Byravee Iyer
Mar 20, 2013

Tablets threaten toy story in Asia

SINGAPORE - In the age of tablets and smartphones, traditional toy makers are struggling to stay relevant in Asia.

Toy sales growth has fallen across Asia, according to Euromonitor
Toy sales growth has fallen across Asia, according to Euromonitor

Growth in the toys and games segment is slowing. Market research company Euromonitor estimates that the category grew 11.6 per cent in 2011-2012, but will decline to 7.2 per cent between 2011-2016. More specifically, growth in traditional toys such as board games and dolls is set to fall from 11.4 per cent to 6.5 per cent.

The numbers are particularly pronounced in markets in Southeast Asia. In Indonesia, for instance, it is expected to drop from 13.5 per cent to 5.1 per cent. Similarly, in Singapore the number is set to decline from 9.5 per cent to 3.1 per cent, while in the Philippines it will fall to 3.1 per cent from 8.7 per cent.

The story is no different in other markets. In China, the growth of traditional toys is expected to slip from 18.7 per cent to 12.4 per cent, and in Japan it will go to as low as 0.8 per cent from the 10 per cent growth it registered last year.

One of the biggest challenges facing the industry is that physical products are being replaced on tablets and smartphones. Also, the time children are spending on these gadgets is going up sharply.

There are other problems hampering the sector. In Japan, declining population and low birth rates have resulted in reduced demand for toys. Manufacturers are increasingly required to expand their consumer base by targeting adults and the elderly population. “Without government initiatives, toy sales will continue to suffer,” said a report from Euromonitor.

For their part, toy makers are now trying to adapt. Walt Disney got together with toy company Jakks Pacific for a new line of technological toys designed to link the toys kids play with at home with Disney’s animated characters.

This application can be downloaded on both Apple and Android applications. Using a device’s camera, one can focus on any toy designed to work on the application and it will trigger preset animations that appear on the screen. 

Mattel, the makers of Barbie, have also turned their Hotwheels into an application.

In Asia, Japan’s Bandai Namco Group leads the market with 9.6 per cent market share. Another Japanese company, Takara Tomy, accounts for about 8.2 per cent of the market. Mattel has about 3.8 per cent, followed by Lego at 2.5 per cent and Hasbro with 2.2 per cent. Other established players like Walt Disney and Pokemon have less than one per cent each.

Not all companies are losing market share. Danish company Lego has experienced sales growth of over 50 per cent in Asia in recent years, said Roar Rude Trangbaek in an email to Campaign Asia. He added that this was happening across all markets in Asia. To support this demand, Lego recently inaugurated a new head office in Singapore.

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