The US and Japan made toys for their domestic markets first before going global. While browsing across the dusty aisles of most unorganised (and even some organised ones) toy shops, it is sobering to see the lack of visible Indian toy brands. With an industry that is Rs 19,000 crores (USD 2.4 billion) in size and growing at 15% CAGR, it would seem innocuous to assume that there should be more Indian players in the industry, other than the American, Danish (primarily Lego), and Japanese giants. India’s share in the global toy market, estimated at $90 billion, is just 0.5 percent ($500 million). Funskool is perhaps one Indian brand that is recognisable while partially owned by Hasbro of the US, while a plethora of brands has emerged, which are basically importers or redistributors. Furthermore, it is perhaps more complicated than ever to define the category of toys and games or what really constitutes it. As per a report, nearly 30% of toys sold are learning aids in some form with the rest coming in the realm of ‘fun or leisure’.
Even though it caters to nearly 26% of the Indian population, the toy sector is indeed a very complex industry. Segmentation is intricate with boys and girls rapidly changing the demand and setting new trends accelerated with a drastic increase in access to smartphones and smart devices. Video games have taken over a large segment while animated content has grabbed eyeballs. YouTube is by far the most popular ‘channel’ with children and transcends genres. In this muddle, how do toymakers create products that really ‘stick’?
Globally, there are brands that have become behemoths in a short period of time. In 2019, Hasbro acquired Peppa Pig, a British franchise for 3.27 billion pounds or about Rs 29,000 crores in 2019 exchange rates. The latter was only 15 years old when sold. The Canadian Paw Patrol is not even 10 years old and the parent company did over $2 billion (Rs 16,000 crores) in 2021. This targets pre-school while many other franchises cater to various age groups.
There are simpler forces that explain the lack of Indian brands in toy shops, namely pricing and a complete social disconnect. As per Ankur Bisen of Technopak Advisors, the socio-economic disconnect between toys and kids is linked to toy design and a slow evolution of popular culture. Marquee franchises such as those that belong to Disney are entrenched in American popular culture, so much so that many fan fraternities celebrate May the 4th as Star Wars day, derived from a dialogue from the movies. In India, a nation of immense diversity and complexity of cultures, the starting point would be to invest in building popular culture.
In the developed markets of the EU, UK, Japan, and the US, most such franchises transcend product categories, moving into spaces such as theatre and other live performances, comic books, video games, TV, collectibles, theme parks, apparel and footwear, personal care, FMCG and a host of others. The movie Aladdin by Disney came out in 1992 and the theatrical performance debuted in 2011 and has grossed $500 million (Rs 4000 crores) as a theatrical release. In India, theatre is still perceived to be an avenue for adults and full family-targeted performances are rare. It is surprising since many Indian states had a history of children’s theatre or storytelling.
Pricing is perhaps the biggest factor in consumption within this industry, explaining the meteoric rise of YouTube’s popularity with children. It is practically free for most families and gives endless hours of ‘enjoyment.’ It also attracts numerous content creators who routinely innovate and create very diverse performances. The purchasing power across cities in India is constrained and most toys are perceived as having a low return on spending. Nearly 80% of toys are imported from China, mostly low quality. It points to a direction that local manufacturing needs to develop significantly. The way India has moved towards reducing electronic imports, it is prudent to do the same in this industry. If we want to create an extensive ecosystem, it starts with storytellers.While many millennials resonate with Amar Chitra Katha, the industry needs many more franchises that tell unique stories, forming the basis of future franchises. Almost a decade ago a short 3D animated film Shri Hanuman Chalisa took the Indian animation sector by storm and was a massive success at Oscar-qualifying film festivals across the globe. Be it in the realm of mythology or sci-fi, Indian studios, and the film industry at large need to explore kids’ content in a larger way for billion-dollar franchises to emerge. The chances of establishing a social connect is much higher, aiding toy designers. It also aids in bringing the cost down as volumes shore up.
The government is certainly trying to improve the domestic manufacturing sector with its newly launched PLI scheme. There is also a push in the AVGC segment, which may create franchises leading to better merchandise availability. As organised retailers expand their footprint, we will see volumes shore up in the long term, but the question to address is whether Indian toy brands emerge and take up more market share in time or shall we see the big toy giants gain further.
The author is the Director and Executive producer at Charuvi Design Labs (CDL).
