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New Toys and Games Research: What is it Telling Us?

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Euromonitor International’s latest research reveals that 2014 saw the highest global growth in toys and games in six years, as emerging regions continued to drive sales. Value sales of toys and games recoded double digit value growth in emerging regions, including Latin America and Eastern Europe. The developed markets of Western Europe and North America saw their best performances since 2008 – a much awaited and welcome return to growth following sluggish sales over recent years.

In 2014, global sales of traditional toys and games and video games recorded value growth of around 5% and 7%, respectively. Licensed products remained an important contributor to the industry’s dynamism. In traditional toys and games, construction, once again, was the fastest growing category with approximately 13% growth in value terms, closely followed by dressing-up and role play, with 12% growth. Video games recorded its best performance since 2008, posting double-digit value growth, as the full impact of the arrival of the much anticipated next-generation consoles, Xbox One and PS4, were felt across the globe. The increasingly popular digital gaming was another contributor to video games’ strong performance in 2014.

Some of our key findings include:

  • The global toys and games sales exceeded US$151 billion in 2014, recording 6% value growth compared with 3% gain the previous year. Steady real term growth is expected to continue to 2019.
  • Traditional toys and games, which accounts for over 56% of total toys and games in value terms globally, recorded its best performance for more than a decade in 2014 with 5% value growth while sales exceeded US$85 billion mark. Eastern Europe and Asia Pacific were among the best performing regions, recording over 9% and 7% value growth, respectively. These regions were followed by Latin America, which enjoyed around 6% increase in value sales in 2014. World’ s top 5 best performing markets included Argentina, Turkey, Indonesia, Thailand and Russia all posting double digit growth rates.
  • In relation to licensing, Frozen, by far the hottest merchandise of 2014 globally. Launched at the end of 2013, Disney’s ever most successful animated children’s film snowballed into a phenomenon throughout 2014 taking the industry by surprise. The brand’s popularity extended beyond North America – it was the third-biggest film ever at the Japanese box office, for example. The blockbuster film’s central dynamic – the turbulent, but ultimately loving, relationship between two sisters – enjoyed significant cross-cultural/global appeal throughout the year stimulating toys sales.
  • 2014 witnessed many movie launches which contributed to the sales of tie-in products. LEGO movie, Teenage Mutant Ninja Turtles, Disney’s Planes Fire & Rescue, Transformers: Age of Extinction, How to Train Your Dragon 2, Spider Man 2 as well as Marvel’s Guardians of the Galaxy and Captain America  all came in 2014, leading to a flurry of licensed action figures, dressing-up and role play, construction toys and other products.
  • In the US, the birthplace of many international licences and world’s largest licensed toys market, penetration of licensed properties in toys reached 27% in 2014 translating into almost US$5.9 billion in absolute sales. Licensed toys will likely continue to be one of the fastest growing areas in the US remaining vitally important to sales. In fact, there are numerous factors that might make licensed products even more important in coming years. Besides the multiple films Disney intends to produce for Marvel characters nearly every year, there is a new Star Wars film slated for release in December 2015, with multiple more to come within the next five years. Jurassic World and Minions are also likely to be the hot properties of 2015. Additionally, Disney has already announced that it will be producing a sequel to Frozen. Another Transformer film is already slated for release, with more likely to follow as well as likely new releases for Spiderman, Superman, Batman, and many other major super hero characters. Television will also continue to play a major role, with brands like Teenage Mutant Ninja Turtles and My Little Pony still resonating with children.
  • Construction was the fastest growing category in traditional toys and games in a 7th consecutive year in 2014 with 13% value growth globally thanks largely to another phenomenal performance from LEGO. The popularity these toys proved to be resistant to any sort of decline and the success of the remarkable LEGO movie meant that 2014 was just another great year for the company. With the new Star Wars movie being launched in 2015, the future also looks pretty bright. Back in 2013, Mattel, world’s largest toys maker, acquired MEGA brands, meaning competition could become more intense. Construction is also forecast to be the most dynamic category in overall toys and games globally with over 6% CAGR adding further US$3.3 billion in projected sales by 2019.
  • Western Europe traditional toys and games sales enjoyed a welcome return to growth in 2014 from static or declining sales of recent years. Turkey was the star of the region with 17% value growth, outperforming all other countries by a large margin. All countries in the region recorded positive growth with the UK leading the way with almost 5% rise in sales in value terms.
  • In North America, the largest traditional toys and games market globally, value sales of traditional toys and games posted its best performance for more than a decade in 2014. Over the next five years, the region is projected to record around 1.4% CAGR translating into US$1.5 billion in additional sales by 2019. Construction as well as actions figures and accessories are expected to underpin the sales in coming years contributing just under US$800 million combined to the overall sales in absolute terms over the course of 2014 and 2019.
  • China is forecast to be world’s growth engine in traditional toys and games over the next 5 years adding some US$4.4 billion to the global sales by 2019. Spend per child on traditional toys and games in China was less than US$45 in 2014, compared with US$330 in Japan in the Asia Pacific region, suggesting strong future growth potential. Low spending in the country masks the extreme gap between very wealthy families which spoil their so-called ‘little emperors’ and much poorer households at the bottom of the pyramid.
  • The global video games market recorded its best performance for 6 years recording over 7% value growth in 2014, stimulated by nex-gen console launches as we as digital gaming. Both Xbox One and PS4 were launched towards the end of 2013 and contributed greatly to static video games consoles’ 33% value growth in 2014. In overall video games, all regions recorded positive growth; Latin America was being by far the most dynamic region with 19% value growth in 2014 followed by Eastern Europe with 15%.
  • Digital gaming continued to be one the best performing categories in video games globally in 2014 posting just shy of 14% value growth thanks largely to the rising penetration of smartphones and tablets, improving gaming experience on these devices as well as the new game launches. Video games software sales continued to suffer in a 6th consecutive year shrinking over 5% globally in 2014 as the shift from packaged software to digital gaming became ever more pronounced.
  • As the lines between traditional toys and games and video games blur, toys to life products have become popular within video game hardware accessories. These products were first made popular by the Skylanders series, launched in 2010, which went largely unchallenged until the release of Disney Infinity in 2013. In 2014, Activision Blizzard introduced the 4th generation of its range, Skylanders Trap Team retaining its global market share in video games hardware accessories at around 10%, up from 3% in 2011. Having seen the popularity and dynamism of Skylanders, Disney invested heavily in this area launching its own version of hybrid toys in 2013, securing the company almost 7% share of the global video games hardware accessories market in value terms in 2014.
  • The success of toys to life products has already spurred other companies to move into this area most notably Nintendo, which entered the toys to life market in 2014 with its Amiibo range earning the brand a 2% market share in video games accessories globally. LEGO already partially dipped into the market with LEGO Fusion in June 2014, and will become much more heavily involved in 2015. The company announced that it will release LEGO Dimensions in September 2015, a new product that will allow consumers to purchase characters that can be imported into a game, featuring many properties from the highly popular LEGO movie.
  • Gamers in the UK spent the most, at US$142 per video gamer, within video games in 2014. In France, another important market in terms of spend per gamer, shooter, sports and role playing were the most popular game genres, accounting for 45% of video games software sales in 2014, up from 29% in 2004.
  • Stimulated by rising disposable income, strong demographic fundamentals, increasing penetration of organized retailing as well as urbanization, Asia Pacific is forecast to be the most dynamic traditional toys and games market to 2019, recording a CAGR of around 5% while adding some US$5.5 billion to the global sales.
  • Mattel is the largest and best-known traditional toy company in the world, commanding almost 12% share of the global traditional toys and games market in 2014. However, while it controls around a fifth of the toy market in North America and Latin America, its dominance is much weaker in other regions, such as Eastern Europe where LEGO Group leads, and Asia Pacific where the top spots are taken by BANDAI NAMCO and Takara Tomy.
  • In board games, Hasbro's brand Monopoly is iconic. However, it does not sell that well in Japan where trading card games such as Duel Masters and Yu-Gi-Oh! are much more popular.
  • In dolls and accessories, Mattel's Barbie is still by far the most recognised brand in the world, accounting for almost 18% of global value sales in 2014, down from over 23% in 2010. It is hugely popular in Germany where an average girl owns around seven Barbie dolls. However, in South Korea, Mimi dolls are more popular than Barbie, while in Spain FAMOSA’s Nenuco, Nancy and Barriguitas dolls command a combined value share of 43%. In 2014, dolls based on the hugely popular Frozen movie was the best new comer to the category reaching over 3% value share from scratch.
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