Is This The End For Toys R Us And The Toy Industry As We Know It?

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CNN has dire news regarding ailing retailer Toys R Us—it could shutter for good as early as next week.  Not surprisingly, the stocks for the major toy brands—Hasbro, Mattel, and others—fell at the dire prediction.

Both Hasbro and Mattel reported losses for last year’s fourth quarter—a.k.a. the all-important holiday season. Even a seemingly perennial brand like Lego recently reported its first sales slump in 13 years. And while big-box retailers like Walmart and Target have propped these toy companies up in the face of Toys R Us’s troubles, they too have suffered recent losses.

So while it seems to me that, barring some sort of massive re-branding/new approach, Toys R Us is a “done” entity—I’m also questioning the future of these toy companies.

Look, I think the actual brands and licenses from Mattel, Hasbro, and etc. will survive just fine. Barbie, Transformers, etc. But what about sales of the actual physical toys themselves?

I remember visiting the main sales convention for the toy industry, Toy Fair, like 7 years ago. A MASSIVE amount of product for that show—gigantic displays, dioramas with like hundreds of action figures, and so on. Mattel and Hasbro practically had their own conventions within the convention.

I had interviewed a rep for Mattel back then—she was both their rep for the Girl Toys and the Interactive Division, both categories sort of smushed together to let the almighty Boy Toys breathe. And she was frank with me in that Mattel anticipated the market was going to change dramatically & interactive/digital toys were going to end up replacing the other stuff—replacing the dolls and action figures.

And so Mattel had new Barbies with digital cameras in their torsos, where you could  upload images taken by the doll to a computer. They had robots. They had these hybrids featuring action figure-type things with digitally interactive “game boards.”

But these were still physical toys. And increasingly, children were opting to spend a good deal of their time with digitally simulated worlds on video game consoles and (increasingly) their tablets/phones.

And here we are. In such a crisis environment, previously unthinkable moves—like Hasbro buying Mattel, which is the rough equivalent of Marvel buying DC—can happen.

If there is a bigger business lesson in all this it’s that—you never know when a seemingly bulletproof market is going to be rocked and forced to change dramatically. But actually…you do kind of know. It’s just hard to admit to yourself when this was your world.