With a declining national birth rate steadily shrinking their target market, Japanese toycos are trying every trick in the book to reinvigorate demand for their products. Bandai and Takara are tackling the problem by pumping up their 2004 R&D budgets and giving their business strategies a tune-up.
Bandai reportedly plans to pour an additional US$10 million into new toy concept development this year, bringing its total investment up to US$148 million. The toyco has its crosshairs fixed on adult consumers as a more viable demo right now, and will go after new business in that realm by expanding its hobby-related lines of scale model toys, virtual pet robotic toys and action figure model-building kits.
While Bandai believes the ‘six-pocket’ phenomenon – in which parents and both sets of grandparents (six pockets) are shouldering the toy-buying load for one or two children – is on the rise in Japan, that doesn’t compensate for the ‘serious problem’ of a declining kids population. The company is also aiming to expand its business development efforts outside of Japan this year, with the goal of eventually doing 50% of its business in international markets.
Takara, meanwhile, has beefed up its 2004 R&D budget by US$1.85 million (to US$19.5 million). Peter Harwood, marketing manager for Takara USA, says the Japanese toy market has been shrinking at a rate of 3% to 5% a year over the past decade, but the situation has escalated into a ‘crisis stage’ in the last three years. He says Takara is dedicating its additional R&D bucks to developing high-end electronic toys that appeal to all consumer demos.
Takara’s big hope right now is the burgeoning market for pet toys. Meowlingual and Bowlingual, devices designed to interpret the purrs and barks of beloved housecats and dogs into humanspeak, hit the U.S. market in 2003. The company has moved approximately 300,000 units of the Bowlingual in Japan and is looking for bigger numbers in the U.S., where it retails for about US$120 a pop. Harwood says similar items that build on the initial technology are in the works, but Takara’s not ready to unleash details quite yet.