As more and more children love video games, traditional toys without innovation are facing weak demand, coupled with the shadow of Toys "R" Us, the rise of new channels for e-commerce has highlighted the bad situation of the toy retail industry. Where is the trouble for toy maker Mattel, which has been suspended twice?
Toy maker Mattel released a lower-than-expected full-year performance guidance for 2019 at an analyst meeting in New York on Friday. The biggest one-day drop.
FactSet data shows that the company expects adjusted EBITDA in 2019 to be between $ 350 million and $ 400 million, lower than analysts' expectations of $ 551.6 million.
The company also expects sales to be flat in 2019 after adjusting for the exchange rate.
"Either their confidence is very low or the company is falling apart," said Davidson analyst Linda BoltonWeiser.
Prior to Mattel's announcement, the company reported last week that sales were strong in the fourth quarter of 2018.
The bad ??百乐宫网上游戏?? of Mattel, the top toy maker, is not the first. Mattel Q4 suffered an unexpected loss in 2017, and even CNBC wrote that even Barbie could not save Mattel.
In fact, Mattel's poor performance is related to the environment in addition to itself.
1.Streaming & Pay TV users
Loss of pay TV subscribers, switch to streaming media platform affect sales?
According to a report from the British media watchdog Ofcom, the three major streaming companies in the UK, Netflix, NOW TV (Sky) and Amazon Prime, have a total subscription volume of 15.4 million, which has exceeded the pay TV subscriptions. Among them, 32% of Netflix users and 20% of Amazon Prime users said they chose to subscribe to paid streaming to watch exclusive content.
The second quarter of 2018 financial report shows that since 2014, Netflix has spent nearly $ 30 billion on streaming content production, and its investment has increased year by year, and more than $ 10 billion has been used in the past year.
More and more viewers are choosing online streaming services such as Netflix or free wireless broadcast television services. The business of major toy makers such as Mattel and Disney is mainly driven by TVs and large-screen movies. In 2013, Disney squeezed Barbie into the most popular female toy with a spin-off doll from the best-selling movie Frozen.
Can toys really change the status quo through advertising to streaming media now? In the face of young consumers who have no property freedom, the effect is not obvious. After all, movies are no longer the only advertising medium.
2. The channels for selling toys have changed
The product's uncharacteristics and aging channels are destined to be abandoned by the times.
A 7-year-old boy relied on a toy unpacking video. Ryan won the title of Forbes' most profitable YouTube anchor in 2018 and became a super-rich man with an annual income of over 100 million. Toy vendors have settled in new channel platforms.
Early Toys R Us did not cut into e-commerce at the most suitable prime time, leading to bankruptcy and liquidation. The shadow affected the entire toy industry. Retail channels, which were also severely impacted by e-commerce, also indirectly affected Barbie's sales. Since 2010, retail store sales including Wal-Mart, JCPenny, and Target have been declining. These were once the main sales channels for Barbie, but now they are all struggling to deal with the impact of e-commerce. At the same time, the impact of emerging business models such as toy sharing and leasing is also continuously impacting toy sales.
3. China-US trade war raw materials rise
Johnny Sze, deputy general manager of the Ego Group, which makes toys, mentioned in an interview with CNBC that some parts of the toys, including batteries and circuit panels, were affected by tariffs. Some companies are considering moving production lines to Vietnam or India, including one of Mattel's manufacturers, Hong Kong-based Wah Shing Toys Co. Mattel's financial report also mentioned rising raw material costs. According to the American Toy Industry Association, 85% of all toys sold in the United States are imported from China.
4. Own factors
Technology is the primary productive force, and innovation is the primary driving force for development
Since its birth in 1959, Barbie has been the most well-known product of toy company Mattel and the best-selling toy ever, and its market positioning is also very clear-for girl groups, use fashion model dolls to give them a princess dream.
Barbie, 60, doesn't know that times are changing. It requires the injection of fresh blood to promote circulation.
Electronics are recognized as the most powerful competitors of traditional doll toys. According to data from the US Department of Commerce last week, retail sales in this department's peak season in December fell 1.2% year-on-year, the largest decline in nine years. This means that in terms of toy consumption, American families have cut their toy budgets.
It can be seen that more and more children now tend to play video games and electronic products instead of traditional toys.
Mattel's full-year 2018 results show that in addition to Barbie's full-year sales growth, Fisher and the "Thomas and its friends" series sales fell by 13%. It can be seen that, in addition to the core brands of Mattel, many brands are slipping (over) and cannot be favored by the younger generation. For independent toy manufacturers like Mattel, iterating to upgrade is urgent.
Although, like most toy companies, Mattel has always faced a dilemma: consumers have begun to move to the Internet, and children are increasingly interested in video games and mobile devices. In addition, the impact of Toys R Us bankruptcy continues.
Learning from Disney, Disney has been publishing comics of its classic brands on a regular basis for many years, while acquainting younger generations with characters and brands, it can also attract new users. With the growth of users and changes in taste, Disney has continued to iteratively upgrade products to meet the needs of consumers of multiple ages.
Hasbro and Lego continue to launch new toy categories, eroding Mattel's original advantage market, and expanding its influence by means of IP-based and entertainment-oriented means such as filming IP movies and setting up movie studios. Spin Master is a benchmark for innovative research and development of toy products.
Mattel has also been involved in the film industry, authorizing outside film companies to develop big movies with toy brands, but the results have not been satisfactory. The establishment of the film department this time also shows that Mattel has begun to change the previous model of sales growth driven by scale expansion and promote the deep development of IP from within the company.
Reuters said that in April 2018, Margaret Georgiadis, CEO of Mattel, the world's largest toy maker, would leave the company after only 14 months in office, and its position would be held by board members, digital media Industry executive Ynon Kreiz takes over.
After Mattel's new officer took office, under the leadership of CEO Ynon-Kreiz, Mattel has adopted a two-pronged strategy to reverse the dilemma of this troubled toy maker. First, Kretz worked to cut costs by $ 650 million, lay off 2,200 people, and close the New York office.
Mattel CEO Ynon Kreiz
Mattel CEO Ynon Kreiz is not a traditional toy manufacturing or related industry practitioner. He previously served as CEO of Maker Studios, an online short video content production company, which was sold to Disney in 2014.
Kreiz was also co-founder, chairman and CEO of Fox Kids Europe, a company that operates pay-TV channels in more than 50 countries, with extensive experience in the area of children's entertainment in particular.
Kretz said he hopes to revive sales by establishing a film division to bring his famous toy industry to the big screen. In January, the company announced that it had hired Margot Robbie from SuicideSquad to play Barbie, and revealed that it would produce a live-action version of the HotWheels movie. On Friday, the company announced that it will also produce an American girl movie. It can be seen that media content is the key to the future transformation of Mattel.