Toy Fair: Changing Industry, Changing Show

Toy Fair Report

by Karen Raugust -- Publishers Weekly, 3/10/2003

A foot and a half of snow, a terrorist alert and a holiday weekend kept traffic light at the 100th annual New York International Toy Fair. But an even greater contributor to this year's somewhat subdued Fair was the challenging atmosphere facing the toy industry as a whole.

Toy Industry Association (TIA) announced before the Fair (held February 16 through 19 at the Javits Convention Center and toy district) that sales of traditional toys fell 1% in 2002, from $20.5 billion to $20.2 billion. FAO Schwarz, which operates Zany Brainy and The Right Start, as well as its flagship chain, entered Chapter 11 a month ago. And several key manufacturers, including Trendmasters and Irwin, went out of business last year.

This pessimistic backdrop was reflected at the fair. Several vendors took smaller spaces or maintained private booths for appointments. Some long-time exhibitors, such as McFarlane Toy, opted out, while Hasbro, which used to exhibit its products in a three-floor building, showed its brands to the media only, in a small showroom (Mattel moved out of its building to the Toy Center three years ago). The fair was also a day shorter than in the past.

"The way people talk about Toy Fair is very analogous to the way people talk about BEA, that it's a vestigial fair that's primarily a PR thing," said Kate Klimo, v-p and publisher of Random House/Golden Books Young Readers Group, which shows its products at its New York offices.

"The same forces that created changes in the independent book market vis à vis the chains are at work in the gift and toy industry as well," explained Larry Jonas, director of special sales at Harcourt Children's Books. "Publishers have to take that into consideration."

Publishers' objectives for Toy Fair vary, with some focusing on specialty-store order-taking and others meeting mainly with existing accounts. Most highlight key titles for spring and fall, emphasizing novelty, book-plus, gift books and licensed titles. Surprisingly, despite the snow and other challenges, most publishers reported healthy activity in order-writing, at least compared to expectations.

"The bad weather had an interesting effect in that the people that were in town came and were in a buying mood," said Michael Jacobs, senior v-p of Scholastic's trade division. "The customers that came were particularly interested in good values," such as the company's 8x8 program offering a free spinner rack with the purchase of a certain number of titles. Jacobs noted that Scholastic has focused on acquiring more licenses over the last year, including G.I. Joe, Care Bears and Hamtaro.

"We wrote more orders this year than last year," Jonas reported. "But it's not a terribly big order-writing show." He said attendees were enthusiastic about Tails by Matthew Van Fleet, and a Little Prince board book gift set.

Jonas said Harcourt's strategy for Toy Fair differs from BEA or other book shows. "Thirty-two-page picture books, YA, early reader novels and early fiction are not even part of the picture," he said. "[At Toy Fair,] they're interested in modest price points and the giftable appeal of the product."

Conversely, Silver Dolphin Books, which specializes in interactive and novelty titles, approaches BEA and Toy Fair in much the same way. Associate publisher Lilian Shia reported interest in the company's Uncover series; titles have 3-D models inside that reveal a layer each time a page is turned. "It's definitely an order-writing show for us," said Shia. "Even on the last day there were buyers in the building."

School Zone, which this year showed at the Javits Center only (it had space at both Javits and the Toy Center in previous years), highlighted merchandising strategies and its higher-end Super Deluxe and Scholar series, as well as a new line, Activity Zone. "We're trying to get more revenue from the same space," said Peter Alfini, v-p of sales. The company is encouraging retailers to move up to a $7.99 price point, rather than relying on 32-page, $2.99 books, in order to increase the profitability of their four-foot School Zone sections.

At Reader's Digest Children's Books, which shared a booth with its distributor, Simon & Schuster, two titles stood out, according to Rosanne McManus, associate publisher. Attendees were excited about Disney Animal Friends, the follow-up to last year's Disney Princess Movie Theater, and Caterpillar Spring, Butterfly Summer. Meanwhile, Simon & Schuster Children's Publishing reported a strong response to Mama Hen and Her Baby Chicks, a board book that clucks and lays three eggs, also board books.

Modern Publishing, one of the only publishers still residing in the Toy Center, was taking orders for its new licensed coloring and activity titles, including The Wiggles, Caillou, Beyblade and Kellogg's, which president Andrew Steinberg says is getting a good reaction from bookstores and mass retailers. Modern recently redesigned the covers of its Fisher-Price Ready Readers storybook line. "Those were a slow go for a while, but they seem to be back," Steinberg said.

Learning Horizons highlighted its Nick Jr. line, featuring Blue's Clues and Dora the Explorer, the company's first character licenses. (It holds rights to the Parents magazine brand.) Titles include a workbook that allows readers to self-check their answers with a decoder device, and patent-pending "flap cards," two-sided flash cards with a flap on each side. The company also introduced a motivational stationery and sticker line featuring Strawberry Shortcake and Care Bears, acquired from its parent company, American Greetings.

Director of marketing Theresa Gamble noted that key accounts have already seen everything by the time Toy Fair comes around, although they reconfirm orders at the show. "We don't want them to see something new," she said. "If they haven't seen it already, we're in trouble."

Penguin and its divisions had one of the largest book-related displays. Diane Cain, director of consumer product marketing, told of a good response to a new line, Peter Rabbit Seedlings, and to recolorized versions of Eric Hill's Spot, for which a floor display featured five-inch promotional plush that will be part of a retail purchase-with-purchase offer. Penguin also exhibited Mad Libs, including products from the brand's first three licensees, Tek-nek, Basic Fun and Cardinal Games.

"It's a chance for us to show off the new licenses," said Debra Dorfman, president and publisher of Penguin division Grosset & Dunlap, "and to tell about some of our own brands." She mentioned licenses such as Strawberry Shortcake, Liberty's Kids and Jay Jay, as well as actor Henry Winkler's new Hank Zipzer series.

Little Brown devoted half its booth to its own titles and half to Disney Worldwide Publishing, which it distributes. Veronica Gonzalez, associate director, special markets for AOL Time Warner Book Group, reported good reaction to Baby Einstein, an upcoming Toot 'n Puddle book, bilingual board books, Bad Cat by Theresa McGuinness, and two new Todd Parr titles, Otto Goes to the Beach and Otto Goes to Bed.

One publisher that didn't take a booth this year was HarperCollins Children's Books, which met with key accounts at its headquarters or other locations. "We absolutely participated," said Diane Naughton, v-p of marketing. "But from a time and resources standpoint, we felt we could get as much accomplished this way as we could if we took a booth."

Trend-Spotting

In addition to meeting with accounts and writing orders, publishers walk the floor looking for materials or technologies that might apply to books, products that could be incorporated into book-plus packages, and licensing or product trends. This year, innovation was lacking. "It was really uninspired," said Robin Corey, Simon & Schuster's executive v-p/publisher, novelty books and media tie-ins.

The educational toy segment continues its strong performance, with interactive books especially prominent. The leader in the category is LeapFrog, whose LeapPad and LeapPad books (many featuring recognized characters) were the top-selling toys of 2002. The company has become the third-largest toy company in the U.S.

One of LeapFrog's competitors, Oregon Scientific, holds licenses for Barbie and Hot Wheels and launched a workbook creator and a series of interactive books. Meanwhile, Fisher-Price introduced the PowerTouch Learning System, another interactive book product.

The rise in educational toys is probably one reason for the increase in representation at Toy Fair from educational and parent-teacher stores, a trend noted by several publishers. "This year I was struck by the number of ed dealer customers," said Tracey Dils, trade publisher at McGraw-Hill Children's Publishing, which displayed its workbook and educational lines.

Learning Horizons spotlighted the Parent's Choice and Dr. Toy citations its Learn Every Day workbooks received recently. "We had not gotten a lot of parent-teacher store interest before," said Gamble. "But they were really interested in the awards."

A new exhibitor was Picture Window Books, a year-old company offering educational, illustrated nonfiction titles to the school/library and retail markets. Sarah Wohlrabe, sales manager, said she saw many educational accounts at the show, but that book, toy and gift stores seemed to be looking for educational books as well. The company introduced its line of 110 titles, including Read-It! readers and Dirt: The Scoop on Soil. "Our objective was to learn," Wohlrabe said. "And to be seen."

In terms of licenses, properties from the 1980s were noted all around the show, including Care Bears (Modern and Scholastic are the tie-in publishers), Strawberry Shortcake (Penguin and Dalmatian Press), and My Little Pony (HarperCollins). For boys, the Teenage Mutant Ninja Turtles are back, while Mattel showed a range of Masters of the Universe product.

Following on the successes of movies such as Harry Potter, The Lord of the Rings and Spider-Man, two noticeable licenses were Marvel/Sony's The Hulk and Universal's Dr. Seuss's The Cat in the Hat. Marvel will publish three trade paperbacks in conjunction with the summer release of The Hulk, including a glossy reprint of Marvel Masterworks The Incredible Hulk (in partnership with Barnes & Noble). Among the Cat in the Hat toy licensees at the show were Play-Along, Little Kids, Jakks Pacific and Applause (Random House publishes Cat in the Hat books).

In addition to a number of the retro brands mentioned, many properties targeted girls, including two of the leading examples, Bratz (for which MGA Entertainment is on the verge of signing two publishers) and Groovy Girls. Barbie has seen a resurgence, thanks in part to a home video series; Barbie of Swan Lake is the latest title. Mattel teamed Barbie with one of this year's hottest licenses in Barbie Loves SpongeBob SquarePants, a doll accessorized with SpongeBob-themed clothing.

Literary licenses with considerable presence were Olivia and Thomas the Tank Engine. Thomas is celebrating its 10th birthday under new ownership--HIT Entertainment purchased licensor Gullane last year--and stars in a direct-to-video release. Random House will publish a tie-in title, Percy's Chocolate Crunch, to be cross-promoted with the video.

Changes Afoot

The evolving toy industry has led the TIA to announce that, starting later this year, the annual show will be divided in two. The first, the early mass market toy show, October 21 to 23, will cater to the big chains that order Christmas merchandise more than a year in advance. The traditional February Toy Fair will focus on the specialty market.

This change is the result of developments over the last several years. Toy Fair used to be a venue for introducing new product, until the ever-more-powerful mass retailers began ordering earlier and earlier, and toy companies adjusted by showing their lines to important accounts at least four months before Toy Fair. Meanwhile, the remaining specialty stores continued to buy for the fourth quarter in February. The split to two shows formalizes what was already happening.

Toy companies and publishers are undecided about whether to participate in one or both of the shows. Several said they thought they'd have a presence at both, at least initially, depending on the needs of their key accounts. Alfini expected School Zone to be at both, but in a reduced space. "When I first got into book publishing [13 years ago], Toy Fair was the big, big deal for the mass market," he said. "While you still have to come, now it's more a formality than for conducting serious business."

Unlike the big mass market toy companies, most publishers have been served well by the current configuration. "For us, we're not Hasbro. It's a very good situation the way it is," Steinberg said. "But we'll be at both shows; we have to. Specialty stores are a good business for us and we can't slight them. For us, a chain with 20 to 30 stores is a good business."

"We would probably rely on input from the mass retailers we deal with," said Gamble. "That's a good chunk of our business because of our association with American Greetings. We're going to be there [in October] if they are." She noted the company would still target specialty stores in February. "There are so many of them that it's an impossibility to see them all face to face on a sales call basis."