How the Toy Industry Got Your Kids Hooked on Surprise Toys

Three bucks buys you great joy, or great disappointment.

Spin Master's Hatchimals Colleggtibles.

Source: Spin Master

For $2.99, you can purchase joy, or disappointment, in the form of a tiny purple egg. Sold in a so-called blind bag, you have no idea whether it will yield a rare collectible or a generic toy duplicated across thousands of other such bags. Some muscle cracks the egg, and out comes a little blue catlike figurine. Its rank is "common." Fork over another three bucks to try again. 

These eggs are the brainchild of Spin Master Ltd., the Canadian company behind holiday blockbuster Hatchimals, which is essentially a massive blind bag itself. That $60 egg contains a birdlike creature that pecks its way out of a shell and then, as you play with it, learns different commands. Looking to follow up on its December success, Spin Master introduced the low-cost Hatchimals Colleggtibles earlier this month.

They're right on time, too: This week at Toy Fair New York, Toy Industry Association Inc. named collectibles one of its top toy trends for 2017. 

Spin Master's Hatchimals Colleggtibles.
Source: Spin Master

While toy industry revenue increased 5 percent last year, sales of collectibles were up 33 percent, according to data from market researcher NPD Group Inc. The collectibles sector, which includes trading cards, figurines, dolls, and blind bags, made up 9 percent of the industry's dollars in 2016. Blind bag sales were up 60 percent, increasing more than sixfold in the last three years. The surprise moment of opening the packages has a massive audience on YouTube, where millions of videos are dedicated to opening blind bags. 

"That's huge," says Adrienne Appell, spokeswoman for the Toy Industry Association, of collectibles and blind bag growth. "With blind bags, its $2.99 and $3.99. Kids can save up their money, parents have no problem. It's really affordable—there's really no barrier to entry." 

The success of blind bags is also because of the low risk they present to the retailers who sell them. The toys take up relatively little space in stores, often placed next to the cashier. "When they don't take up much space, you can just continue replenishing them as the boxes empty out," says Juli Lennett, senior vice president and U.S. toy industry analyst for NPD. "That's a huge advantage for retailers."

Spin Master is far from the only company getting in on the trend: Universal Studios Inc. released a collection of Despicable Me 3 blind bags; DreamWorks Animation LLC's Trolls got its own blind bags; Chubby Puppies, beloved among young children, has a line; and Pirates of the Caribbean-themed characters can be found in plastic form in a blind box. Lego Systems Inc. has long offered figurines in a box container, as has Funko, whose Mystery Minis collection includes Barbie, Beauty & the Beast, Alice Through the Looking Glass, Captain America, and numerous other licenses. Mattel Inc.'s Imaginext line has sold 3.4 million blind bags since 2014, and 4.8 million Thomas & Friends Minis sold last year. 

The Disney Blind Box set from MyMoji.
Source: Funko

The blind bag trend was pioneered by Funko and Shopkins, Lennett says, the latter started in 2014 by Moose Toys and selling over 100 million since. While Funko has sold blind bags for several years, it's recently expanded its offerings. Funko is diversifying its line through the Mymoji collection, which includes a free Emoji download with each purchase.  

Despite the fervor around blind bags, Gerrick Johnson, a toy industry analyst at BMO Capital Markets, is less optimistic. "The collectibles market, I believe, will most likely grow again this year because the market is flooded with blind packs," Johnson says. "The rate of growth is definitely going to decelerate. This is probably the last year of growth." Nonetheless, he praises the Hatchimals Colleggtibles as a clever expansion of the product line.  

Lennett, however, predicts that blind bags aren't going anywhere. "All of those that ... got in early are certainly going to lose share," she says. "Do I think it's going to slow down? No." 

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