Holiday Hits: Music Toys and Games

Thanks to the popularity of TV shows High School Musical and Hannah Montana, musical playthings are big sellers this season

Music means money in toyland this holiday season as retailers and toy manufacturers report strong sales of products geared to teeny-boppers.

Much of the credit belongs to Walt Disney (DIS) and its hit Disney Channel TV shows Hannah Montana and High School Musical. The company shrewdly targeted 8- to 12-year-old (tween) girls several years ago, developing programming specifically for them. In addition, Disney has a hit with the musical film Enchanted, released on Nov. 21, adding up to something of a trifecta in product-extension opportunities for the company . "This could easily be one of Disney's best years for licensed toy sales" says toy industry analyst Gerrick L. Johnson of BMO Capital Markets.

Gerald Storch, chief executive of Toys "R" Us, says his buyers identified music-related toys as a major theme earlier this year. In addition to Hannah Montana merchandise—everything from blond wigs to replicas of her tour van—the company has carved a special section at the front of its stores where it sells real guitars, keyboards, and drums. "The whole rock star phenomenon is much broader than toys," Storch says.

Brushing to the Oldies

In video games, one of this year's biggest hits is Activision's (ATVI) Guitar Hero III, a sequel to the hugely popular game that allows players to score points by playing along with songs on a plastic guitar. It has recently been challenged by Rock Band, a game that includes bass guitar, drums, and a microphone. It's produced by MTV Games (VIA) and Electronic Arts (ERTS).

The broader music trend has been building for a couple of years, thanks in part to reality shows such as Fox's (NWS) American Idol and ABC's (DIS) Dancing with the Stars, as well as the ongoing popularity of Apple's (AAPL) iPod, a top Christmas request since its release six years ago. "Music is always an important part of a girl's world," says Valerie Juries, an executive at Hasbro (HAS).

Juries' company has had a surprise hit this year with Tooth Tunes, an electric toothbrush that plays music. The idea is that kids will be more diligent about brushing and do it longer if it's fun. The toothbrush plays songs such as We Will Rock You and Y.M.C.A. That'll wake up anyone in the morning.

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