Inventor Roundtable Part 3: Has crowdfunding changed the future of toy inventing?

Billy Langsworthy

By Billy Langsworthy

September 24th 2015 at 11:00AM
UPDATED September 24th 2015 at 1:04PM
Inventor Roundtable Part 3: Has crowdfunding changed the future of toy inventing?

This week, Seven Towns’ Steve Perrin, Ooba’s Max Ford, Wow! Stuff’s Richard North, Jenga creator Leslie Scott and Bananagrams’ Rena Nathanson discuss whether, with more and more inventors getting to market through platforms like Kickstarter, the current landscape is as good as it’s ever been for toy and game inventors.

Max Ford, Managing Director, Ooba: There are lots of different disruptive platforms to launch games and toys off of like Kickstarter. Would you have used Kickstarter if it had been around at the start of Bananagrams?

Rena Nathanson, CEO, Bananagrams: I think had I not had the resources, yes. It’s a great resource for people who have no other option.

Richard North, CEO, Wow! Stuff: We used Kickstarter for Real FX. With Kickstarter, you have this fantastic attention when you do a campaign, particularly from tech websites. The beauty of it is that if you’ve got a good product with some PR lined up, then the likes of Engadget, Mashable and TechCrunch will pile in and review it. If they love it, it’ll be a big success and if they hate it, it won’t. Today, in bringing new products to market, Kickstarter is phenomenal.

Rena Nathanson: The landscape is changing so quickly, even in the last two or three years.

Richard North: Three years ago, you couldn’t have had a small company come up with a great product like Bananagrams and get it out there so fast. Even the big companies are trying to get involved in all the Kickstarter forums.

Max Ford: Looking at things that have launched successfully through it, games are particularly big as an area on Kickstarter. Cards Against Humanity has been an enormous success since it was funded and the latest one is Exploding Kittens, which looks to be a good, interesting card game that has drummed up over $8m.

One of the theories we have at Ooba is that bringing games like Jenga and Bananagrams to market will happen predominantly on this sort of platform in the future. The bigger companies might rightly now wait for something to become socially aware with a big online following before licensing it. I believe Hasbro has just done it with Pie Face.

Richard North: The big difference with a platform like Kickstarter is that consumers are voting these products to the top. They are becoming massive advocates for the products because they now have a voice. This has taken everyone by surprise, especially in the last five years with the real push forward of Kickstarter. A big company will create something internally or via an inventor programme and then it will have to market it back to the consumer.

There’s also IndieGoGo and there’ll be other platforms coming out. You see these campaigns raising $8m, $10m, $12m and there’ll be a $50m one at some point. Maybe there’ll be a $100m campaign within the next five years. This means the big companies can be disrupted massively. If a major company dominates the blaster market and then somebody creates something that does $15m on Kickstarter and ends up seeding to thousands of people who become the most vocal online, suddenly that’s a marketing platform that’s cost you nothing. It changes people’s perceptions almost overnight and suddenly, the bigger companies have a major competitor on their hands.

Max Ford: It’s a threat to our business model in a way because we used to show pieces of paper to companies and say “what do you think of that?” and they’d say “it’s very nice” and they’d sign on the dotted line. Now, for the same percentage, we’re being asked to develop a 3D prototype that works and actually have a China costing ready, and put that on the table. As I said just now, in the next five to ten years, companies could be asking “what’s the following for that product?” because it needs to have an online awareness first.

What this might mean for some of the major companies? Picking up all these hot products is one thing, but people who raise $8m for a card game aren’t following the typical inventor to agent to distributor route on purpose. Cards Against Humanity and companies like Big Potato are good examples of firms choosing to do things their own way and not caring about what the traditional toy industry is about. Ultimately, is it even possible for big companies to vanish because inventors don’t need them to do the distribution any longer?

Richard North: Google has changed the print advertising market and TV advertising has changed massively due to the advent of the Internet. Some companies have been destroyed. Retailers like Woolworths were big on the High Street a few years ago but have been destroyed because of companies like Amazon. Will it happen in the toy space? It’s a really good question. Will the new brands going forward disrupt the established old brands? Will the old brands become uncool?

Rena Nathanson: It’s no bad thing to make the big boys look at themselves. It’s a leveller. It’s a good thing and it’s humbling for them.

Max Ford: A lot of people want to get close to the source of a great product, and that’s you, the very good game inventor. The wonderful thing that the internet is doing is bringing people closer to the author. Kickstarter is effectively exploiting that and showing that the power can simply be in the quality of the idea. Although, today people are working out that expertise in how to exploit the best ideas is critical too.

Steve Perrin, Senior VP Design and Production, Seven Towns: The concept of the big behemoth company being under threat is nothing unusual. It’s always been the case. People that are not within a big organisation are much freer to do things. It’s not just in the toy industry that it happens. Look at how Google has influenced Microsoft or how IBM has been influenced by Intel. Any company has to keep evolving. The big toy companies do find that more difficult than the smaller ones because it’s the nature of the beast. They have to justify everything to so many more people that they can’t move as fast. A big company would rather take $10m and buy a company that has equity than invest $1m in something entirely new with no equity whatsoever. That’s nothing new.

Max Ford: Each category of our industry is under threat from different areas but I think game focused Kickstarter campaigns are a real area of concern for inventing groups and big toy companies, but it’s also a launching pad for both.

Richard North: I think you’ll start seeing the major firms placing many more small bets than they’ve ever done. They’ll have a business within their business set up to invest in the early stages of lots and lots of small businesses, just like Google has done with Google Ventures.

Leslie Scott, Jenga creator and co-founder of Oxford Games: Hasbro did that originally with Winning Moves. Winning Moves was an incubator for Hasbro.

Richard North: Probably the most famousKickstarter so far is Oculus Rift. It went from a product concept to being purchased for $2bn in 18 months because of Kickstarter. It went out there and got funded quickly, but it got exposure. Imagine if that happens in the toy industry. With the bigger companies placing smaller bets, one of those bets could become very big indeed.

Steve Perrin: The key thing for any inventor is a route to market. The concept of Kickstarter is new route to market. It’s not that the other routes have gone away and this has replaced it, it’s just a new route to market. It can only be a good thing but as a route to market, it has a massive amount of failures as well as few success stories. But it’s very low risk and that’s the interesting thing about it.

Max Ford: You say that disruptive routes to market have been around for ages and that’s true. But if you were to look 15 years ago, 10 years ago, five years ago at the number one card game in the world, it’s UNO. Then Kickstarter comes along with Exploding Kittens and if you’re a major toy company, you might be able to acquire it for x million and you have a serious contender that seemingly came out of nowhere. Previously you had to spend many more millions on TV-ing an unknown game to even try to get remotely close to where Exploding Kittens is now.

Richard North: It’s a massive shift. It’s a massive disruption. I think the world is completely changing and it’s changing super quick. The big companies have to be much more nimble and they will be placing thousands more bets. Kickstarter won’t just be one of the routes among many for an invention to come to market. I think 60 to maybe even 80 per cent of the routes to market will be radically different to what we were used to three or four years ago. That’s my prediction. Everything will change.

Max Ford: It’s not just disrupting the route to market; it’s disrupting the traditions of the toy industry. If an inventor comes to you and says “I have an idea for a card game that is a bit like Apples to Apples but with swear words,” you would say ‘that’s really interesting and fun, but I can’t imagine licensing it to someone’. Our norms and expertise are being challenged and I think rightly so.

Richard North: For everyone in this room, if you get offered a product by an inventor that you feel fits with one of your brands or a new product you want to take to market, you are deciding that. Out there with something like Kickstarter, thousands of people are making that decision and you’re aggregating the correctness of the decision based on their want for it.

Steve Perrin: Tradition is that we all have to pitch to a toy company who then has to pitch to a buyer before the consumer even gets a chance to look at the product.

Billy Langsworthy, ToyNews: Can some of the more traditional toy firms get away with ignoring this shift or is it something that all companies will have to acknowledge and embrace in some way?

Rena Nathanson: I think it would be foolish if they did.

Steve Perrin: Kickstarter effects games companies and tech firms more than a sector like pre-school.

Richard North: It’ll happen there as well.

Rena Nathanson: I think it’ll reach everywhere eventually.

Richard North: It’ll have an effect on licensed toys. Look at the films coming out through Kickstarer. We’ll have new brands and new superheroes come from it. It’s changing everything because it’s democratising invention of every kind to everybody. The Internet of Things is going to be the next big wave, and people laughed at Carphone Warehouse and Dixons getting together. They said it was like two drunks propping themselves up in a bar. Nothing can be further from the truth. The Internet of Things is going to affect all of our lives massively.

Leslie Scott: I feel like by the time I’ve understood Kickstarter, there’ll be something utterly different around.

Rena Nathanson: I’m sure there have been loads of phenomenal ideas that haven’t got the exposure and didn’t get the funding. This gives inventors both of those things. It’s going to hit things outside of our industry as well like medicine and science, which is a good thing as well.

Max Ford: It’ll always come down to a good idea though.

Ooba wants to evolve and adapt but we will start to do so by concentrating on having, or finding, the best ideas. We are professional at that. Taking that and finding routes to market is what we’ll do for the rest of our careers if we can. If we get caught out for having a poor idea or for delivering it badly, then we deserve to be caught out. That’s the wonderful thing about the levelling nature of this technology.

Richard North: 20 years ago, who’d have thought that a 27 year old would be the CEO of one of the five biggest companies in the world? That’s how fast things are changing.

Rena Nathanson: 3D printing is also revolutionising things. You can have a prototype made in an hour. It’s crazy.

Richard North: Max from Wobbleworks came to see us with the 3Doodler pen when we were in New York two years ago. He said “are you interested?” I looked at it and said: “That’s not a toy. We’d never be able to sell that.” He was trying to sell it to kids but we were thinking about what temperature it needed to be at to melt the plastic. I thought how could you ever sell that to kids? We ruled ourselves out, like Spin Master did, and then he put it on Kickstarter and did $2m.

Steve Perrin: If you take the fact that you have to have a good idea as a given, it’s still no good just putting it on Kickstarter and expecting it to happen. It’s still about working hard, knowing how to use Kickstarter and backing it up with a PR campaign.

Max Ford: Not to mention the production standards and safety tests you have to go through. But it’s still quite interesting that a card game that’s not dissimilar from an existing card game can come on the market and give UNO a run for its money. I think that’s the kind of thrill our industry definitely needed. It is an old boy’s club and I’m second generation so I’ve seen it from the days of people in smoke filled meeting rooms talking about Guess Who.

Next week, the group will discuss how technology is shaping the industry.