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“The digital revolution will keep going”

During the past two years several retailers and other companies have filed for bankruptcy. First it was Toys ‘R Us, then the Danish Top Toys, now the Dutch toy chain, Intertoys. 

This is not a crash of the market or a depression; this is a digital revolution taking place in the market. This phenomenon isn’t new. Industrial revolutions have happening several times over in the past 250 years in most industries and will likely happen many more times. 

Step back in time with me… Before the first industrial revolution in the United Kingdom, cotton was processed into goods in workers’ homes and in shops. These were then sold to agents which these workers were under contract with. When the industries and the larger machines came into fruition, many of these agents disappeared. 

The same thing is happening right now when talking about retail and TV. The digital era has caused similar changes in other industries already – construction, healthcare, travel and so on. Toys is just another one on the list. 

In past decades, retail and TV served the toy industry as intended. But it is no longer 1986. Children watch YouTube and Netflix, not TV. People check prices online before deciding to buy or just simply buy online in the first place. Toy-TV shows often rack in tens of thousands of views per episode rather than hundreds of thousands or even millions. 

Let’s be real here; why would I as a child go ahead and watch 30 minutes of TV at a scheduled time, 10 minutes of it being commercials I cannot skip, if I can easily through legal or pirated means watch the same content whenever I want to? 

And why would I even watch these shows if I can enjoy more interactive content online? Is this a crash of the market? Again, no. 

Those who saw this coming and adapted properly are now flourishing. MGA, according to its CEO Mr. Larian, sold LOL!Surprise to the market without a single dime being spend on TV advertisement – everything was based on social media marketing, like YouTubers and other methods. 

And now they’re dominating the charts. Mr. Larian shouted on LinkedIn that TV ads are a waste of money and you might as well just put money in a paper shredder. And I don’t exactly disagree. 

Spin Master too saw this coming as well and is now thriving. Funko produces its figures through an extensive process involving brainstorming and social media feedback from the community. And there are many other examples. 

The message is simple; those who do not adapt to the new situation will die. It’s like saying you’re a producer of typewriters and you’re disregarding computers. Or when the Telex was replaced by the Fax machines – and how many of those are now not simply disregarded for emails with attachments? 

It’s the way of the world. In time, the same will happen to existing technologies and methods by new ones which right now are inconceivable. Was this foreseeable?

Hindsight is 20/20, but there is a good way to sniff the air to see if an industry will change; and those are anomalies. Things that shouldn’t happen under what most professionals believe, yet happened. 

In the past decade, several of those occurred. Funko’s successes using online platforms, becoming so large in just 20 years after its founding in 1998. Retailers like Action and websites like AliExpress and the way they sell goods was also an anomaly – at first. Later came Netflix and Fortnite. 

But the most blatant were the Bronies – the adult My Little Pony fans – they sprung up from 4Chan in 2010 and developed their own digital infrastructure out of nothing. This includes newspapers, fan series, fan videos and tens of thousands of hours of content. They still exist, now more than eight years later. That is worthy of note and observation. 

When the television network The Hub folded (which was one of the earliest victims of the digital revolution) MLP was one of the few survivors. There is no denying the digital realm played a role in it. This should have been a tell-tale sign something was up. In time, when the next technological/methodological revolution will take place, other strange anomalies will also spring up. 

So why aren’t people adapting? 

Authors who observe history have written about this, and it’s applicable everywhere. Robert Greene, in his work 33 strategies of war suggests: 

“The world is full of people looking for a secret formula for success and power. They do not want to think on their own; they just want a recipe to follow. 

"They are attracted to the idea of strategy as a series of steps to be followed toward a goal. They want these steps spelled out for them by an expert or a guru. Believing in the power of imitation, they want to know exactly what some great person has done before. 

"Their manoeuvres in life are as mechanical as their thinking…the essence of strategy is not to carry out a brilliant plan that proceeds in steps; it is to put yourself in situations where you have more options than the enemy does.”

This is what many within the toy industry have been doing wrong; repeating the same steps, based on the successes from 30 years ago. But repeating that is exactly what is now making them cave in on themselves. The circumstances are never the same. But taking risks by trying new directions is unpleasant; better to stick to what you know. 

Therefore, several companies have and will fold. Those upcoming ones are likely more unpleasant than when Toys R Us folded, but some cannot be avoided. 

“But wait! What about the hedge funds?” 

I believe the hedge funds saw they were dying and are here for the meat. They are not the cause, only a reaction. 

When was the last time this happened? I think it is the early 80’s. The big anomaly at the time was Star Wars; people tend to forget that people didn’t believe Star Wars would go anywhere and that it was just George Lucas’ little fantasy project. 

This was the time storytelling-based merchandising really took off – and the toy company Mego was one of its victims. They couldn’t pay off their debts which they had loaned for the Christmas seasons and consequently filed for bankruptcy. 

The reason I am so loud is that the current problem with the collapse of retail and TV will likely see many ‘’TV Toy’’ brands shelved for years, decades or even indefinitely. But that is a mistake – you would chuck the baby out with the bathwater. 

For example; because of emails people use post or fax a lot less. But letters have changed in the way we use them, but not in its essence. The same is applicable here; all TV-toy brands, from Sesame Street to Thomas the Tank Engine to Transformers and so on can easily be expressed in different forms. Not just comics and books, but also digital formats. 

A very basic example is to stream content on Netflix, but there are more interesting ways to go about it and allow brands to reach new heights not previously thought possible. These brands can become much, much more than simple episodes on a TV screen and can be much more positive for children than is currently possible with today’s technologies and resources. 

My goal is and has been to discover a good digital method and work on one of these brands to do exactly that. Until then I wait patiently, observing from the side-lines and gaining work experience. 

I’m only 26 and still have much to learn anyway as a professional, so I am I no hurry. However, I wanted to write this piece because I knew that now is the time I would, hopefully, be taken seriously. And my message is simple; adapt to the digital era. The 80’s are over. 

There are many toy brands and many jobs on the line in the coming decade and there is no reason to put those in jeopardy, because that would mean I have failed in what I want to accomplish. 

Lucas Harskamp is a medior software programmer living with his wife and dog in Rotterdam, the Netherlands. He has a Bachelor of Applied Science in Game Architecture & Design and during his studies committed to researching toys & merchandising on the side.

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