In Western Europe, high inflation is having a negative impact on sales of toys and games, with a similar situation prevailing in Asia Pacific, notably Japan, as rising prices in many areas of the economy are putting pressure on consumers’ disposable incomes.
There was also an element of a natural correction in 2022, with a drop in sales after the strong performances in most countries for much of 2020 and 2021 due to the pandemic. Consumers in home seclusion spent more on toys and games to entertain both their children as well as themselves, while the lifting of COVID-19 restrictions saw people spending more time outside their homes again.
Sales of video games in Western Europe have also been hit by supply chain problems with video games hardware, including Sony’s PlayStation lines, leading to shortages of some products.
Despite these negative pressures, Western Europe saw sales growth increase by 2% in 2022. In contrast, Asia Pacific saw decline of 4% in 2022, due to losses in China and Japan.Performance in Asia Pacific was also negatively impacted by the resurgence of COVID-19 cases in China in 2022, as the virulent Omicron variant spread rapidly across the country. With the Chinese Government keeping its strict zero-COVID policy in place until very late in the year, this has meant significant disruptions and restrictions across most of society.
However, while the declines in China and Japan, the region’s two biggest toys and games markets, meant sales were falling overall in Asia Pacific, all other major country markets saw positive growth in 2022.
Key markets to watch in Western Europe and Asia Pacific
High inflation rates will likely remain a problem in the immediate future, but both Asia Pacific and Western Europe are expected to see positive CAGRs of 3% and 2%, respectively, in real value terms over 2022-2027. Asia Pacific will have the three most dynamic toys and games markets globally over the forecast period in India (16% CAGR), Indonesia (14%) and the Philippines (13%), with only Japan expected to see declining sales in this region. However, seven of the 10 least dynamic countries will be in Western Europe, including the region’s three biggest markets – Germany, the UK and France – all with CAGRs of 1% or below.
Blind collectables, trading card games and Squishmallows among the recent crazes
Blind collectables have been helping to drive a dynamic performance in dolls and accessories in China, while games and puzzles was one of the few categories to see strong growth in Japan in 2022 thanks to a trading card games craze.
In the UK, Squishmallows have taken the country by storm, quickly becoming the number one product in plush, and also helping this category defy the generally declining trend in traditional toys and games in this country.
Chinese regulations could hamper sales in Asia Pacific’s biggest market
While momentum is not expected to disappear from the blind collectables trend in the next few years in China, it is expected to slow given the Chinese Government has sought to strengthen the regulation of blind collectibles, including increasing transparency of the probability of acquiring hidden special SKUs as well as requiring consent from a guardian when a minor purchases blind collectibles.
In addition, new anti-addiction regulations limit the amount of time minors can spend playing video games in China, which could impact sales in this category in this country, and therefore the region as a whole. Although the licensing of new video games in China started again in 2022 after being frozen for quite a lengthy period, any new freeze could also act as a factor limiting growth in the coming years.
For further insight on regional trends, country highlights and key data findings, see the full reports on Toys and Games in Western Europe and Toys and Games in Asia Pacific.
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