Since its launch in 2014, Moose Toys’ Shopkins line has grown to include hundreds of collectible characters and a range of Shoppies Dolls

Are collectibles in an oversaturation situation?

While the collectibles craze continues apace, licensors and licensees are trying to defy category fatigue. Will sales start to flag, or is this space now too big to fail?
May 24, 2017

Kids’ desire to collect may not be new, but it has never been more evident than right now. The collectibles craze is in full swing, and toy shelves are stacked with mystery packs galore.

Market research firm The NPD Group reports that collectibles grew by 33% in the US in 2016. The category represented 9% of total US toy industry sales, raking in US$1.8 billion last year. Mystery pack sales grew by 60% for the year, and since 2013, sales of collectibles blind packs have increased six-fold in the US.

The collectibles category has reached a fever pitch, and now it might be hitting its saturation point. Companies looking to cash in on the craze will need to evolve their offerings, or risk losing consumers to the next all-consuming trend.

“In the toy business, when something takes off, everyone gets on the bandwagon,” says Isaac Larian, CEO of L.A.-based MGA Entertainment. “But not all of those products succeed. ‘Me too’ products don’t last. They go away.”

Larian says kids quickly lose interest with products that bring nothing new to the category. MGA Entertainment’s new L.O.L. Surprise! line combines collectibles with YouTube’s unboxing phenomenon. Each doll comes surrounded by seven layers of wrapping, containing a prize in each layer. The surprises include outfits and accessories for the dolls, as well as secret messages and collectible stickers.

The line launched in late 2016 and experienced virtual sell-outs in markets around the world. According to NPD, L.O.L. Surprise! is the top-selling item YTD, and was the third-largest growth property in the playset dolls and collectibles category for the January/February period. Following its successful debut, MGA is launching a licensing program that includes apparel, accessories, stationery, party goods, publishing, games and sporting goods. The first phase is slated to reach retail in spring 2018.

“The whole success or failure of a toy is the innovation—bringing a product that is completely unexpected,” Larian says. “At the end of the day, a lot of these copycat products will fall by the wayside, and one or two products that are truly different and innovative will stand.”

MGA Entertainment's new L.O.L. Surprise! line combines collectibles with unboxing as each doll comes surrounded by seven layers of wrapping

MGA Entertainment’s new L.O.L. Surprise! line combines collectibles with unboxing as each doll comes surrounded by seven layers of wrapping

Standing out in the collectibles crowd

Australia’s Moose Toys has been at the forefront of the recent collectibles renaissance. Since its launch in 2014, the toyco’s Shopkins line has grown to include hundreds of collectible characters and a range of Shoppies Dolls. According to Moose Toys co-CEO Paul Solomon, adjustments and evolution are necessary to stay relevant in a category that is constantly being inundated with new offerings.

“Collectible toys reflect a timeless play pattern. The trend will certainly continue given that they are cute and affordable, and kids love the thrill of the chase,” says Solomon. “There is, however, a limit to how many brands will be successful in the space the more crowded it becomes.”

To differentiate Shopkins and develop its consumer base, Moose Toys focused on creating content across digital platforms. The brand’s animated webisodes have racked up more than 250 million views on YouTube, and Shopkins continues to diversify with expansions into live entertainment (Koba Entertainment) and electronics (KIDdesigns) in 2017.

While Moose Toys seems to have captured lightning in a bottle with the Shopkins brand, Hasbro’s Littlest Pet Shop has been a constant presence in the category since the early 1990s. Andrea Hopelain, VP of global brand strategy and marketing for the Rhode Island-based toymaker, agrees that evolution is necessary to continue engaging consumers, whether the brand has been around for a few years or several decades.

“Making a product stand out in a popular category like collectibles takes a great amount of brand relevance and awareness,” she says. “Fans of the brand have always loved the collectibility of the Littlest Pet Shop figures, and that has grown across major categories in retail, including apparel, accessories, publishing and digital gaming.”

Part of that awareness, Hopelain says, is considering both retail and consumer insights. “We pay attention to what’s selling, and we try to add in as much variety as possible, because we know our fans enjoy the challenge of collecting the more than 300 pets we offer,” she says.

In addition to offering special collections like Rainbow and Black & White Style, Hasbro is also introducing new sizes in 2017. With additional segments of collectibility, Hopelain believes the brand continues to be relevant.

Evolution can only come into play, however, after a brand captures the imaginations of consumers. For companies introducing a new line, licensing can be a fast-track to fans’ hearts.

Disney introduced its Tsum Tsum line of plush collectibles in Japan in 2013, and then brought it to the US in 2015. The Jakks Pacific range includes three separate sizes of figures and features fan-favorites like Mickey Mouse and Spider-Man, making it an immediate stand-out at retail.

“Everything begins with the story,” says Josh Silverman, EVP of global licensing for Disney Consumer Products and Interactive Media. “Across Disney, Pixar, Marvel and Star Wars, we have a tremendous wealth of amazing characters and stories that our fans around the globe connect with.”

Fans connected so deeply with the Tsum Tsum versions of their favorite characters that DCPIM launched the short-form digital series Tsum Tsum Kingdom last year. The live-action/puppetry series is positioned as a nature documentary that gives fans a closer look into the lives of Tsum Tsum toys in their natural habitats.

The Tsum Tsum collectibles line has proven so successful for Disney, in fact, that it expanded the property into a number of new consumer products categories (figures, softlines, accessories, home décor and more) following the line’s Japan debut.

Hasbro's Littlest Pet Shop line is introducing new sizes and collections—like Black & White Style—to ensure the brand stands out on shelf

Hasbro’s Littlest Pet Shop line is introducing new sizes and collections—like Black & White Style—to ensure the brand stands out on shelf

The oversaturation situation

Carol Spieckerman, president of Arkansas-based Spieckerman Retail, believes licensing is a great vehicle for diversification, and ultimately, increasing your odds of succeeding.

“If you have multiple licensing relationships, you’re hedging your bets that one of a few will be doing really well, even if others are lackluster,” she says. “I think for something that is seemingly so specific as collectibles, licensing is a great way to bring diversification into the picture while still taking full advantage of the niche. You can diversify from a brand perspective and a property one without having to abandon the category or step outside of it.”

A more diverse company—one that doesn’t have collectibles as its sole focus—is better positioned to adapt when the category becomes oversaturated, says Spieckerman. But there is a risk of appearing inauthentic to a given community of consumers.

“If you don’t have credibility in that space, it can really work against you to look as if you’re opportunistically jumping in on something that is not authentic,” Spieckerman says. “You have to build up that credibility and that trust with consumers in order to earn that business.”

The danger of appearing inauthentic and failing to engage with consumers increases as a category becomes more crowded, she says. Products that don’t connect with collectors will fall by the wayside, and those companies will soon abandon the category in search of something more profitable.

“It will hit a saturation point, and then there will be companies that are no longer in that business,” Spieckerman says. “It’s just the natural ebb and flow. I think collectibles are always going to be around; it’s just a matter of at what level. Right now, it’s very hot.”

To thrive in a category as popular as collectibles, Spieckerman says companies need to understand its community and what its members want. In order to do that, she says companies should be paying close attention to social media.

“I think collectibles is a category that uniquely benefits from social media and digital virility. It’s a natural fit that the affinity groups that support collectibles can convene online and share their interests, and it becomes self-perpetuating in a way that really helps fuel the category.”

Companies looking to capitalize on the craze need more than awareness of a particular collectibles community; they need to understand how that community has developed and what its motivation is. Before launching or evolving a line, toycos should be monitoring consumer sentiment, aggregating that data, and reacting to it.

“It’s no longer just about building inventory and hoping things sell the way you thought they would,” says Spiekerman. “It’s about having the ability to quickly react to what consumers are wanting. It’s about ‘track and react.” She also believes marketing must involve social media to make sure brands are known in the channels that mean the most to their category.

As dialed in as a company may be, MGA’s Larian believes there will always be a level of mystery involved in the trends of the toy industry. “Kids are like aliens,” he says. “They have their own language and only they understand it; nobody else does. One day they like something, and the next day they don’t. It’s very difficult to gauge that.”

The one thing toycos can count on, he notes, is that the collectibles trend will give way to something else. Consumers will move on, and companies will continue trailing behind unless someone is willing to innovate and create the next trend.

Disney's Tsum Tsum line is thriving, thanks in large part to its connection with fan-favorite characters like Mickey Mouse and Spider-Man

Disney’s Tsum Tsum line is thriving, thanks in large part to its connection with fan-favorite characters like Mickey Mouse and Spider-Man

A collectible future?

“We experiment with different things and then we market them,” Larian says. “We try to create and generate a trend. It’s like Apple. Not everybody woke up one day and decided they wanted an iPhone, but Apple did a great job of creating that demand. And you can do the same thing in the toy business.”

Hoping to create demand—and throwing their hats into the collectibles ring—are The Lego Group and Spin Master. Lego launched its Lego Brickheadz line earlier this year (see p. 34). The line features the Lego bricks and illustrated instruction manuals fans love. But instead of a traditional open-ended construction set, the consumer is left with a collectible figure.

Spin Master is expanding its hit property Hatchimals with the Hatchimals Colleggtibles line. Just like the original Hatchimals toy—eggs that hatch to reveal hidden creatures—the new collectible figures come packaged in small shells that need to be cracked open. The first Colleggtibles series features more than 70 figures, including special and limited-edition figures.

There are even more new avenues to explore, according to NPD global toys industry analyst Frederique Tutt, who says tweens are an as-of-yet untapped market for the collectibles category.

“Likewise,” she says, “the collectible sticker market—very popular in Europe—only has a couple of manufacturers fighting for market share. There are always opportunities if you try to do something innovative that nobody else is doing.”

Moose Toys’ Solomon expects plush collectibles will come to the forefront this year. He also believes that parents’ desire for a return to traditional play patterns will lead to items that incorporate arts & crafts or active play. “The return to classic play patterns is becoming more and more important,” he contends.

In the same way that Shopkins continues to breathe new life into its brand with digital extensions, Hasbro is introducing new branding for its Littlest Pet Shop line this fall with original multi-screen storytelling.

And Disney’s Silverman isn’t ruling anything out. “I think what makes the collectibles space so interesting,” he says,” is the surprise factor of a new style or offering breaking through to become a trend.”

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