Many Toymakers Face Weak Sales
NINTENDO BLASTS AHEAD
UNITED STATES toy companies are grumbling over another year of slow sales and a market still dominated by video games. The 1990 Christmas season will mark the industry's fourth year of flat growth. Industry analysts predict US sales rising about 4 percent above last year's $13.4 billion (not including video products). That growth is less than the inflation rate..
Toymakers will once again be up against Nintendo Ltd., the colossus Japanese video game maker. Despite predictions of a decline in 1990, video game sales will increase to a 20 percent share of the total US toy market, says Sean McGowan, analyst with Geraud, Klauer Mattison in New York. That up about 5 percent over last year's share. ``It's a considerably higher market share,'' Mr. McGowan says.
Nintendo still dominates the US video game industry, capturing 80 percent of the market. This year, Nintendo of America and its licensees expect $4.1 billion in retail sales compared to last year's $2.7 billion.
``Rumors of our demise continue to be premature,'' said Peter Main, vice president of marketing for Nintendo of America at last month's fourth annual Bear Stearns & Company toy industry conference in Boston.
Despite Mr. Main's optimism for 1991, the company nevertheless predicts declining sales of its standard 8-bit Nintendo Entertainment System (NES) hardware. But video enthusiasts need not despair. Nintendo is now boasting a new 16-bit sytem, called the ``Super Famicom.'' Scheduled for sale in the US next year, the ``Super Famicom'' has greater memory power and can produce better graphics than the standard 8-bit system.
Nintendo is also counting on the continued success of ``Game Boy,'' a hand-held video game system with head phones. The company, now targeting adult users, says new compatible software will feature a dictionary, thesaurus, and travel guides.
Other toy companies, aware of an economic slowdown at home, are finding success in markets abroad. Mattel Inc., for example, reports this year that half its revenues were generated outside the US. Overseas sales for Hasbro Inc. rose 30 percent in the first nine months of 1990.
The toymakers find Europe's markets especially attractive. While there are 40 million children under age 10 in the US, there are 71 million children of that age in Europe, notes Mattel chairman John Amerman. The construction of a European Disneyland in 1992 holds promise for toy industry growth as well, he says.
Back home, Child World Inc., the nation's No. 2 toy chain, announced last week that it would stop paying its bills for six weeks to pay for new incoming toys. The company also announced 30 percent to 50 percent price cuts, a discounting pattern followed by other toy retailers, including the nation's biggest, Toys ``R'' Us.
This year has been a good one for Mattel. It has benefited from an industry-wide push for more girls toys. About 30 dolls are new this year, with Mattel's 31-year old Barbie still a success. Mattel is projecting $700 million in worldwide sales in 1990 from Barbie, up from $600 million last year.
Mattel's ``Magic Nursery'' doll has also been popular. Submerge the doll's dress in water, and it is transformed into a water-proof packet. Inside the packet is a card revealing the doll's gender which says ``It's a Boy'' or ``It's a Girl''. Included in the packet is a new permanent dress and ID bracelets for the baby and her new owner. Tyco Toys Inc.'s ``My Pretty Ballerina,'' who dances on her toes, comes with a cassette and pink tutu tights. And Hasbro's ``Baby Oh-Oh,'' fed with a water bottle, has special diapers that change color when wet.
As for boys' toys other than video, the selection is more limited. ``The male action category has generally been a tough category with the exception of Teenage Mutant Ninja Turtles and the success of video,'' says Eisenberg.
Playmates Toys Holdings Inc. of Hong Kong is promoting the popular line of Ninja Turtle figures, plush toys, and acessories. In addition, Kenner's ``Batman'' figurines, play sets, and vehicles are selling well, as are Hasbro's ``World Wrestling Federation'' wrestling figures. Galoob sees strong sales of its ``Micro Machine'' miniature cars.
As for the dog category, analysts forecast strong sales of Hasbro's ``Go-Go My Walking Pup,'' a battery-powered walking dog with a leash. Tonka Corporation is also counting on strong sales of its ``Pooch Patrol'' dogs. These friendly-looking dogs are equipped with folding lips and moveable eyes, tails, and ears, and can be easily transformed into fierce-looking watch dogs.