INSIDE TRADER: The future of app toys

This month, ToyNews? Inside Trader, Steve Reece takes a closer look at the growing app toys category and asks if they are pure gold or fool?s gold for toy suppliers.
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There seems to be a gold rush style charge towards app-based toys. Not surprising when you consider the media hype around smartphones and apps. But what’s the reality? Are companies basing their move in this direction on hard evidence that this fledgling category has legs, or are they merely following the crowd?

Well the best, most recent stats I can find are from Kantar Wordpanel (February 2012) suggesting UK smartphone penetration is now at 50.3 per cent. Which is huge. Moreover, smartphone sales now account for over 70 per cent of mobile sales, a figure set to rise to as much as 90 per cent in the next year or two. So surely this opens up a huge opportunity for related products? We can just bang out an app related toy, stick the word ‘app’ on the packaging and we’re quids in right?

Well… there is an opportunity, but there are other factors to take into account to avoid this gold rush reaping only fool’s gold. Firstly, compatibility with different handsets and operating systems is a challenge. While this has lessened with two systems now capturing most of the market – Android and iOS – there is still broad handset proliferation.

Secondly, there is still a significant barrier to adoption – penetration of mobile devices and smartphones is very low among our consumer, ie. kids. The most robust stats suggest only seven per cent of kids aged five to seven have mobile devices, which is not mass market scale, even if the trend is upwards. And as any parents know, there are occasions where handing over expensive gadgets for mini monsters to run wild with, is at least unlikely, if not unthinkable. When I think of some kids I know, I would be more likely to offer a box of matches and paraffin than I would be to let them loose on a gadget whose procurement necessitates a two-year contract. My conclusion is that toys allowing kids to play in a calm, constructive manner will be more likely to work commercially than action oriented toys.

Like all new markets, the trade and consumer will need to sort the wheat from the chaff with app toys. I rode the wave of DVD games a few years back, a market which was at least partly killed by the proliferation of ‘me too’ product. And so, as with all things toys, it’s not the technology which will deliver success, it’s using the technology to deliver an enhanced, entertaining experience, as well as setting yourself apart from the crowd, that will deliver the goods.

In terms of areas of opportunity, the portable nature of smartphones has lent itself as an R/C control, hence the proliferation of R/C related products. Nurturing/fashion toys will draw upon the interactive element and opportunity to update content. Finally, the use of augmented reality to immerse consumers into the product or brand universe seems likely to add value.

Let’s be clear – app toys will be one of the biggest trends in our industry for the next few years, and some will win big. But technology evolves, and as every cycle proves – once-dominant players can be easily sidelined at the point of evolution. So this isn’t the area to bet the house on, but those who do will need to find a way to set themselves apart.



INSIDER TRADER: Virtual worlds

ToyNews? Inside Trader, Steve Reece, is exploring virtual worlds this month and asks if they are likely to continue taking the world of toy licensing by storm?

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