If you have children – or even if your memory stretches back to your own childhood – you are probably aware of the symbiotic relationship between the entertainment industry and the toy industry.
Choose just about any major movie, TV series or game that appeals to children or young adults and chances are brand name toys will be available in stores around the world.
This is a lucrative area for the world’s biggest toy brands – such as Lego, Hasbro and Mattel – and is also good for entertainment companies. Estimates vary, but according to Grandview Research, the global toy market was worth $291 billion by 2021, rising to $308 billion the following year. Branded toys are an important part of the total.
These are figures that should appeal to entrepreneurs and investors alike. After all, there is nothing more attractive than a large market. But there is one more question to ponder. Is the branded toy market open to disruption in any way? Is there room for entrepreneurs to step in, do things differently and ultimately carve out their own niche?
Darran Garnham is CEO of Toikido, a two-year-old British company that makes toys for entertainment industry brands. As things stand, it sells in 100 markets around the world through approximately 70,000 outlets.
When I spoke with Garnham, I was eager to ask him about the reality of a young company competing with established toy manufacturers while negotiating with entertainment companies to convert their two-dimensional assets into three-dimensional products.
A track record
As Garnham acknowledges, it’s a lot easier to break into the branded toy space if you already have a track record in the industry. “Before starting the company I worked in retail, entertainment and toys. I led the Universal Studios branding team,” he says.
So why leave a high-profile and presumably high-paying job?
Well, as with so many modern entrepreneurial stories, the pandemic was the catalyst. That was partly because Garnham began to rethink his own priorities and question whether he wanted to keep a job that required extensive travel from home and family. But there was a more practical reason. “Large companies responded to the crisis with furlough arrangements and job restructuring. It was a good time to put together a team,” he says.
All well and good, but how does an emerging company begin to make a dent in a long-established market? Garnham says his approach was to offer potential partners something different.
In practice, it takes about 18 months to develop a toy concept from design to point of sale, he says. That is probably not surprising given the number of balls to be juggled. The studios that own the intellectual property must plan their own campaigns. In addition, toy deals must be negotiated and design and manufacturing time must be taken into account.
“We wanted to streamline that process,” says Garnham. “And we run Toikido as a technology company.”
For example, many internal processes have been accelerated, meeting times have been reduced to a minimum and decisions have been made quickly. But that leaves the other side of the equation. To shorten the time to market by 6-8 months, the IP owners must also act quickly. Maybe faster than usual. Is that a problem?
More speed
Garnham says entertainment companies themselves are looking for more speed. He cites a project for Netflix based on a show called Back to the Outback. “They chose us because we were the only ones who could deliver within four months,” he says.
To date, Toikida’s list of media partners includes the aforementioned Netflix, Apple, Roblox, and Skydance Animation.
In addition to developing toys with partners, the company is also about to release assets based on its own IP in the form of Pinata Smashlings, in partnership with PMI and Character Options.
So how is all this funded? Garnham says he initially sold stock in Calm, a company he invested in. Since then, the company has attracted investment from Gary Vaynerchuk, CEO of the US-based media agency, Vaynermedia. The relationship was about more than investments. “We did a project with Gary where we put his brand of products in every Macy store in America,” says Garnham.
That all sounds ambitious for a company with a small team. Key to getting things done was relationships with three manufacturing partners and a network of distributors. Again, an industry background helped Garnham and his team forge those relationships. Last year’s turnover was £60 million, generating a profit of £4 million.
And Garnham sees room to grow. “We want to be a $200 to $300 million company by 2025,” he says.
The toy industry is huge, but also – at least in terms of entrepreneurial activity – under the radar. But there are, it seems, opportunities to build profitable businesses quickly. That said, for aspiring branded toy manufacturers, a background in the industry probably wouldn’t hurt at all.
Janice has been with businesskinda for 5 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider businesskinda team, Janice seeks to understand an audience before creating memorable, persuasive copy.