Learn while you play seems to be the strategy of the toy licensing industry here which is attempting to aggressively expand its reach. And not just chance toys, the market offers a platter of toys related to well-known icons like Barbie and Mickey Mouse, hugely popular Angry Birds games and other video-based fables.
The Indian toy industry is estimated at about 400 million US dollars and until now has generated only a small chunk, i.e. 0.5 per cent of the global market. However, growing at a rate of approx 15 per cent, the industry promises a rapid rise in this figure, especially in the context of the growing middle class and increasing demand for quality goods.
Entry of popular games and characters at regular intervals is further ensuring that retailers miss no opportunity to tap this market. Mattel toys had recently collaborated with WWE to offer fans toys, which will bring the sport home and create their own action with two new products - Mattel’s Create A Superstar and Create A Ring. For a market as wide and varied as India, there is space for traditional, local toys and organised players like Fisher Price and Playskool apart from the increasing consumption of easily accessible stuff as well as the imported variety from China and Italy. “Currently, only about 20 per cent of the market is served by Indian manufacturers and the rest by import of toys from different countries, mainly from China and Italy,” said Toy Association of India vice president, Pawan Gupta.
Multimedia driven content Mattel Toys, the parent for iconic brands like Barbie and Hot Wheels, is one of the largest players in global toys and allied licensing industry and has tied up with a plethora of licensees as well as licensors in this category. Nair of Mattel Toys highlights the fact that globally licensing model is no longer restricted to just ‘toy making’, but goes beyond by creating compelling content according to the new age demands and trends.
The growth opportunities are encouraging both the local licensees as well as international players to unwind the segment. My Baby Excels, the subsidiary of Excel Home Entertainment has acquired licensees of Disney, Marvel and Angry Birds for children’s scooters. Muzlim Kapasi, COO, MBE stated, “Merchandise related to iconic characters sell easily due to the connection they have with the audiences.” Further, replicating the growth trajectory of their global counterparts, home grown icons like Motu-Patlu and Chhota Bheem have also recognised the role of television and multimedia in creating a fan-base among kids. And the list doesn’t end here. Angry Birds, one of the most popular digital IPs driven by the popularity of its mobile game, has become one of the largest licensing programmes in India with 500 (plus) products across 10 categories and available in a 1,500 (plus) stores and leading MBOs and on all major portals. “The Angry Birds Licensing and Merchandising story and its phenomenal success speaks volumes of the sheer potential of the licensing story in India; it cuts across age groups and geographies,” says Jiggy George, Founder and CEO, Dream Theatre that represents Angry Birds, Candy Crush and Talking Tom in India.
Rovio – the parent company of Angry Birds, had 60 per cent of its revenues coming from the licensed toys and today, it sits among the top 20 licensed property list, with licensing revenues in excess of US$ 500 million. Some other digital properties pushing the boundaries successfully are Moshi Monsters, Candy Crush, Talking Tom, Temple Run, Subway Surfers, Star Doll etc. No doubt, toys are essential part of kids’ play activities, but their importance in learning can’t be ignored. With growing popularity of educational games like puzzles and kids’ tablets, players like Funskool, Warner Brothers etc are developing games with an orientation towards education. Vise Time Learning Pvt. Ltd, a BTS manufacturer has got the license for University of Oxford’s educational series.
Vast majority of sales transacted in physical stores Undoubtedly, eRetail has multiplied the reach, connecting a retailer to as many as 400 cities in one go, but as for its target audiences, this industry requires a retail strategy excessively driven by visibility, which is more at physical stores as compared to online. In the words of Richard Barry, Executive Vice President, Chief Merchandising Officer, Toys“R”Us Inc, “Physical store is still the core of our business as a major portion of our sales is completed in physical stores.” However, the sweet spot for toy industry, still lies in a rather unorganised segment as traditional retail contributes to approx 60 per cent of the total revenue followed by modern retail (30%), eCommerce (7%) and franchised outlets (approx 3%).
According to Barry, the role of a store is extremely important in building the brands as the stores feature and highlight merchandise in accordance with any upcoming movie or television series, which is something one would not have at an online store and it acts as a magnet to attract consumers to the physical stores. Adding to it, Shree Narayan Sabharwal, Business Head, Simba Toys opined, “Retailers are focusing more on online channels, which in turn, is curbing the retail of toys by being out of reach of kids – the TG for this industry." Moreover, the expansion of counterfeit merchandise is being pumped up by eCommerce as eRetailers do not have a mechanism to check license of retailers registering on portal resulting in quite a handsome sale of counterfeit products online. Nevertheless, the strong growth prospect of the licensing industry has helped the licensors to remain ‘bullish’ about their offerings.