Another successful ToyCon is behind us, and we hope you have enjoyed connecting with your peers and sharing valuable insights with our industry leaders. We look forward to seeing you at ToyCon '09. Goodbye from Phoenix. Safe travels home!
This morning, ToyCon attendees were fortunate to hear directly from a panel of deal-making giants and learn the inside story of what it takes to make a deal firsthand. Tenenbaum started with a humorous list of what NOT to do when trying to close a deal, including alienating senior management, not listening to the other person, insisting on “my way or the highway,” and not trusting your gut. The conversation then evolved into a discussion of the elements that need to be in place to give you the most favorable landscape to achieve your ultimate goal. Essentially, you have to know what you want BEFORE you enter into any kind of discussion. The entire discussion will be emotionally draining to you and everyone else involved in the deal. It will take its toll on you one way or another, and you have to expect a change in relationships between you and the rest of your senior management team. What’s the right time to sell? There’s no right answer because no one can really know. You have to feel in your gut that it’s the best possible time. Feely said he used to believe that you should wait until you have a major hit before you put your company on the market. People caught on eventually, however, so this tactic might no longer work. Furthermore, what may be the right time for YOU to sell might not be the right time for your partners or senior management team. If you’re going to sell your company with the intention of walking away, sell if for the best cash deal you can. If you want to sell your company with the intention of still being involved in a senior position, it’s a very different deal because you’re still concerned about your employees and you care about the future of the company. Foreman advised that if you’re taking paper, stock or back-end participation, you need to be more involved and active instead of just taking cash and walking away. If you’re going to take an earn-out, then you need to maintain some level of control. As far as when it’s time to walk away from the deal, each panelist had valuable advice. Rubin said he would walk if he felt uncomfortable with anyone in the room, or if he found himself arguing over minutiae. Feely said he would walk if he didn’t feel it’s a win-win situation or if he felt there was any aspect of the deal that was even remotely unethical. Foreman said he would walk if the lawyers were pushing too hard or if there wasn’t enough respect from the other side. In the end, all panelists agreed that either buying or selling a company is essentially a calculated risk – and that the best way to handle the transaction is to get yourself some expert advice from trusted and reputable professionals, and to actively involve your executive team.
Moderator Bernie Tenenbaum (China Cat Capital LLC), and panelists Jay Foreman (Play Along), Arnie Rubin (Funrise), and consultant Pat Feely provided a candid exchange recounting their personal experiences both buying and selling companies.
It IS Easy Being Green Toy companies are faced not only with selling products and developing the next great “play memory” – they now also need to implement changes to their businesses to become more “green” and eco-friendly. Dr. Steve Dunn, Professor at the University of Wisconsin School of Business, brought his multi-disciplined career experiences to ToyCon to advise the toy industry on the simple actions we can take right now to improve efficiencies, lower energy costs, and help care for the environment. Some of these include: Dr. Dunn offered other suggestions and action items for companies that want to take an even more ambitious approach to long-term sustainability. For these and other ideas, visit Dr. Dunn’s website at http://www.iso2050.com/
Guber, Founder and CEO of Mandalay Entertainment and veteran Hollywood visionary, told his entranced audience that the key to success is to always remember that you’re a storyteller, and that everything you do and experience is a story waiting to be told. According to Guber, the world of toys is no different. As digital play begins to evolve, the lesson to be learned is that you have to stay in the game even if you experience failure after failure. He recounted some of his own failures throughout his career, and pointed out the joy of success was always worth the pain. Over the course of his career, Guber has been able to synthesize his experiences to develop a formula for success that he calls MAGIC: M = Motivation A = Audience G = Goals I = Interactivity Guber certainly made an emotional connection with his audience tonight, as his speech was received with thunderous applause and a standing ovation. Goodnight from Day 2 of ToyCon. See you tomorrow!
Once upon a time, under a starry desert sky, more than 200 people gathered to hear a story from one of the entertainment world’s most noted storytellers: Peter Guber.
C = Control
The MAGIC of success is to get other people to do what they ordinarily wouldn’t do. Guber asserted there is no such thing as a customer. Instead, you are communicating to an audience that is hungry for an emotional connection. It’s up to you to move people’s hearts with your stories and with your products. Your business becomes “emotional transportation” instead of a series of transactions.
“I gotta play, and I gotta stay connected to my friends.” That’s what today’s kids and tweens want from their online gaming experiences, said Steve Youngwood of MTVN Kids & Family Group, and this afternoon’s keynote speaker. MTVN’s solution is to create successful Virtual Worlds such as Neopets and NICKtropolis that offer young gamers better, faster, more direct ways to play and interact with one another. Today’s kids are wired, and they want their technology to be invisible; they just want relevant, involving content. Youngwood concluded that key factors for a successful virtual world must include good intellectual property, innovative product and development capabilities, advanced operational infrastructure, and effective, efficient distribution.
According to Youngwood, most kids play games as their primary online activity. Games are a sort of social currency that can earn them “street cred” among their peers. A perfect virtual world allows kids to work on their identity and feel achievement, and is comprised of seven aspects of interactivity:
It was refreshing to hear two expert panelists offer differing opinions about how to use the Web for online retailing. During this afternoon’s session, Ed Schmults from FAO Schwarz extolled the virtues of Web 2.0 technology for creating innovative online marketing solutions. Fellow panelist Greg Ahearn from Toys“R”Us, U.S. argued that it may be premature to focus on Web 2.0 when the technologies of Web 1.0 haven’t been fully realized yet. Schmults’ position was that Web 2.0 offers rich media opportunities such as blogs and YouTube video postings – thus providing viral marketing opportunities to smart marketers. By turning over some creative control to the customer, marketers help keep their brand relevant on a personal level – and your customers become stakeholders in your product and help do your marketing for you. Ahearn argued that there is tremendous growth in just getting back to the basics of Web 1.0. He focused on the value of search engine optimization – making simple changes to your current website – to make it easier for web searchers to find you. These changes can be made in minutes rather than days or weeks, and you can see immediate results. Clearly, both experts set out practical blueprints for getting the most out of your online marketing. The most important message of the day is that you have to stay connected with your customers – no matter what road or method you choose.
In this afternoon’s session Marketing in a Digital Age, moderated by Julia Fitzgerald of VTech Electronics, there was consensus among panelists Anton Rabie of Spin Master, Marc Rosenberg of Zizzle, and Tim Kilpin of Mattel that girls are the primary users – and thus, the main trendsetters – of online play.
Rabie observed that girls are faster to the digital world due to the social networking aspect and customization of many online sites. Successful sites such as Club Penguin, Funkeys and Neopets were designed from the beginning to have a sense of community and strong social aspects. In the case of WebKinz, the user has an emotional attachment to the physical product (ie, collectible plush) that opens the gate to the online playground. It’s this emotional connection to a physical product that differentiates the successful online site from many of those that fail.
Kilpin noted the importance of using television advertising to drive consumers to the web, which then drives the consumer to the physical product. Having said that, he also emphasized that participating in digital is about taking chances. No one really knows what will work and what won’t. It’s important to experiment slowly and take baby steps.
This sentiment was echoed by Rosenberg, who said you don’t have to spend a lot of money to promote your product if you’re creative. You have to try everything. He recommended less-expensive microsites for new products or smaller companies with limited budgets, as opposed to more expensive television advertising or major websites.
They all agreed that digital must be a core component of your marketing mix, and that building your brand online is of crucial importance to your ultimate success. Above all, you must be true to your brand.
Jonathan Peck, President of the Institute for Alternative Futures, enlightened ToyCon attendees about the importance of developing sensitivity to the marketplace by learning and beginning to understand both cognitive and emotional development. He offered descriptions of seven stages of human development (Help Me, Tribal We, Gratify Me, Righteous We, Competitive Me, Holistic Us and Interdependent Me) and provided insights as to how understanding these stages can benefit toy manufacturers and marketers. He went on to warn that the Knowledge Revolution has arrived and never again will the consumer not be informed. Peck, internationally known for his forecasts, offered this to the toy community: “Knowledgeable consumers are here to stay and as a manufacturer you must play to the smart market.” Peck encouraged everyone to continue to evolve and never stop learning. He offered 5 tips to staying ahead of your competition:
Anita Frazier, analyst for The NPD Group, had good news for conference attendees this morning: first quarter ’08 toy sales are up around 1%, with sales of Web-connected toys increasing during a 12-month period from $67 Million in 2007 to $411 Million in 2008. What’s more, 93% of all households bought toys last year, with the average household expenditure around $191. (Households with children ages 6 and under spent $485.) The fastest distribution channel for these toy sales is the Internet, where sales grew in a 12-month period from $1.5 Billion in 2007 to $1.6 Billion in 2008 – an increase of 6.7%.
It was announced at the General Session this morning that the TIA Board of Directors formally adopted the proposed Toy Safety Certification Program (TSCP) yesterday.
TSCP is the toy industry’s detailed response to the pending Federal safety requirements through a certification system to enhance both the reality and the public’s confidence that toys are sold in the U.S. market are safe. It will be further developed in 2008 and rolled out in 2009. To read the entire TSCP draft, click here.
Toy Safety Matters: Mobilizing Our Members Carter Keithley, President of TIA, outlined the TIA outreach efforts underway to help counter the 170 toy-related legislative bills in 32 states. The small differences between each state’s proposals – with no measurable increase to product safety – would create a nightmare for the industry. TIA has undertaken a lobbying and public affairs effort in priority states to stem these legislative initiatives and media information. Keithley called for all TIA members to reach out to their legislators to deliver a common industry message – on the great lengths the industry already goes through in the name of toy safety, the importance of a uniform national approach, and industry efforts to enhance our already robust toy safety system. A TIA "Call to Action" will be sent to members in the coming days.
The same Weather Gods that smiled on the industry at Toy Fair 08 in February have decided to grace us with picture-perfect weather as ToyCon 2008 got underway at the lovely Sheraton Wild Horse Pass Resort in Phoenix, Arizona. A brilliant blue sky. Temperatures in the low to mid 80’s. Non-existent humidity. A cool, gentle breeze. What a great way to kick off the industry’s premiere networking event – the largest ToyCon in five years. And kick it off we did, with relaxing rounds of golf and exciting sets of tennis on the luxurious grounds. (TIA’s very own Bill Osterholm claims he had the second-lowest golf score, but to tell you the truth, we’ve doubted everything he’s said since he came back from Moscow.) Old friends reconnected, new friends were made, war stories were shared and business cards exchanged amidst lots of laughter and good feelings. Arad, introduced by Hasbro COO Brian Goldner, reminisced about his early days in the toy industry – including life at The Toy Building and meeting industry friends at the luncheonette – and remarked that this event felt like a class reunion. In the early days, there was advertising, then animation – and then Star Wars. Star Wars changed everything, and in fact started a whole new category of toys: 3 ¾” scale action figures. After Star Wars, everyone realized that the most cherished product attribute was the brand. Nowadays, the most successful brands understand the importance of convergence: using motion pictures, television, the computer, Internet and 3D to enhance the next generation of storytelling and play. “Times are changing, and kids are changing with it,” said Arad. “Don’t try to change the kids, they’ll win every time. Better to change WITH the kids. The future may be dangerous, but it holds huge opportunity, too.” Immediately following the Welcome Reception, more than two dozen guests were escorted to one of four top Phoenix restaurants to enjoy Dinner with Friends – an innovative networking program that pairs up strangers (and soon-to-be friends) to enjoy dinner together. What a great way to bring first-time attendees together and make them feel comfortable! See you tomorrow! 
As the sun began to set on the great Arizona desert and the stars began appearing in the sky, so did the stars of the toy industry come out to attend the ToyCon Welcome Reception. Andrea Barthello, Co-Founder, ThinkFun (ToyCon Conference Chair) and Bernie Tenenbaum, Managing Partner, China Cat Capital, LLC (ToyCon Vice Chair) welcomed over 200 of the industry’s movers and shakers on the Akimel Lawn, where they enjoyed cocktails and hors d’oeuvres, and heard opening remarks from special guest Avi Arad – fresh from the triumphant world premiere of his latest feature film Iron Man.
