Children are born every day and every time one comes to this world, plans are put in place to ensure that they have the best that they could possibly get in life. This includes health, education and other basic needs.
In such plans, we usually have those who plan to spend and those who develop the products and services that attract such expenditures. However, when you look at both cases, the two parties are in a way investing in kids.
Investing in kids provides one of the best investment opportunities to investors in the sense that if and when kids ask for something that could contribute positively to their development, they will most likely get it regardless of the prevailing economic conditions.
This is probably why companies such as Amazon (AMZN, Financial) and Mattel (MAT, Financial) place kids’ products among the main business units in their business models. For Amazon, these products are found on the Toys and Video Games business unit in its retail segment while for Mattel, everything is pretty much about kids’ products.
Amazon faces competition from several rivals in the technology sector while Mattel also has to fend off the threat of toys and games giant Hasbro (HAS, Financial). However, after a wave of change that saw consumers shift toward modern products and technologies for developing kids' social skills, a new trend is developing with traditional methods almost relaunching their challenge in a kickback fashion.
It’s no longer about just toys and video games as it would appear from a distance. People are encouraging their kids to develop creative abilities by engaging in activities such as arts and crafts, sports and recreational activities and community building and social activities, among others.
On the other hand, developers of modern toys and games products for kids are trying to gain mileage over their traditional rivals by making toys and games that can make kids smarter. For instance, Toys “R” Us is one of the leading manufacturers of toys; last year the company’s chief merchandising officer, Richard Barry, revealed the company’s plans for making products that can contribute positively to kids' development.
“There’s some significant news out there about the attractiveness of the job market in science and engineering. As a parent, equipping your kids with the skills is important,” Barry told MarketWatch during an interview.
However, not every parent is keen on embracing these emerging products for their kids. In fact, according to several studies, arts and crafts for preschool kids are emerging as some of the most common types of activities in which parents are encouraging their kids to engage.
Nonetheless, modern toys and games developers can also count on the fact that peer pressure could be a good catalyst for more sales. While some parents are pushing their kids to engage in more practical activities and events such as drawing, simple numbers competitions and reading, children find it easier and more fulfilling to play with toys and video games.
The hard situation is further compounded by the fact that since the emergence of smartphones and tablets, technology-driven activities have become more popular among kids at home.
Currently, the global toy industry is valued at about $120 billion from which Mattel accounted for roughly 7% of the global annual revenues. On the other hand, the U.S. toy market accounts for a quarter of the market with a valuation of $30 billion. Global market research firm Strategyr expects the market to grow by 9.4% CAGR to more than $135 billion by the year 2020.
It is good to note that the figures presented above include both modern and traditional toys and games but not necessarily traditional activities such as the ones discussed earlier in this write-up.
However, market players like Mattel are looking to tap into emerging technologies such as augmented reality and virtual reality to develop products that could drive growth to new levels. App-integrated toys and toys that can be controlled by smartphones and tablets are also tipped to form part of the new growth frontiers in the toys and games market.
Nonetheless, with studies pointing to these new creatives as a major source of the growing decline in creativity and originality among kids, it’s now up to the players involved to try and merge the two together in a bid to promoting positive development in kids while utilizing modern technologies.
Television, game consoles and smartphones are believed to be among the leading causes of a negative development of preschool kids while those even in school can’t seem to shake off old habits either.
Conclusion
In summary, while the market is there for the taking, it looks as if companies may have to re-evaluate their approaches to the toys and games industry. Parents are increasingly becoming sensitive to the modern technologies that are being developed to provide fun and games for kids at home.
It is clear that most of these games and toys do not necessarily contribute positively to kids' development, and this has sparked an increase in the interest for traditional activities such as arts and crafts for the development of kids’ creative cognitive skills.
Disclosure: I have no position in any stock mentioned in this article.
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