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What's Hot in Toys

According to leading market research company, The NPD Group, US retail sales of toys generated $21.23 billion in 2011 compared to $21.68 billion in 2010, a decline of 2 percent. When looking at quarterly sales for the toy industry, Q1 and Q2 combined sales (combined to account for Easter falling in a different quarter vs. 2010) saw dollars decline by close to 3 percent and units fall nearly 7 percent, as average retail prices increased by more than 4 percent. The same trend continued in Q3 as dollars fell by close to one percent and units declined over 8 percent, while average prices rose 7 percent. The fourth quarter (Oct.-Dec.), which usually is a strong quarter for the toy industry, experienced a dollar sales decline of 3 percent and a unit sales decline of 7 percent, while average retail prices rose by 5 percent. (See Exhibit 1.)

Exhibit 1--US Sales Data: 2011 to 2010 Comparison

SUPERCATEGORY      JAN-DEC   JAN-DEC   % CHANGE
                     '11       '10

Action Figures &    $1.29 B   $1.41 B       -8%
Accessories

Arts & Crafts       $2.72 B   $2.75 B       -1%

Building Sets       $1.61 B   $1.30 B       23%

Dolls               $2.66 B   $2.49 B        7%

Games/Puzzles       $2.14 B   $2.32 B       -8%

Infant/Preschool    $3.21 B   $3.33 B       -4%

Outdoor & Sports    $2.77 B   $2.84 B       -3%
Toys

Plush               $1.32 B   $1.67 B      -21%

Vehicles            $1.64 B   $1.61 B        2%

Youth Electronics    $530 M    $541 M       -5%

All Other Toys      $1.33 B   $1.41 B       -2%

Total Traditional  $21.23 B  $21.68 B       -2%
Toy Industry

Source: The NPD Group / Consumer Panel Tracking, available at
https://www.npd.com/wps/portal/npd/us/news/press-releases/.

A strong increase of 23 percent in the Building Sets supercategory led the way into positive territory, with a respectable 7 percent increase in Dolls and a modest increase of 2 percent in Vehicles. Plush tumbled 21 percent with Action Figures and Accessories and Games and Puzzles both dropping 8 percent. On November 21, 2012, Gerald Storch, CEO of Toys R Us, predicted that Black Friday (November 23, 2012) would be "huge." [http://www.cnbc.com/id/49917052.] Speaking on CNBC's "Squawk Box" Storch indicated that an early Thanksgiving, leaving more shopping days before Christmas, generally is good for sales.

Of the $21.86 B of US toy sales in 2010, approximately 96 percent were imported, with 85 percent of such imports coming from China. [U.S. Department of Commerce Industry Report, Dolls, Toys, Games, and Children's Vehicles NAICS Code 33993, available at http://ita.doc.gov/td/ocg/2012%20toy%20report.pdf.] Notwithstanding the high proportion of imported toys, the toy industry makes a substantial contribution to the US economy in terms of the product design, marketing, research and development, and corporate support functions, as well as supporting an independent network of toy designers and inventors such as Marvin Glass Associates, [See http://en.wikipedia.org/wiki/Marvin_Glass_and_Associates.] Breslow Morrison & Terzian & Associates, [See http://en.wikipedia.org/wiki/Toy_Industry_Hall_of_Fame.] and Eddy Goldfarb. [Id.]

Popularity of Licensed Toys

Personal endorsements of products date back to the 18th Century, when Josiah Wedgwood capitalized on Queen Charlotte's use of his products by assuming the title "Potter to Her Majesty." The licensing of toy products got its start at the end of the 19th Century with the creation of a Yellow Kid Doll, based on the character from the "Hogan's Alley" comic strip in 1899. Mass market licensing followed soon thereafter with the 1907 Ideal Toy Company version of the Yellow Kid. In the 1930s toys incorporating characters from entertainment properties proliferated with Mickey Mouse, Popeye, Buck Rogers, Shirley Temple, and Dick Tracy branded items from that era now commanding high prices from collectors.

Entertainment and character licenses for toys continue to be popular with both children and adults. While the average retail price for a licensed toy was 57 percent higher than that for non-licensed toys, licensed toys represented a bright spot for the industry in 2011, increasing dollar sales by 2 percent and gaining 1.2 dollar share points. Licensed toys represented 26 percent of total industry sales in 2011.

Top properties for the year based on total dollar sales (in alphabetical order) included Barbie, Cars: The Movie, Crayola, Disney Princess, and Star Wars. Based on dollar sales: Cars: The Movie, Disney Princess, Star Wars, Thomas and Friends, and Toy Story topped the list of 2011's best-selling licensed properties (in alphabetical order). The 2013 nomination for the Toy Industry Association's Toy of the Year "TOTY") Award for Property of the Year included newcomers Monster High, Ninjago, and Skylanders Giants. Other nominated properties were the perennial Barbie, Marvel's The Avengers, Teenage Mutant Ninja Turtles, and Disney Princess.

A discussion of toy licensing, however, would not be complete without mentioning the licensing of toy brands for non-toy merchandise--the Barbie Lunch Boxes, the Mr. Potato Head iPhone cases, the G.I. Joe Graphic Novels, and other non-competing products and services. Industry analyst Sean McGowan of investment banking firm Needham & Co. states:

  Licensing revenue can be a very important source of extremely
  profitable revenue for toy companies. For example, Hasbro's
  Transformers property pulls in tens of millions of dollars in
  revenue for each movie release, and the profit margin on that
  revenue is over 90 percent. They stopped disclosing this data some
  time ago, but Mattel used to say that the wholesale value of
  products sold under the Barbie license approximates $1.0 billion.
  If they collect 10 percent of those sales as a royalty (a
  conservative estimate), then that's $100 million of revenue that's
  nearly pure profit. That may have only been 2 percent of total
  revenue, but it was probably more like 10 percent of total
  operating profit just from Barbie royalty income.

Clearly, out-licensing revenue is nothing to be sneezed at, particularly in light of the broad range of non-competing products that have been enhanced by toy brands, including, among other items; slot machines, adhesive bandages, blankets and linens, movie replica swords, wall decals, toothbrushes, furniture, electronics, and clothing of all sorts.

2012 Toy of the Year Awards

The 2012 TOTY Awards, given by the Toy Industry Association, Inc., and representing the best toys of the year as voted by retailers, media, and sales data were:

* Toy of the Year--LeapPad Explorer, LeapFrog Enterprises

* Activity Toy of the Year--LEGO NINJAGO Fire Temple, LEGO Systems, Inc.

* Boy Toy of the Year--Hot Wheels Wall Tracks, Mattel, Inc.

* Educational Toy of the Year--LeapPad Explorer, LeapFrog Enterprises

* Game of the Year--Angry Birds Knock On Wood Game, Mattel, Inc.

* Girl Toy of the Year--Fijit Friends Interactive Figures, Mattel, Inc.

* Infant/Toddler Toy of the Year--Elefun Busy Ball Popper, Hasbro/Playskool

* Innovative Toy of the Year--Hot Wheels Wall Tracks, Mattel, Inc.

* Outdoor Toy of the Year--Rockboard Scooter Mini, M.Y. Products LLC

* Preschool Toy of the Year--LeapPad Explorer, LeapFrog Enterprises

* Property of the Year--Angry Birds, Rovio Entertainment Ltd/Striker Entertainment (Licensing Agent)

* Specialty Toy of the Year--HEXBUG Nano Hive Habitat Set, Innovation First Labs, Inc.

2013 TOTY Nominees (announced November 19, 2012)

* Activity Toy of the Year--Toys that inspire creative play through various forms of activity:

* Blingles[TM] Bling Studio by Moose Toys

* Cake Pops By Bakerella Ultimate Cake Pops Set by SRM Entertainment LTD.

* Digital Light Designer by Crayola

* LEGO[R] Friends by The LEGO Group

* LiteBrix[TM] by Cra-z-Art[R]

* Monster High[R] Create-A-Monster Design Lab by Mattel, Inc.

* Symphony in B.[TM] by B. toys by Battat

Boy Toy of the Year--Toys developed for boys of any age:

* Air Hogs Battle Tracker[TM] by Spin Master Ltd.

* HEXBUG[R] Warriors Battling Robots Battle Stadium by Innovation First International

* Hot Wheels[R] Ballistiks[TM] by Mattel, Inc.

* LEGO[R] Ninjago by The LEGO Group

* Nerf N-Strike Elite Hail-Fire blaster by Hasbro, Inc.

* Skylanders Giants[TM] by Activision Publishing, Inc.

* Teenage Mutant Ninja Turtles Shellraiser by Playmates Toys

E-Connected Toy of the Year--An app-cessory or other physical toy that interacts with a smart-phone, tablet, or gaming device:

* Animal Planet Wildlands by Nukotoys

* Furby by Hasbro, Inc.

* Kurio7 by Techno Source, a division of LF Products (a Li & Fung Company)

* Life of George by The LEGO Group.

* Skylanders Giants[TM] by Activision Publishing, Inc.

* Sphero[R] by Orbotix

* StoryBots[TM] Starring You[R] StoryBooks by JibJab Media Inc.

Educational Toy of the Year--Toys that help children to develop special skills and knowledge through play:

* InnoTab[R] 2 by VTech Electronics North America, LLC

* LeapPad2[TM] by LeapFrog Enterprises, Inc.

* Leapster GS Explorer by LeapFrog Enterprises, Inc.

* LEGO[R] Architecture by The LEGO Group

* Roll & Play[TM] by ThinkFun Inc.

* Spectacular Science by Thames & Kosmos

* Zingo![R] Sight Words by ThinkFun Inc.

Game of the Year--Children's board, card, CD-ROM or electronic game formats. (NOTE: All electronic games must have an ESRB "Early Childhood" rating):

* Disney Jake and the Never Land Pirates Never Land Challenge Game by Wonder Forge, Inc

* Don't Rock the Boat[TM] by Patch Products

* Fibber[TM] by Spin Master Ltd

* Perplexus Epic[TM] by PlaSmart Inc.

* Skylanders Giants[TM] by Activision Publishing, Inc.

* Spot It Jr. Animals by Blue Orange Games

* The Sneaky, Snacky Squirrel Game? by Educational Insights

Girl Toy of the Year--Toys developed for girls of any age:

* Disney Princess Cinderella Magic Lights Dress by Creative Designs International (CDI), a division of JAKKS Pacific

* Doc McStuffins "Time For Your Check-Up" Doll by Just Play

* Furby by Hasbro, Inc.

* Furreal Friends Baby Butterscotch, My Magical Show Pony by Hasbro, Inc.

* La Dee Da[TM] by Spin Master Ltd

* LEGO[R] Friends by The LEGO Group

* Monster High[R] High School by Mattel, Inc.

Infant/Toddler Toy of the Year--Toys developed for infant children and toddlers (ages up to 36 months):

* Alphabet Activity Cube[TM] by VTech Electronics North America, LLC

* Cruise & Groove Ballapalooza[TM] by Fisher-Price, Inc.

* LEGO[R] Duplo Creative Sorter by The LEGO Group

* Rock*tivity walk 'n roll rider by PLAYSKOOL

* Roll & Play[TM] by ThinkFun Inc.

* Tranquil Turtle[TM] by Cloud b

* Woofer[TM] by B. toys by Battat

Innovative Toy of the Year--Toys that utilize innovative design, technology, or manufacturing processes to enhance play value:

* 4D Cityscape Time Puzzles by

* 4D Cityscape Puzzles Inc.

* Digital Light Designer by Crayola

* Furby by Hasbro, Inc.

* Illumivor Mecha-Shark by Skyrocket Toys

* LeapPad2[TM] by LeapFrog Enterprises, Inc.

* Nerf Firevision Sports Football set by Hasbro, Inc.

* Swish[TM] by ThinkFun Inc.

Outdoor Toy of the Year--Toys designed for outdoor play:

* Fuze Wheel Writer by Sky-rocket Toys

* Little Tikes[R] Cozy Couple Go Bubbles by Imperial Toy

* Nat Geo WILD[TM] Anteater Bug Vac[TM] by Uncle Milton Industries

* Nerf Firevision Sports Football set by Hasbro, Inc.

* Razor[R] FlashRider[TM] 360 by Razor USA LLC

* The Original Big Wheel by Kids Only, Inc., a division of JAKKS Pacific, Inc.

* YBIKE Explorer by National Sporting Goods

Preschool Toy of the Year--Toys developed for preschool-aged children (aged 3-5):

* Chuggington Die-Cast Railway by Wilson and TOMY

* Disney Princess Songs Palace by Little People[R] by Fisher-Price, Inc.

* Doc McStuffins "Time For Your Check-Up" Doll by Just Play

* LeapPad2[TM] by LeapFrog Enterprises, Inc.

* Servin' Surprises[TM] Kitchen & Table by Fisher-Price, Inc.

* Switch & Go Dinos[TM] by VTech Electronics North America, LLC

* Symphony in B.[TM] by B. toys by Battat

Property of the Year--Property that had the greatest success spreading its brand through-out the industry:

* Barbie[R] (Mattel, Inc.)

* Disney Princess-Cinderella (Disney Consumer Products )

* LEGO[R] Ninjago (The LEGO Group / Ninjago)

* Marvel's The Avengers [TM] (Disney Consumer Products)

* Monster High[TM] (Mattel, Inc.)

* Skylanders Giants[TM] (Activision Publishing, Inc.)

* Teenage Mutant Ninja Turtles (Nickelodeon)

Specialty Toy of the Year--Toys primarily distributed through specialty retailers:

* 4D Cityscape Time Puzzles by 4D Cityscape Puzzles Inc.

* All Duct Out by ALEX Toys

* Fashion Angels Color Rox Hair Chox[TM] by Fashion Angels Enterprises[TM]

* Fastrack by Blue Orange Games

* LEGO[R] Architecture by The LEGO Group

* Loopdedoo[R] Kit by Ann Williams

* Playmobil E-Rangers Headquarters by Playmobil

Toys R Us Fabulous 15

(Not in order)

1. Disney Doc McStuffins Time For Your Check Up Doll by Just Play $39.99

2. Fisher-Price Jake and the Never Land Pirates-Musical Pirate Ship Bucky by Fisher-Price $44.99

3. Lalaloopsy 12 Inch Doll-Silly Hair Star by MGA Entertainment $49.99

4. Furby by Hasbro $54.00

5. Gelarti Designer Studio by Moose Toys $24.99

6. LeapPad2 Explorer by Leap-Frog Enterprises $99.99

7. Micro Chargers Time Track Race Track by Moose Toys $34.99

8. Teenage Mutant Ninja Turtles Secret Sewer Lair Playset by Playmates $139.99

9. Yvolution YFliker F1 Flow Series Scooter by Yvolution $79.99

10. Hot Wheels Remote Control Terrain Twister Vehicle, by Mattel $99.99

11. LEGO Ninjago Epic Dragon Battle, by LEGO $139.99

12. One Dimension Singing Doll by Hasbro $29.99

13. Skylanders Giants Starter Pack by Activision $49.99 for Wii (for other platforms prices vary)

14. Tabeo 7 Inch Tablet by Toys R Us $149.99

15. Wii U by Nintendo $419.97

Amazon.com's Black Friday Top Ten

Amazon.com's top 10 Toys and Games as of November 23, 2012:

1. LeapFrog LeapPad1 Explorer Learning Tablet, Green--Leap-Frog $59.99

2. Fisher-Price Little People Disney Princess Songs Palace-Fisher Price $35.71

3. LeapFrog LeapPad2 Explorer, Green--LeapFrog $99.00

4. CrayolaLight Designer-Crayola $39.97

5. LeapFrog LeapPad Carrying Case, Green--LeapFrog $12.59

6. The Elf on the Shelf: A Christmas Tradition with Blue Eyed North Pole Pixie-Elf The Elf on the Shelf $29.95

7. LeapFrog App Center Download Card--LeapFrog $15.00

8. LEGO Ultimate Building Set-405 Pieces--LEGO $24.59

9. Easy Bake Ultimate Oven-Hasbro $38.00

10. HedBanz Game--Spin Master Games $13.97

John H. McCann is a partner with Schechtman, Halperin & Savage, LLP based in Pawtucket, RI.

Source Citation   (MLA 8th Edition)
McCann, John H., III. "Toy licensing." The Licensing Journal, Jan. 2013, p. 32+. Academic OneFile, http%3A%2F%2Flink.galegroup.com%2Fapps%2Fdoc%2FA319000696%2FAONE%3Fu%3Dko_acd_uoo%26sid%3DAONE%26xid%3D1c69b9f8. Accessed 19 Sept. 2018.

Gale Document Number: GALE|A319000696