The-sky-is-falling prophecies are not uncommon within the toy industry, even at the best of times. But after a year like 2000, those working in the biz had to be feeling more than the garden-variety anxiety about their trade.

The charge (an oldy but a goody) critics have lobbed at the major toycos for the last 10 to 15 years-that their dependence on entertainment licensing has ostensibly downsized their ability to come up with interesting toys and would negatively impact their sales-finally had its day of reckoning. No TV show- or film-related toys connected. There were no apocryphal stories on the front of the Wall Street Journal quoting put-upon parents concerned that their grade-schoolers had become addicted to the gotta-have toy du jour (à la Pokémon from a few years ago). There were no toys, as retailers say, that you had to chase. Well, almost none.

That the (nonlicensed) Razor scooter emerged as the only toy consumers had to hunt for says all you need to know about where the industry is at. The company that brought it to North America, Razor USA, was an obscure sales and marketing company from outside the regular toy industry network. Its success begs the question, where were the majors? Why didn’t the Razor scooter emanate from their toyshops? Part of the answer can be traced back to the major toycos’ R&D departments, which have essentially become design fulfillment centers for licensors, forced to pump out the same old lines of SKUs to the latest event pic, under ever-shrinking lead times.

Talk to the old timers in the biz, and you’re fed a radically different picture of how the process used to work (see ‘Toy inventors jockey for position in the new industry landscape,’ page 17). Twenty or 30 years ago, it was common for major toycos to have advanced R&D-whole departments of people who were paid to doodle on a blank piece of paper and dream up the next Tonka or Barbie. These days, it’s incomprehensible to think that the risk-averse toycos could divine any ROI from maintaining staff to blue sky. In recent years, the only way toycos like Hasbro and Mattel have been able to come by innovative original toys is to buy them, or, more specifically, the companies that created them. And it’s a strategy that has produced middling results at best. Despite statements from the outset, often the smaller, more creative companies that are bought are eventually swallowed whole by the parentco, never to be heard from again. We saw this trend continue in 2000 with Hasbro’s cutbacks. (Sayanora OddzOn!) The big toycos get bigger, but not wiser.

Look at many of the major toy hits from the last few years-Furby, Air Hogs or Magic: The Gathering trading cards (which provided the game-play template for Wizards of the Coast’s Pokémon TCGs), for example-and you’ll notice that they all originated from smaller toycos, companies that were willing to risk throwing their weight behind products that were significantly different at the time. And it’s probably no coincidence that the stalwarts among them have found success not by striking it lucky at the entertainment licensing craps table, but by developing their own proprietary brands. Take Toronto’s Spin Master Toys, for example. Its revenues soared 200% last year, primarily on the sales strength of its Flick Trix and Air Hogs brands. You’d have to dig deep into the recesses of your mind to recall the last time Hasbro or Mattel launched such a successful brand of their own.

It needn’t be so. The failures of 2000 have created an opportunity for toycos to chart a new course. More than ever before, retailers are questioning the conventional wisdom of supporting licenses the way that they have in the past. Now is the time to follow through on a new strategy. No one’s expecting toycos to swear off entertainment licenses completely, but they need to strike a greater balance between developing new, innovative toys and movie and TV tie-in product. Heck, they could even try creating new, innovative toys based on licensed properties. What would it hurt? Short of one company buying the other, what’s left to try? Oops, that’s already been tried.

Simon Ashdown, Senior Writer