TOYS AND GAMES 1

HONG KONG TOYS & GAMES FAIR

TOYS AND GAMES: GLOBAL TRENDS, DEVELOPMENTS

AND PROSPECTS
UTKU TANSEL, HEAD OF TOYS AND GAMES

JANUARY 2015

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 TOYS AND GAMES 2

ECONOMIC AND DEMOGRAPHICS

OUTLOOK
TOYS AND GAMES PERFORMANCE BY
GEOGRAPHY
CATEGORY ANALYSIS
KEY INSIGHTS
CHANNEL ANALYSIS

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ECONOMIC AND DEMOGRAPHICS OUTLOOK TOYS AND GAMES 3

Which Countries Have the Highest-Spending Middle Class Households?

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 ECONOMIC AND DEMOGRAPHICS OUTLOOK TOYS AND GAMES 4

BRIC as Large Consumer Markets with Rising Discretionary Spending

Discretionary Spend as a Proportion of
Consumer Expenditure in BRIC: 2005 – 2030, %
72

70
Discretionary Spend as a Proportion of

68

66
Consumer Expenditure (%)

64

62

60

58

56

54

52

50
2005 2010 2015 2020 2025 2030

China India Russia Brazil

Growing middle class and rising disposable income

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Note: Discretionary spending is spending on all items other than food, non-alcoholic beverages and housing
ECONOMIC AND DEMOGRAPHICS OUTLOOK TOYS AND GAMES 5

India to Replace China as World’s Largest Population

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 TOYS AND GAMES 6

ECONOMIC AND DEMOGRAPHICS OUTLOOK

TOYS AND GAMES PERFORMANCE BY
GEOGRAPHY
CATEGORY ANALYSIS
KEY INSIGHTS
CHANNEL ANALYSIS

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 TOYS AND GAMES PERFORMANCE BY GEOGRAPHY TOYS AND GAMES 7

Accelerating Global Growth

Global Toys and Games Sales 2008-2018, Rsp
220 7

200 6
180
5
160
4
140

% growth, constant
US$ billion (RSP)

120 3

100 2
80
1
60
0
40

20 -1

0 -2
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Forecast
Size Growth
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 TOYS AND GAMES PERFORMANCE BY GEOGRAPHY TOYS AND GAMES 8

Asia Pacific Set to Become World’s Largest Traditional Toys Market

Traditional Toys and Games Value Sales, Rsp, Largest Regions
27,000
26,000
25,000
24,000
23,000
22,000
Value Sales, US$ million

21,000
20,000
19,000
18,000
17,000
16,000
15,000
14,000
13,000
12,000
11,000
10,000
2013 2014 2015 2016 2017 2018

Western Europe North America Asia Pacific Latin America

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 TOYS AND GAMES PERFORMANCE BY GEOGRAPHY TOYS AND GAMES 9

North America: Flat Sales in World’s Largest Toys Region

North America Toys and Games Growth, US Traditional Toys and Games,
2008 – 2013, Rsp,% Top Performing Categories, 2013 - 2018, Rsp, %
20
Construction
Toys $306m
15
Arts & Crafts $146m
10
Action Figures &
Accessories $80m
Growth (%)

5
Scientific/Educational
Toys
$32m
0
2008 2009 2010 2011 2012 2013
Pre-School
(3-4 Year Old)
$107m
-5

Games &
Puzzles
$98m
-10

Dolls &
-15 Accessories $124m

Traditional Toys and Games Video Games 0 5 10 15 20

Growth (%)
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 TOYS AND GAMES PERFORMANCE BY GEOGRAPHY TOYS AND GAMES 10

Latin America: Still Rocks

Latin America Traditional Toys and Games Value
Sales and Growth, Rsp
16,000 9

14,000 8
Latin America Toys and Games
7 Value Sales by Country,
12,000 2013, US$ million, Rsp
Value Sales, US$ million

6 862
10,000

Growth (%)
5 Argentina
8,000
5,696 2,860 Brazil
4
6,000 Mexico
3
Other Latin
4,000 3,967 America
2

2,000 1

0 0
2010 2011 2012 2013 2014 2015 2016 2017 2018

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 TOYS AND GAMES PERFORMANCE BY GEOGRAPHY TOYS AND GAMES 11

Eastern Europe: Russia Continues to Dominate Sales

Eastern Europe TG Sales by

Russia Traditional Toys and Games 2013,
Country, US$ million, 2013
% Growth, Rsp
Baby 504
Ukraine
Other Traditional TG 20 Infant 1,055
1,046 Poland
Scientific/Educational 10 Pre-School
239
0 Action Figures Romania
Ride-On Vehicles
& Access.
-10
3,147 Russia
Radio/Remote
-20 Arts & Crafts
Control
Russia Toys and Games Growth, %, Rsp

Plush Construction
Video Games
$275m

Outdoor & Sports Dolls & Access.

Dressing-Up & Role
Model Vehicles Traditional Toys $335m
Play
Games & Puzzles and Games

0 5 10 15

2013 to 2018 CAGR 2013

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TOYS AND GAMES PERFORMANCE BY GEOGRAPHY TOYS AND GAMES 12

Western Europe: Stagnates, Turkey Shines

Western Europe Traditional Toys and Games
Sales and Growth, 2013, Rsp
5,000 14

4,500 12

4,000 10

Sweden 3,500 8

US$ million
3,000 6

Growth (%)
2,500 4

2,000 2
UK
NL 1,500 0
Germany
1,000 -2
France
CH 500 -4
Italy
0 -6
Spain
Turkey

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 TOYS AND GAMES 13

ECONOMIC AND DEMOGRAPHICS

OUTLOOK
TOYS AND GAMES PERFORMANCE BY
GEOGRAPHY
CATEGORY ANALYSIS
KEY INSIGHTS
CHANNEL ANALYSIS

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 CATEGORY ANALYSIS TOYS AND GAMES 14

Construction and Dolls to Drive Growth in Absolute Terms

World Traditional Toys and Games Value Sales , Selected Categories

10.0

9.0
Construction
8.0
Arts and Crafts
2013 Growth, Rsp, %

7.0

6.0 Infant Toys

(19-36 Months)
5.0

Dolls and Scientific/Educational

4.0
Accessories
3.0

2.0
Action Figures and
1.0 Games and Puzzles Accessories

0.0
1.0 2.0 3.0 4.0 5.0 6.0 7.0

2013 – 2018 CAGR, %

Note: Bubble size represents value sales RSP, from US$2.7 billion to 9.9 billion
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CATEGORY ANALYSIS TOYS AND GAMES 15

Kids’ Tablets: One of the Most Dynamic in New Product Developments

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CATEGORY ANALYSIS TOYS AND GAMES 16

Blurring Boundaries Between Platforms

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CATEGORY ANALYSIS TOYS AND GAMES 17

Cross Platform Collaborations Are on the Rise

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 TOYS AND GAMES 18

ECONOMIC AND DEMOGRAPHICS

OUTLOOK
TOYS AND GAMES PERFORMANCE BY
GEOGRAPHY
CATEGORY ANALYSIS
KEY INSIGHTS
CHANNEL ANALYSIS

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KEY INSIGHTS TOYS AND GAMES 19

Toys Very Licence Driven…

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KEY INSIGHTS TOYS AND GAMES 20

…Especially Action Figures

Penetration of Licensed Toys, Selected Categories, 2013, %, RSP

100

90

80

70

60
%

50

40

30

20

10

0
Action Figures and Dolls and Accessories Model Vehicles Plush Toys
Accessories

Russia Turkey Japan UK

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 KEY INSIGHTS TOYS AND GAMES 21

Video Games: Where is The Console Cycle?

World Static and Hand-held Consoles Value Growth (% Rsp)

50 90,000
45
80,000
40
70,000
35
30 60,000
% y-on-y growth

US$ million
25
50,000
20
40,000
15
10 30,000
5
20,000
0
10,000
-5
-10 0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Video Games Hardware Video Games Software Digital Gaming

Video Games Hardware Packaged video games software Digital gaming

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 KEY INSIGHTS TOYS AND GAMES 22

Phenomenal Growth in Smartphones & Tablets Stimulate Digital

Gaming
Global Mobile Phones Volume Sales, ‘000 units Global Laptops vs Tablets Volume Sales, ‘000 units
2,000 300
1,800
1,600 250
1,400
Million Units

200

Million Units
1,200
1,000
150
800
600 100
400
200 50
0
0

Feature Phones Smartphones

Laptops Tablets

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KEY INSIGHTS TOYS AND GAMES 23

Video Games: Key Developments

Enter the
Asia: Trend
Matrix:
Console Towards
Virtual
Wars Subscription
Reality
Model
Arrives

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 TOYS AND GAMES 24

ECONOMIC AND DEMOGRAPHICS

OUTLOOK
TOYS AND GAMES PERFORMANCE BY
GEOGRAPHY
CATEGORY ANALYSIS
KEY INSIGHTS
CHANNEL ANALYSIS

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 CHANNEL ANALYSIS TOYS AND GAMES 25

Traditional Toys Stores: Most are Declining/Static But Still Important

Toy Sales Through Traditional Toy Stores, %, Rsp, Selected Markets
Sweden

South Africa

Ukraine

Taiwan

Poland

Hong Kong

Italy

Malaysia

Germany

US

Turkey

Brazil

Argentina

0 10 20 30 40 50 60

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2008 2013
CHANNEL ANALYSIS TOYS AND GAMES 26

Grocery Continues to Muscles in Traditional Toys and Games

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 CHANNEL ANALYSIS TOYS AND GAMES 27

Internet Sales Reach New Heights

% of Traditional Toys Sold Through Half of Internet Users Will be in Asia
Internet, Selected Markets by 2020
UK 100%

Turkey 90%
Sweden 80%
Spain 70%
Germany 60%
France 50%
US 40%
Brazil 30%
Russia
20%
Taiwan
10%
South Korea
0%
Japan 2005 2010 2015 2020
India
China Western Europe North America
Middle East and Africa Latin America
0 5 10 15 20 25
Eastern Europe Australasia
% (RSP)
Asia Pacific
2013 2008
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 CHANNEL ANALYSIS TOYS AND GAMES 28

Video Games Distribution: Internet Gains Media Products Stores Suffer

Share of Media Products Stores in Video Games Value Sales, %, Rsp
45
Brazil
40
35
Japan
30
Share (%)

25 Spain

20
United Kingdom
15
10
Russia
5
0 South Korea
2008 2009 2010 2011 2012 2013

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 TOYS AND GAMES 29

THANK YOU FOR LISTENING

Utku Tansel – utku.tansel@euromonitor.com

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