I make it my business to follow all forms of play. I do this because all of us, whether a producer of video games, a maker of Tinker Toys or an app game developer are competing for the same consumer dollar.
When you look at the Play Industry as a whole you begin to realize that the Play Industry is suffering from a supply and demand problem. In short, the amount of play being offered is now bigger than the available consumption.
Let’s take a look at the 2011 / 2012 comparable sales for the various toy categories:
The numbers say it all. Below, according to the website Gamasutra, are the month to month 2011 / 2012 comparable sales of video games this year.
See a trend? Well, it’s been going on for a while now and even with new hardware on the way, it is doubtful that this industry will again see the levels it experienced just a few years ago.
There have been some unusually downbeat articles on the toy industry in recent weeks. In August, The Wall Street Journal ran an article whose title said it all: “Lego Chief Sees Weak U.S. Demand for Toys.” The article reported that Lego CEO, Jorgen Vig Knudstorp, as saying "These six months have been the most negative toy market that I have seen in the U.S..."
In the same negative vein, MarketWatch ran an article on September 25, 2012 entitled: “Softer U.S. demand could hurt toy makers.” The article quotes NPD as stating that “…data showed domestic retail toy sales have posted mid- to high-single digit percentage year-over-year declines each
Remember when everyone was playing Farmville on Facebook? Well, they stopped! As a result, Zynga the company behind “Farmville” and “Words with Friends” is struggling as its revenues and stock price drop and high level executives exit the company.
Here is how an article on the Silicon Valley based Mercury News framed it:
…people are now migrating to smartphones and tablet computers in droves... Zynga has yet to prove it can reap the same revenue from iPhone and Android games…Investors who own Zynga stock have sold it off in droves, spooked by declining user numbers and a worry that Facebook games were just a fad, with people moving on to playing on their iPhones and Android phones instead.
The combination of the new platforms (iPhone, the iPad and the Android products) plus the existing ones are creating an over-supply of play products. In other words, those declines in sales may derive from what has become a buyer’s market for play.
The modern consumer faces an abundance of ways to play. As a result, between video games, toys, social gaming and apps there may be more supply than there is demand. Until the demand aligns with the supply look for all formats to struggle.