The least plausible moment in “The Secret Life of Walter Mitty”—a generally implausible film—is one in which Ben Stiller’s protagonist convinces a group of Icelandic teens to give him a three-hundred-dollar skateboard in exchange for a ratty old action figure he happens to be carrying in his briefcase. Is there a teen-age boy on Earth who would be so eager to acquire a doll? If Mattel’s and Hasbro’s latest returns are any indication, the answer is no.
During a call with analysts on Monday, Hasbro admitted that its fourth-quarter net income fell fifteen per cent from a year earlier, to a hundred and thirty million dollars. Mattel had similarly bad news in its own report, released two weeks earlier: its net income rose twenty per cent in the fourth quarter, but only because it had significant legal expenses weighing it down a year earlier. Discounting those expenses, the company’s income dropped seventeen per cent. Mattel’s C.E.O., Bryan Stockton, summed up the problem bluntly: “We just didn’t sell enough Barbie dolls.”
In 2013, U.S. toy sales fell by about one per cent, according to the market-research firm NPD, helped along by a six-per-cent drop in sales of action figures. Youth electronics, a category that includes everything from kid-friendly tablets to robotic dogs, climbed eighteen per cent.
It’s no surprise that kids are drawn to electronics; this has been the case since the advent of the radio. More recently, physical toys have ceded market share to video-game consoles like Sony’s PlayStation, Microsoft’s Xbox, and Nintendo’s Wii. Most video games can be enjoyed by a single player, a quality that creates opportunities for play not afforded by, say, a chess board. Video games also tend to tell a story, which is key to holding the attention of today’s children. Plenty of traditional toys have benefited from rich, or at least ubiquitous, storytelling—witness the success of Transformers, G.I. Joe, the Teenage Mutant Ninja Turtles, and so on. But, whereas these toys benefited from a supplemental story, a video game is the story.
Video games do well because they aren’t just for kids. They have a devoted following of men and women, now in their twenties, thirties, and forties, who grew up with games. The only major traditional toy maker to seriously explore the adult market is Lego, which has an enthusiastic following of Adult Fans of Lego, or AFOLs, a community I’ve gradually waded into. In 2008, Lego introduced the Architecture Series, the first Lego product ever marketed specifically to adults, with sets that include the Sears Tower and the Empire State Building. Now and then, if the weather is nice, I’ll stroll to my neighborhood park with a Lego set and build it in the shade (not an Architecture set, for what it’s worth—I prefer the spaceships). Occasionally, a curious child will wander over and ask if he can help, but such children are always quickly followed by parents who eye me as though I were handing out candy from a windowless van.
Lately, business is especially bad for traditional toy companies because of a new threat: smartphones and tablets. As if console video games weren’t bad enough, mobile devices are in customers’ pockets at all times, and once the phone is paid for it can provide a lifetime’s worth of fleeting diversion for pennies. Traditional toy companies aren’t the only ones suffering—some of the companies that make console video games are, too. Last year was a particularly bad one for Nintendo, which sold fewer of its new Wii U consoles in nine months than Microsoft and Sony sold within the first twenty-four hours of launching their own new consoles, last fall. Caught between the convenience of smartphone games and the power of the PlayStation 4 and Xbox One, the Wii U failed to distinguish itself. And what’s bad for Nintendo may also eventually be bad for Microsoft’s and Sony’s game divisions. In an interview earlier this month, PlayStation’s U.K. manager, Fergal Gara, said that Nintendo’s struggles “could be detrimental to the entire market,” in that Nintendo’s younger customers often become PlayStation and Xbox aficionados when they’re older.
Meanwhile, it’s becoming harder to locate the boundary between toys and video games. In Activision’s video-game series Skylanders, for example, players are expected to collect a bunch of figurines; when one of them is placed on a special “portal” set up near the television, it appears on-screen as the player’s new avatar. Richard Gottlieb, the president of Global Toy Experts, a consulting firm, told me that, even though the Skylanders figurines are among the best-selling action figures on the market, they are counted as “video-game accessories.” Industry observers are coining portmanteaus left and right to describe these hybrids. Forget toys—here are “interaction figures” that facilitate “phygital” play. As traditional toy companies fiercely protect their territory—the tactile, the messy, the outdoors—some of the products they’ve been selling for decades are reimagined in digital form. For instance, Hasbro’s line of board games includes both Scrabble and Words with Friends: a seventy-five-year-old classic and a cardboard-and-tiles version of the iPhone app that ripped it off. Now that’s phygital.
Photograph: David Hurn/Magnum
