It’s an odd state of affairs when an industry, however tacitly, denounces its primary stock in trade. But in 1998, the toy biz did just that. Toys `R’ Us initiated the trend back in the summer, when it unveiled a modified corporate mission statement to stockholders. No longer was its purview to be the ‘preeminent worldwide retailer of toys and juvenile products.’ Forthwith it would be, ‘Toys… The Worldwide Authority on Kids, Families and Fun.’

In keeping with the soul-searching, an October Businessweek article featured a Hasbro senior marketing exec proclaiming that the Pawtucket, Rhode Island manufacturer now considered itself a leisure company-this from the makers of G.I. Joe and Mr. Potato Head. The semantic-sleights-of-hand continued during a December press conference announcing the acquisition of The Learning Company. Mattel’s CEO Jill Barad said the purchase of the second largest producer of educational software ‘marked the beginning of the process of transforming Mattel from a toy company into a global children’s products company.’

Although conveniently vague, these new designations spread the gospel that each company is broadening its mix beyond the category that brought it prominence. And who can blame them for trying to disassociate from a commodity as troubled as toys? In the context of the previous 12 months, it all makes excellent PR sense. Whether it was retailers slashing their inventories, a less than 1% growth rate, or a customer base that took a take-it-or-leave-it attitude towards `gotta-have’ toy hopefuls, last year was a malaise-a-plenty.

The most troubling development was the statistical evidence that kids are increasingly disenchanted with traditional toys. The phenomenon, dubbed KAGOY (kids are getting older younger), is broached in our Toy Fair special report (see ‘Age compression rattles the toy biz,’ page 57), which examines solutions to stanch the flow of kids away from toys to video games.

For manufacturers, the antidote of consensus-go high-tech or go home-has, until now, invariably meant a liberal sprinkling of techno tzchotzkes (i.e. LCD screens, talking chips) on recognizable toy designs, carried out under the rubric of reaching a new level of interactivity. For the most part, this much vaunted state of being has gone unquestioned as an ideal toy companies should strive to incorporate in their products.

Time out for evaluation: a furry animal that speaks one of 2,000 prerecorded phrases and blinks its eyes when its infrared sensors detect movement has been touted as the pinnacle of toy interactivity. But what level of interaction is achieved if it performs irrespective of what its child-owner says to it? Does Furby deserve the title of great toy, or is its success a triumph of marketing savvy and a shrewdly managed production schedule? Staff writer Duncan Hood explores these questions in his article ‘Anatomy of a Furby: The essential elements of a hit toy’ (page 68). Perhaps what kids want from their toys is less interactivity, as it is currently construed, and more engagement. The ultimate interactive toy, then, is the one children can create themselves. This has long been the mantra of the specialty market, and a few companies working in mass are gradually adopting it as their own.

On its Barbie Web site, Mattel is leveraging e-commerce killer app-personalization-to enable girls to create Barbies to their own liking. Likewise, Lego’s Transmedia Robots give kids the tools to construct robots using their imaginations as schematics.

In this Brave New World of toys, industry attention needs to focus less on semantics and across-the-board technology injection, and more on niche market satisfaction. The state of the toy market imitates the fractionalization of the kids TV pie. And with the licensing impact of a fragmented TV market and less bankable (and shorter) theatrical windows, trickle-down economics contribute to less of a mass market for toys at retail. Witness the growth of specialty toy chains (‘The specialty market: Values for your money,’ page 72).

The world is converging to deliver personalized entertainment options, one of which is toys.

Simon Ashdown, staff writer