By Andria Cheng
NEW YORK--With economic uncertainty and the U.S. presidential
election foreshadowing the upcoming holiday season, toy companies
are hoping playthings that work with popular mobile devices and
apps can help them attract shoppers.
Mattel Inc. (MAT) is introducing a Fisher-Price plush monkey
that will work with an iPhone to allow infants six months and older
to engage in interactive play. Some of the company's Hot Wheels
cars and Monster High dolls also come embedded with sensors used
with games that consumers can play on their iPads.
Also making a comeback is Hasbro Inc.'s (HAS) Furby, the
electronic pet first created in 1998 that turned into a hit at the
time. After a disappointing attempt to remake the toy a few years
ago, the new Furby, $59.99 versus the original one at $35, comes
with an LCD screen and allows its owner to feed it virtual
sandwiches and other foods from an iPad. Hasbro also is introducing
popular apps such as Fruit Ninja to board-game formats.
"Technology always changes the toy business," said Jim Silver,
editor in chief of toy-review site TimetoPlayMag.com, which on
Friday unveiled its holiday 2012 most-wanted toy list. The event
gathered major toy makers, from Mattel and Hasbro to Jakks Pacific
Inc. (JAKK) and LeapFrog Enterprises Inc. (LF).
The holiday season isn't only a make-or-break period for toy
makers. They are also a crucial category for retailers such as
Wal-Mart Stores Inc. (WMT), Toys "R" Us Inc. and Target Corp.
(TGT).
Chains such as Wal-Mart often use toys as so-called loss leaders
to lure consumers into their doors to buy other things, analysts
said.
To differentiate its products, Toys "R" Us for the first time
joined the tablet war, introducing the Tabeo device, which puts the
company in direct competition with its own suppliers such as
LeapPad maker LeapFrog. In another bid to drive traffic to its
stores, the retailer also will allow shoppers to make a reservation
on 50 hot toys in person.
The company, as well as Wal-Mart and Sears Holdings Corp.'s
(SHLD) Kmart, also have either lowered or waived their own layaway
fees to get consumers to think about shopping early.
As a result of the heavy push on layaway, Mr. Silver said some
popular toys may run out of stock early this holiday season.
Even though different retailers and industry groups have
published their own hot holiday toy list to generate buzz, things
remain tough for the sector. Industrywide toy sales last year
dropped 2% to $21.23 billion, according to NPD Group. Gerrick
Johnson, an analyst at BMO Capital Markets, forecast the industry
will see another decline of about 2% this year.
"There aren't a lot of innovative toys out there," Mr. Johnson
told MarketWatch. "I'm not a big fan of the whole genre of the app
toy. A lot of companies are making them, but they are kind of
forced. Many are trying to create a toy that works with iPhone or
iPad with real play being an afterthought. Only a few will
succeed."
On the other hand, he likes the ideas of turning app games such
as Angry Birds into physical toys.
Among some of the expected hot toys this year,
entertainment-driven items are key. For instance, toys tied to Walt
Disney Co.'s (DIS) Doc McStuffins, a television show about a girl
who treats stuffed animals and toys, or the relaunch of Teenage
Mutant Ninja Turtles at Nickelodeon show some promising signs, Mr.
Silver said.
Mattel's Monster High dolls, which the toy maker first created
in 2010 through a Web series, are expected to see merchandise sales
more than triple to $300 million to $400 million this year from
$100 million last year, Mr. Silver said.
"It's a big entertainment year," he said.
Also new for this holiday season, Barbie is getting into
construction toys for the first time through Mattel's licensing
deal with Mega Brands (MBLKF, MB.T). Meanwhile, Lego itself is
heavily expanding its building sets for girls. Sales to girls rose
to 30% of the private company's total in the U.S. from 10% before
its introduction of Lego Friends girls' line in January, a
spokeswoman said.
There are also a flurry of dolls for girls at different ages.
Jakks Pacific has the Winx Club dolls that are tied to Nick's
animated series of girls with fairy power. Toronto-based Spin
Master unveiled La Dee Da dolls about girls attending a fashion
school in New York. Barbie, meanwhile, for the first time also
works as a digital camera, with pictures taken appearing on her
T-shirt.
There may be a good reason for those introductions.
While most other toy categories, including action figures, games
and puzzles and plush toys, saw a decline in sales last year,
building sets last year saw sales surge 23% while dolls grew 7%,
NPD's data showed.
Write to Andria Cheng at acheng@marketwatch.com
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