The PopCult Toybox
Following a disastrous fourth quarter in 2014, which followed several quarters of declining sales, Mattel parted ways with their CEO, Bryan Stockton last week. His exit was not a huge surprise, but the recent performance of the world’s number two toymaker (Lego surpassed them for the top spot last year) is a sympton of the changing toy market as globalization and shifting demographics, as well as competition from videogames and electronics, shuffled the deck in terms of conventional wisdom.
After years of dominance in fashion dolls with Barbie and die-cast cars with Hot Wheels, Mattel saw their twin pillars falter. Barbie fell behind toys based on Disney’s “Frozen” last year as the top-selling toy for girls, and that’s a double-whammy for Mattel because they were outbid by their top US competitor, Hasbro, and beginning next January, “Frozen” toys will move from Jakks Pacific to Mattel’s top rival, Hasbro.
After years of rapid growth, Mattel’s “Monster High” line plateaued this year, but even with a healthy market share, it’s apparent that Monster High has cannibalized sales from Barbie. With Frozen shifting to Hasbro in 2016 and Monster High and Barbie seemingly stalled in terms of growth, Mattel could wind up getting knocked out of the top spot as the nation’s premier maker of toys for girls. This year’s “Hail Mary” pass sees Mattel relaunching Barbie as a superhero, “Super Sparkle,” part of the Princess Power line.
The problems affecting Hot Wheels seem to be easier to fix. Over the last couple of years Mattel has focused on salting their assortments with “hot” cars designed to appeal to the collectors market. While it’s cool that they’ve released Hot Wheels versions of Batmobiles, The Jetson’s Car, The Homer (from The Simpsons) and other cool pop culture vehicles, the way they’ve done it has done more to alienate collectors rather than attract them. Making matters worse, the regular Hot Wheels cars over the last couple of years have been rather dull and uninspired. Mattel has obviously gone with cheaper production, using existing molds and old designs instead of creating new, eye-catching toy cars.
Hot Wheels can be saved with a simple refocusing of their priorities.
Things are not all doom-and-gloom for Mattel, though. They have a pretty healthy action figure division now, which is good because that’s been a weak spot for them for years. The new year will see two new toy lines based on DC Comics properties, Batman Unlimited and Super Friends, which may revitalize DC and Mattel’s fortunes in advance of next year’s Superman/Batman movie. WWE is performing strong for Mattel as well.
It would interesting to see Mattel exploit Masters of the Universe with a mass-market action figure line. Teenage Mutant Ninja Turtles (Playmates) and The Power Rangers (Bandai) are surging, due largely to cross-generational appeal as parents share their nostalgia for the original properties with their children. Mattel is really missing the boat by not exploiting their home-grown He-Man figures for a new generation of kids.
Mattel’s purchase of Mega Bloks last year was a brilliant move that positions them to move more strongly into the area of construction toys, which is the fastest-growing segment of the toy industry.
As for what the immediate future holds, 2015 will be seen as a rebuilding year. Most of the programs in place now (like the new superhero Barbie) were the product of Stockton’s leadership. Christopher Sinclair is the interim CEO as Mattel’s board searches for a replacement. Until a new leadership team is in place, Mattel will basically have to tread water.
The absence of a permanent CEO illustrates a pretty significant challenge that Mattel, and to a lesser extent, Hasbo both face. Both companies are so huge that it’s difficult for them to react to changes in the market as quickly as a smaller toy company can. It’s like the old adage about steering an ocean liner. Changing course takes much longer, and Mattel has a lot to consider when looking for a new direction.
Not only are we coming off a dozen years of declining birth rates, we are now living in a world where kids as young as a few months old are proficient in using technological devices. Toymakers have to compete with Apple and Android phones and tablets. So far attempts at integrating traditional toys with iPads have been miserable failures. Mattel (and Hasbro) need to find a way to crack into the gaming and software market.
Activision went from being a software company to having the top action figure line when they released Skylanders. Disney is making a stab at copying that success with Disney Infinity. Mattel and Hasbro don’t have anything like that, despite owning properties like Masters of the Universe and GI Joe, which could easily be integrated into gameplay with figures.
Maybe Mattel needs to look outside the traditional toy industry for their next CEO, and choose someone from the tech sector.