailers are noticing that games are "contracting" … they are taking up less space on store shelves due the ubiquity of app-driven content. The games category is in transition as toymakers are competing with free digital content. "It's not just a platform transition – it's a business model change," explained McGowan.

What's happening around the world will have a ripple effect on the U.S. toy industry, added McGowan. "With rising consumer spending power, factories are trading up and there is an increasing competition for commodities."

Licensing Strategies

With 26% of total industry sales and 2% growth in 2011, discussions about licensed toys played a key role in the PlayCon program.
During the Licensing Workshop, Tom McGrath, owner of TMG Consulting, advised toymakers to partner with apps that have achieved "a critical mass" before determining "whether it's a property that can translate well into a three-dimensional toy," said McGrath. "Don't over-complicate – don't take it to a whole new world," he added.

Michael Stone of Beanstalk encouraged companies to play the "waiting game" when it comes to apps – "don't commit to a property before its success is apparent among both kids and adults," he said. "Be sure that an app will translate well into a three-dimensional toy."

Manuel Torres from Nickelodeon told the audience that "collectibility, variety and character connection" are all important when it comes to licensed products.

Redefining Childhood

In her session on childhood, Dr. Renee Weber of The Marketing Store Worldwide gave attendees a sneak preview of the global realities of play from a first-of-its-kind study that will be released in September 2012. Spanning 12 countries and 4,000 kids, the research explores the lifestyles of children, from their usage of electronics, to their favorite toys, leisure activities and values/aspirations.

Dr. Weber noted that in the U.S., a profound change in the habits of children has occurred in the last five years: "The average age that kids began using electronics (such as computers) five years ago was a little over 6 years of age. Now, we see that kids begin watching TV during infancy, and 10% of babies are using mobile devices."

However, Dr. Weber pointed out that there are certain characteristics of physical toys that can't be replaced by mobile technology.

What kids LOVE about traditional toys:

they are accessible;
they allow kids total control and provide greater variability in outcome;
they have an impactful physical presence; and
they elicit strong physical play

"PlayCon 2012 was a huge success with a distinctly international flavor – we weren't just talking about the U.S.," said Bob Wann, Chair of the PlayCon Committee and CEO of Patch Products. "Our main goal in organizing the conference was met: attendees left the event feeling confident, optimistic and excited that they had the tools and knowledge to enable their respective businesses to be more successful."

PlayCon 2013 (May 15-17, 2013) will take place at the Hyatt Regency Resort and Spa at Gainey Ranch in Scottsdale, AZ. Information will be made available on the Events page of the TIA website in the coming months.