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This locks toy companies into a challenging bet. Every year, they have to a) predict trends, b) invent them, and c) commit capital to them. All without knowing

This locks toy companies into a challenging bet. Every year, they have to a) predict trends, b) invent them, and c) commit capital to them. All without knowing how the rest of the year will turn out. Since toy trends exist, but don’t last for very long, they have to invent new products every year—but the technological state of the art doesn’t advance very fast. It has all the volatility of tech, without the progress. Insightful post. This succinctly explains why most toys are movie-related. It's the easiest trend to predict. EDIT: This article keeps getting better and better. I had no idea Skyrim was almost set in Game of Thrones. https://www.tor.com/2011/09/16/how-skyrim-was-almost-set-in-westeros/ https://www.tor.com/2011/09/16/how-skyrim-was-almost-set-in-... It left me wanting more. The author is apparently Byrne Hobart, and they've written a variety of things: https://diff.substack.com/people/112633-byrne-hobart https://diff.substack.com/people/112633-byrne-hobart Looks like I'll be spending too much time reading them. They also write a post ... double checks ... every day?! For a week straight, sometimes? Wow. Sadly, most of their work appears to be locked behind a $20/mo paywall. It all looks very interesting though: https://diff.substack.com/p/dropbox-information-asymmetry-and https://diff.substack.com/p/dropbox-information-asymmetry-an...

elcomet 6y ago
The easiest, but maybe the shortest. Movie toys cannot be sold for more than a year. While others can last for decades (think legos or kapla)
- imhoguy 6y ago
  They can much longer when you merge classic move genre (dc comics, marvel, star wars) with timeless toys and utensils (lego&compatible, flashlights, balls, backpacks, pencils, lunchboxes). Lightsabers will sell now and in 2030 too.
- scarface74 6y ago
  How long were Star Wars toys popular in the 70s and 80s?
  - jhbadger 6y ago
    Basically from 1978 (when they were released; they missed Christmas 1977 which was their goal) until they were discontinued in 1985 (a couple of years after the end of the original trilogy). While each movie added new figures and playsets, a fair number of figures were unchanged during the seven year period.
    - pantaloony 6y ago
      Movie releases used to be a lot more stretched out. Theatrical release, maybe a year passes then it hits the premium movie channels, another year and they get to make a big deal about it being aired on a regular network. Then finally a few months later you’re seeing ads for the big VHS release. A blockbuster movie was like a 3-4 year marketing event.
  - paulie_a 6y ago
    Not every movie is star wars. There were hundreds of low quality movies made last year with toy tie ins. But most are forgotten
- sokoloff 6y ago
  While this is generally true, I distinctly remember from my childhood asking for and playing with Star Wars toys for the better part of a decade. (Yeah, there was an on-going franchise, but the toys sold for much, much longer than a year per episode.) I wonder if there was something fundamentally different about that property or if there were just fewer options?
  - Symbiote 6y ago
    Harry Potter is probably the current equivalent.
    - aloer 6y ago
      I’d say Minecraft as well
      - kijin 6y ago
        Marvel has been doing quite well for the better part of a decade, too.
        egypturnash 6y ago
        Marvel’s got a constant churn of content with their characters though. And not just movies, there’s the comics they started in, there’s kid’s books, video games, etc. If people are still buying tons of Star Wars stuff, and mostly just Original Trilogy stuff, that’s a very different situation.
  - philwelch 6y ago
    Interestingly enough, they've pretty much stopped making any toys for the Star Wars sequel trilogy but are continuing to make original trilogy toys. Some franchises are just that much more ephemeral than others.
  - zenhack 6y ago
    Star-wars is kindof an exceptional case. The original was the highest grossing film of all time when it was released. Return of the Jedi came out years before I was born but the toys were still popular when I was a kid, despite them having not made any movies recently.
- kingkawn 6y ago
  Star Wars, Harry Potter, any Disney or Pixar movie, etc etc
mysterydip 6y ago
Agreed, got some good insights in the article and I will be reading more as well. Also explains the sequelitis of the video game industry: while new ideas/IP can succeed, it's a risk. People really want more of what they know. Consider a random platformer, or the exact same game reskinned as Super Mario.
- aikinai 6y ago
  A tangent, but this is one reason Nintendo is so successful; they know the characters sell, while at the same time understanding it’s not the characters but the quality of the game and that really matters and brings customers back for more. That’s why they first experiment and develop a lot of game ideas looking for the most fun mechanics. Then after something is shaping up into a great game, they look at the IP catalogue and see what skin to put on top. Edit: In general, but not 100% of the time. The Zelda team is mostly consistently the Zelda team and does set out with intent to make the next Zelda game, for example.
  - gumby 6y ago
    > A tangent, but this is one reason Nintendo is so successful; they know the characters sell, while at the same time understanding it’s not the characters but the quality of the game and that really matters and brings customers back for more. I think you undersell this comment: it’s far more than a tangent. Nintendo and Bandai the only companies I’ve worked with who I’ve Consistently heard the term “fun” discussed at the executive suite level, or a level below. Back in the Ken Kutaragi days at Playstation (SCEI in those days) this was true as well. Hasbro seems to value playfulness, but in my more limited experience The higher up the chain the less relevant it was. Could be that the execs took it as a given? Never came up in any AAA titles I talked with folks about at the companies (but big disclaimer: I never worked on one!) You don’t have to be Marvin Acme, but “fun” seems like a pretty basic value, while objectives like “engagement” I’d see as a consequence,not a primary goal. I think understanding this is what has made Nintendo so successful for decades, and has allowed them to survive flops.
    - aikinai 6y ago
superchink 6y ago
Subscriber here. I had the same impression as you. It’s the only newsletter I try to read every day.
- elliekelly 6y ago
  It’s interesting to me that someone can charge $20/month for a daily post (presumably without ads) and subscribers seem more than happy with the value proposition but the newspaper industry struggles to sell an entire newspaper worth of content for the same price. I wonder if newspapers would have more success “unbundling” their columns. Or at least unbundling the sections of the paper. I pay for two newspaper subscriptions and it’s a lot like a gym membership where I start to feel guilty if I haven’t had the time or made the effort to use it.
  - Someone1234 6y ago
    News is a commodity, and one that many newspapers don't even create (essentially just a compilation of re-written wire service publications and corporate/political PR press releases masquerading as "news" (often without attribution)). The Guardian, Washington Post, and New York Times are likely the closest thing we have to news worth paying for, but I just get most of my news these days from social media sites like Reddit (and their linking directly to wire services in some cases), and find their non-trial prices rather high for very little ORIGINAL content. Essentially if this was legitimately one high quality post a day, that might be more high quality original content than most newspapers.
    - rvz 6y ago
      > The Guardian, Washington Post, and New York Times are likely the closest thing we have to news worth paying for * Only if they allowed comments on articles that disagree with their own biases. The Verge (Owned by Vox Media) is a great example of this. > but I just get most of my news these days from social media sites like Reddit (and their linking directly to wire services in some cases), and find their non-trial prices rather high for very little ORIGINAL content. The same newspaper publishers are also on social media sites as well, but link directly to their own articles and 'select' some social media accounts as sources to include in their articles that fits their narative and their own bias. Reading multiple articles and sources from other publications will give you some good skeptisim in which either side might have missed or omitted some information in their own reporting.
mathattack 6y ago
This is true of lots of retail, including clothing too. And many of these companies take on a lot of debt because the cash flows mistakingly seem predictable and stable. Until they’re not. The best bet for many of these types of firms is to improve processes and systems to shorten the cycle time. (Think lean manufacturing like Toyota)
- divbzero 6y ago
  > The best bet for many of these types of firms is to improve processes and systems to shorten the cycle time. In clothing retail, Inditex (Zara) [1] is an excellent example of achieving success through shortened cycle time. [1]: https://en.wikipedia.org/wiki/Inditex https://en.wikipedia.org/wiki/Inditex
- ezconnect 6y ago
  They actually have technical term for it and it's called fast fashion. This is a summarize take on it https://www.youtube.com/watch?v=xGF3ObOBbac https://www.youtube.com/watch?v=xGF3ObOBbac
- WalterBright 6y ago
  I've been buying the exact same jeans for 25 years now. (Did have to go up a size!)
dvt 6y ago
My buddy ran a clothing startup a few years ago. I built a pretty simple inventory management predictive model (linear regression mostly) that would infer how much they'd need to stock up for the next quarter. Surprised that there isn't more work being done here, as a lot of industries are seasonal (from food, to clothing, to toys) and need to predict demand and balance on the knife's edge of "out of stock" and "too much stock."
- toyg 6y ago
  That’s called Planning and Forecasting and there are plenty of dedicated apps. It’s a sales-heavy market though, where your competitors are the likes of Oracle and SAP, so it’s hard to reach.
  - dvt 6y ago
    Gotcha, makes sense that smaller companies wouldn't have access to it (I'm sure it's quite expensive).
- klipt 6y ago
  Industrial Engineering / Operations Research studies that kind of problem: https://ieor.berkeley.edu https://ieor.berkeley.edu
- friendlybus 6y ago
  I used to run a pizza shop, and had the same thought, why not plot some predictions in R? Most of the obvious busy periods the management team was already talking about. It gets really hard to predict when someone is going to solve their hunger with pizza in the next half hour.
cjbest 6y ago
> They also write a post ... double checks ... every day?! For a week straight, sometimes? Wow. > Sadly, most of their work appears to be locked behind a $20/mo paywall. I submit that these things are related! There's so much great work because folks are paying for it. And in fact, their subscriptions help fund the public ones you're enjoying too. Full disclosure: I'm one of the founders of Substack, the platform that this is hosted on, so I'm hopelessly biased :)
musicale 6y ago
> Since toy trends exist, but don’t last for very long, they have to invent new products every year Fortunately someone already invented blocks (and construction toys) slime/goo (and science/exploration/messy craft kits) and monopoly (board games.) Most "new" toys seem like variations in very well-established categories; something like hatchimals combines plush toys, robotics and collectibles (furby DNA apparently) along with the regrettably persistent trends of unboxing videos (youtube) and randomization/gambling (capsule toy machines, etc..)
sverhagen 6y ago
Is it insightful? I really don't have the subject knowledge to judge. But I sure frowned on the claim that LEGO has no brand loyalty. Maybe I misunderstand brand loyalty, but not only did I (as a child) and does my own kid now keep going back to LEGO, it's me who infected him. When my kid has some fake LEGO, he sorts them out into a separate pile.
- wtracy 6y ago
  I thought that the article argued that Lego is an exception to the rule in that it does inspire brand loyalty. Also, what investors mean by brand loyalty is fairly specific: A customer who buys into one brand continues to buy it for years or decades. Kids are fanatical about the "in" brand of the month, but will drop it without a thought as soon as a new trend is "in". How many kids are tripping over themselves to get the latest Spin Master toys? Most probably wouldn't even recognize the name. Just a couple years ago, stores couldn't keep their Hatchimals line on the shelves. None of that excitement carried over to their other products.
  - asddubs 6y ago
    lego is clever because it locks you into a platform. it's the kid equivalent of buying another cordless power tool of the same brand because you already have the batteries and charger for it

elcomet 6y ago

The easiest, but maybe the shortest. Movie toys cannot be sold for more than a year. While others can last for decades (think legos or kapla)

imhoguy 6y ago
They can much longer when you merge classic move genre (dc comics, marvel, star wars) with timeless toys and utensils (lego&compatible, flashlights, balls, backpacks, pencils, lunchboxes). Lightsabers will sell now and in 2030 too.
scarface74 6y ago
How long were Star Wars toys popular in the 70s and 80s?
- jhbadger 6y ago
  Basically from 1978 (when they were released; they missed Christmas 1977 which was their goal) until they were discontinued in 1985 (a couple of years after the end of the original trilogy). While each movie added new figures and playsets, a fair number of figures were unchanged during the seven year period.
  - pantaloony 6y ago
    Movie releases used to be a lot more stretched out. Theatrical release, maybe a year passes then it hits the premium movie channels, another year and they get to make a big deal about it being aired on a regular network. Then finally a few months later you’re seeing ads for the big VHS release. A blockbuster movie was like a 3-4 year marketing event.
- paulie_a 6y ago
  Not every movie is star wars. There were hundreds of low quality movies made last year with toy tie ins. But most are forgotten
sokoloff 6y ago
While this is generally true, I distinctly remember from my childhood asking for and playing with Star Wars toys for the better part of a decade. (Yeah, there was an on-going franchise, but the toys sold for much, much longer than a year per episode.) I wonder if there was something fundamentally different about that property or if there were just fewer options?
- Symbiote 6y ago
  Harry Potter is probably the current equivalent.
  - aloer 6y ago
    I’d say Minecraft as well
    - kijin 6y ago
      Marvel has been doing quite well for the better part of a decade, too.
      - egypturnash 6y ago
        Marvel’s got a constant churn of content with their characters though. And not just movies, there’s the comics they started in, there’s kid’s books, video games, etc. If people are still buying tons of Star Wars stuff, and mostly just Original Trilogy stuff, that’s a very different situation.
- philwelch 6y ago
  Interestingly enough, they've pretty much stopped making any toys for the Star Wars sequel trilogy but are continuing to make original trilogy toys. Some franchises are just that much more ephemeral than others.
- zenhack 6y ago
  Star-wars is kindof an exceptional case. The original was the highest grossing film of all time when it was released. Return of the Jedi came out years before I was born but the toys were still popular when I was a kid, despite them having not made any movies recently.
kingkawn 6y ago
Star Wars, Harry Potter, any Disney or Pixar movie, etc etc

mysterydip 6y ago

Agreed, got some good insights in the article and I will be reading more as well. Also explains the sequelitis of the video game industry: while new ideas/IP can succeed, it's a risk. People really want more of what they know. Consider a random platformer, or the exact same game reskinned as Super Mario.

aikinai 6y ago
A tangent, but this is one reason Nintendo is so successful; they know the characters sell, while at the same time understanding it’s not the characters but the quality of the game and that really matters and brings customers back for more. That’s why they first experiment and develop a lot of game ideas looking for the most fun mechanics. Then after something is shaping up into a great game, they look at the IP catalogue and see what skin to put on top. Edit: In general, but not 100% of the time. The Zelda team is mostly consistently the Zelda team and does set out with intent to make the next Zelda game, for example.
- gumby 6y ago
  > A tangent, but this is one reason Nintendo is so successful; they know the characters sell, while at the same time understanding it’s not the characters but the quality of the game and that really matters and brings customers back for more. I think you undersell this comment: it’s far more than a tangent. Nintendo and Bandai the only companies I’ve worked with who I’ve Consistently heard the term “fun” discussed at the executive suite level, or a level below. Back in the Ken Kutaragi days at Playstation (SCEI in those days) this was true as well. Hasbro seems to value playfulness, but in my more limited experience The higher up the chain the less relevant it was. Could be that the execs took it as a given? Never came up in any AAA titles I talked with folks about at the companies (but big disclaimer: I never worked on one!) You don’t have to be Marvin Acme, but “fun” seems like a pretty basic value, while objectives like “engagement” I’d see as a consequence,not a primary goal. I think understanding this is what has made Nintendo so successful for decades, and has allowed them to survive flops.
  - aikinai 6y ago

superchink 6y ago

Subscriber here. I had the same impression as you. It’s the only newsletter I try to read every day.

elliekelly 6y ago
It’s interesting to me that someone can charge $20/month for a daily post (presumably without ads) and subscribers seem more than happy with the value proposition but the newspaper industry struggles to sell an entire newspaper worth of content for the same price. I wonder if newspapers would have more success “unbundling” their columns. Or at least unbundling the sections of the paper. I pay for two newspaper subscriptions and it’s a lot like a gym membership where I start to feel guilty if I haven’t had the time or made the effort to use it.
- Someone1234 6y ago
  News is a commodity, and one that many newspapers don't even create (essentially just a compilation of re-written wire service publications and corporate/political PR press releases masquerading as "news" (often without attribution)). The Guardian, Washington Post, and New York Times are likely the closest thing we have to news worth paying for, but I just get most of my news these days from social media sites like Reddit (and their linking directly to wire services in some cases), and find their non-trial prices rather high for very little ORIGINAL content. Essentially if this was legitimately one high quality post a day, that might be more high quality original content than most newspapers.
  - rvz 6y ago
    > The Guardian, Washington Post, and New York Times are likely the closest thing we have to news worth paying for * Only if they allowed comments on articles that disagree with their own biases. The Verge (Owned by Vox Media) is a great example of this. > but I just get most of my news these days from social media sites like Reddit (and their linking directly to wire services in some cases), and find their non-trial prices rather high for very little ORIGINAL content. The same newspaper publishers are also on social media sites as well, but link directly to their own articles and 'select' some social media accounts as sources to include in their articles that fits their narative and their own bias. Reading multiple articles and sources from other publications will give you some good skeptisim in which either side might have missed or omitted some information in their own reporting.

mathattack 6y ago

This is true of lots of retail, including clothing too. And many of these companies take on a lot of debt because the cash flows mistakingly seem predictable and stable. Until they’re not. The best bet for many of these types of firms is to improve processes and systems to shorten the cycle time. (Think lean manufacturing like Toyota)

divbzero 6y ago
> The best bet for many of these types of firms is to improve processes and systems to shorten the cycle time. In clothing retail, Inditex (Zara) [1] is an excellent example of achieving success through shortened cycle time. [1]: https://en.wikipedia.org/wiki/Inditex https://en.wikipedia.org/wiki/Inditex
ezconnect 6y ago
They actually have technical term for it and it's called fast fashion. This is a summarize take on it https://www.youtube.com/watch?v=xGF3ObOBbac https://www.youtube.com/watch?v=xGF3ObOBbac
WalterBright 6y ago
I've been buying the exact same jeans for 25 years now. (Did have to go up a size!)

dvt 6y ago

My buddy ran a clothing startup a few years ago. I built a pretty simple inventory management predictive model (linear regression mostly) that would infer how much they'd need to stock up for the next quarter. Surprised that there isn't more work being done here, as a lot of industries are seasonal (from food, to clothing, to toys) and need to predict demand and balance on the knife's edge of "out of stock" and "too much stock."

toyg 6y ago
That’s called Planning and Forecasting and there are plenty of dedicated apps. It’s a sales-heavy market though, where your competitors are the likes of Oracle and SAP, so it’s hard to reach.
- dvt 6y ago
  Gotcha, makes sense that smaller companies wouldn't have access to it (I'm sure it's quite expensive).
klipt 6y ago
Industrial Engineering / Operations Research studies that kind of problem: https://ieor.berkeley.edu https://ieor.berkeley.edu
friendlybus 6y ago
I used to run a pizza shop, and had the same thought, why not plot some predictions in R? Most of the obvious busy periods the management team was already talking about. It gets really hard to predict when someone is going to solve their hunger with pizza in the next half hour.

cjbest 6y ago

> They also write a post ... double checks ... every day?! For a week straight, sometimes? Wow. > Sadly, most of their work appears to be locked behind a $20/mo paywall. I submit that these things are related! There's so much great work because folks are paying for it. And in fact, their subscriptions help fund the public ones you're enjoying too. Full disclosure: I'm one of the founders of Substack, the platform that this is hosted on, so I'm hopelessly biased :)

musicale 6y ago

> Since toy trends exist, but don’t last for very long, they have to invent new products every year Fortunately someone already invented blocks (and construction toys) slime/goo (and science/exploration/messy craft kits) and monopoly (board games.) Most "new" toys seem like variations in very well-established categories; something like hatchimals combines plush toys, robotics and collectibles (furby DNA apparently) along with the regrettably persistent trends of unboxing videos (youtube) and randomization/gambling (capsule toy machines, etc..)

sverhagen 6y ago

Is it insightful? I really don't have the subject knowledge to judge. But I sure frowned on the claim that LEGO has no brand loyalty. Maybe I misunderstand brand loyalty, but not only did I (as a child) and does my own kid now keep going back to LEGO, it's me who infected him. When my kid has some fake LEGO, he sorts them out into a separate pile.

wtracy 6y ago
I thought that the article argued that Lego is an exception to the rule in that it does inspire brand loyalty. Also, what investors mean by brand loyalty is fairly specific: A customer who buys into one brand continues to buy it for years or decades. Kids are fanatical about the "in" brand of the month, but will drop it without a thought as soon as a new trend is "in". How many kids are tripping over themselves to get the latest Spin Master toys? Most probably wouldn't even recognize the name. Just a couple years ago, stores couldn't keep their Hatchimals line on the shelves. None of that excitement carried over to their other products.
- asddubs 6y ago
  lego is clever because it locks you into a platform. it's the kid equivalent of buying another cordless power tool of the same brand because you already have the batteries and charger for it