Future of Toys: Video Game Publishers Developing New Concepts

(By Rebecca Lipman)

Watch out Woody and Buzz, video game giant Activision (ATVI) is bringing a new toy to town that holds the potential to steal the attention of every child around.

Never mind that this plastic toy looks like just about any other, it’s what’s inside that counts.

And inside these $7.99 Skylanders: Spyro’s Adventure action figures you won’t find a hallowed interior but microchips capable of syncing up with any and all gaming platforms (from Wii to smart phones), joining an online fantasy world and using your toy’s character to play and fight alongside friends.

So a child can play with the toy in their own physical fantasy world – “the floor is lava and dinosaurs are coming!” – and then transfer it to an online one.

And here’s the best part: the more you play with the toy, the more it learns, unlocks abilities and earns points.


The information is synced to your toy, which you can take anywhere (registered abilities and all) and log back in with another gaming system. Oh, to be a kid again…

But it’s a lot to take in given a toy with this user platform hasn’t been put to market before, or at least not marketed to kids. Activision, best known for its success with the Call of Duty franchise, knows getting both children and parents to sign on to this new brand of gaming/action figure experience is going to be a challenge in itself.

The company plans to meet the difficulty head on. The line of 32 toys are being taken on the road for hands-on demonstrations across the country. Fast Company reports “the company will be doing a mall tour at 30 locations nationwide, 60 Trucks with live demos will be driving around to events, and even a “House Party” program where more than 500 influential families will host Skylanders parties. They also targeted some influencers more directly, recently showcasing the game at the BlogHer conference for hundreds of mothers who blog, tweet, etc.”

Using Kapitall’s Turbo Chart, compare the performance of ATVI against the S&P 500 index:

Activision’s decision to get into children’s gaming makes a bit of sense. By instilling video gaming experience in consumers at a young age, there’s a chance it will transfer over to their later years, breeding an entire generation of devoted gamers.

According to Activision CEO Eric Hirschberg, the company is “attracted to innovation and things that can create a unique and valuable experience for gamers. With Skylanders we are seeing some of the same differentiating innovation that led to the first Guitar Hero games.” (via Fast Company)

So we were wondering, if Skylanders succeeds in capturing the hearts and minds of children and parents, what large gaming companies on the market will find themselves facing competition from Activision?

To help explore that idea, we list the biggest toy and games companies trading on the US stock exchange.

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1. Mattel Inc. (MAT): Engages in the design, manufacture, and marketing of various toy products worldwide. Market cap of $9.36B. Share price as of 10/19 at $27.43. Offers a good dividend, and appears to have good liquidity to back it up–dividend yield at 3.37%, current ratio at 2.82, and quick ratio at 1.94. The stock has gained 27.7% over the last year.

2. Hasbro Inc. (HAS): Engages in the design, manufacture, and marketing of games and toys. Market cap of $4.67B. Share price as of 10/19 at $34.81. Offers a good dividend, and appears to have good liquidity to back it up–dividend yield at 3.45%, current ratio at 2.9, and quick ratio at 2.29. The stock has lost 22.88% over the last year.

3. JAKKS Pacific, Inc. (JAKK): Designs, produces, markets, and distributes toys and consumer products worldwide. Market cap of $498.85M. Share price as of 10/19 at $18.51. Relatively low correlation to the market (beta = 0.67), which may be appealing to risk averse investors. The stock is a short squeeze candidate, with a short float at 16.46% (equivalent to 11.64 days of average volume). The stock has lost 2.24% over the last year.

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