Toys and Games in Australia

Abstract

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Executive summary

Continued growth of the toys and games market

Due to a strong Australian economy during the research period, consumers had high discretionary incomes with which they could spoil their children and increasingly grandchildren. Despite concerns that higher petrol prices over 2005-2006 would reduce consumption of indulgence items such as toys this does not appear to have happened and the overall sales of toys and games is expected to climb further in the future.

Video games grow strong

The video games sector experienced steady growth over 2004-2005, after a period of more dramatic growth in 2002-2003 following the release of the Microsoft X-Box and Sony PS2. Much of the steady growth in 2005 was due to the release of portable consoles, Sony PSP and Nintendo DS. With the release of the next generation of consoles from Microsoft (X-Box 360), Sony (PS3) and Nintendo (Wii) expected over 2006-2007, growth is likely to be kick started again in the short term before returning to steady sales growth.

Age compression

Despite continual growth, the Toys and games market is concerned about the apparent trend of children to growing out of toy categories progressively earlier than was the case in previous generations. Also referred to as KGOY or Kids Growing Older Younger, this phenomenon is of particular concern to manufacturers of traditional toys, such as dolls. Conversely, the video games sector benefited from this trend.

Declining birth rates

Although Australia experienced a slight rise in the birth rate in 2005, this was after decades of steady decline. This means that the target market for toys and games in Australia has been progressively eroded, a trend that is likely to continue in the future.

Increased technology in toys and games

The video games sector saw much greater growth than traditional toys, suggesting an increase in the technological orientation of Australian children. To regain these children' s attention traditional toy manufacturers incorporated technology into their toys. This resulted in several success stories, such as the Roboraptor and the virtual pet Tamagotchi, the two most popular toys in Australia in 2005.

The rise of Funtastic

Over the last five years, one Australian company Funtastic grew to dominate the traditional toys and games market in both Australia and New Zealand. It considers itself to be in the business of creating ' lifestyle brands for children' and as such, it gained the licences for ' hot toys' from around the globe and marketed them within Australia. The result of this business model was a long run of the best selling toys in the Australian market, including the Roboraptor and Tamagotchi.