Los Angeles, CA (PRWEB) February 17, 2013
The Toy, Doll and Game Manufacturing industry is expected to continue its modest recovery from painful revenue losses suffered during the recession. Revenue is expected to increase 1.0% to $2.69 billion in 2013. According to IBISWorld industry analyst Sean Windle, “Because toys, dolls and games are discretionary items, industry demand is heavily dependent on economic factors, such as unemployment, consumer sentiment and the level of disposable income – all of which experienced losses over the past five years.” To make matters worse, industry operators have had to face not only dismal economic conditions, but also mounting competition from lower-cost imports. As a result, IBISWorld estimates industry revenue fell at an average annual rate of 6.2% in the five years to 2013.
While the worst of the downturn has passed, the same cannot be said of the industry's struggle to compete with lower-cost imported toys. “Manufacturers in countries like China, which accounts for the overwhelming majority of industry imports, enjoy more relaxed labor and environmental regulations, and can therefore produce goods at a fraction of the cost of US manufacturers,” says Windle. In order to remain competitive, industry firms have had to lower their prices, which has caused them to incur higher fixed costs and made it harder to absorb rising raw material expenses. As a result, the industry's profitability has declined over the past five years. With faltering profitability, many firms have resorted to labor and wage cuts, facility closures or been forced to exit the industry.
The Toy, Doll and Game Manufacturing industry exhibits a low market share concentration. Although close to one-quarter of the market is taken by two global toy manufacturers, Mattel and Hasbro, the remainder of the industry is characterized by a large number of small and privately owned firms. IBISWorld estimates that over half of all companies in the industry will employ fewer than five workers in 2013, with nearly three quarters of firms expected to employ fewer than 10 workers. In contrast, only 3.7% of industry operators are expected to employ 100 or more workers. While the industry remains fragmented, concentration has increased over the past five years, due to many firms being forced to exit the industry under tough economic conditions. Faced with falling demand and eroding profit margins, many underperforming operators had no choice but to close up shop. Other firms that survived the economic downturn have transferred their manufacturing facilities overseas to take advantage of lower production costs.
Unfortunately for toy, game and doll manufacturers, the long-term outlook is bleak. While consumer confidence, the level of disposable income and employment are all expected to increase over the next five years, import penetration is also set to increase. Since a major basis for competition amongst toy manufacturers is price, US firms, which carry higher labor and regulatory costs, will continue to be at a disadvantage to lower-cost overseas manufacturers. However, a bright spot does exist: as import penetration continues to accelerate, US operators are finding business opportunities through exports, which are expected to increase over the next five years. Export growth will help offset some of the industry's losses from import competition. In the five years to 2018, IBISWorld expects industry revenue to increase.
For more information, visit IBISWorld’s Toy, Doll & Game Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
This industry is comprised of firms that manufacture dolls, doll accessories, action figures, toys, games (including electronic), hobby kits and children’s vehicles (except metal bicycles and tricycles).
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.