Matt Brennesholtz
Insight Media Analyst

On Monday I went to the Toy Fair at the Jacob Javits Center in New York City. The Toy Fair is run by the Toy Industry Association (www.toyassociation.org), a toy industry trade group representing 500 companies who account for approximately 85% of domestic US toy sales. This year they expected about 1200 exhibitors, 100,000 different toys of which 7,000 would be new products and 20,000 attendees over the 4 day run of the trade show. These attendees include an estimated 13,000 buyers representing 7,000 unique retail outlets: mass merchandisers, toy and hobby stores, drug stores, department stores, grocery chains, TV shopping networks, outdoor retailers, amusement parks, warehouse clubs, gift shops, museum stores, and more. This is not a new event, rather it is the 106th American International Toy Fair.

All your favorite toys, plus all the toys you have never heard of, were there. But, of course, I did not go to look at favorite toys such as the Marshmallow gun, I went to look at how toy makers were using electronic displays in their products. Most toys have no displays at all, and I was surprised at how low-tech many of the displays in use were. For example, the Emerson Karaoke machines used monochrome CRTs as their main display. When was the last time you saw a monochrome CRT in a new product? Other toys used low resolution monochrome STN displays.

The reason for this is the extreme price pressure on toys. An expensive toy is about $100 at retail, a very expensive toy is about $150. The margins in the toy industry are very high, in part to support the advertising needed to sell the toys. Therefore, a $100 toy can have a BOM cost of not much more than $25 to produce a profit for the manufacturer, distributor and toy store. With a display typically on the order of 20% - 40% of the product BOM, this means $5 - $10 for the display. Another issue with toys is safety. For example, manufacturers don’t like to use glass or hot things in toys, although sometimes this is necessary, for example in an incandescent light bulb. Don’t even think about lead or mercury.

On the plus side for toys, volumes are typically very high. An expensive toy that sells fewer than 50K units would be considered a failure, 100K units would be a moderate success and 250K would be considered very successful. The WowWee Robosapien series, different versions of which sell for between $62 and $300 at Amazon.com, is considered a super-hit among high-priced toys and has sold an estimated 2 - 3 million units. The total toy industry sales in the US alone is an estimated $22B.

One thing in particular I was looking for were toys incorporating low-cost projectors. I only saw one real projector and it wasn’t working: The Jakks Pacific (www.jakkspacific.com) EyeClops Pocket Theater. This was part of their EyeClops series of optical technology toys which also included a night vision system and a video microscope. This pico-projector uses a white LED and an LCoS panel to generate the image. It sat on a base with an adjustable mount and D cell batteries in the base to power the system. The projector could also be used without the base and with the external DC adaptor. The projector will be introduced in the fall for a suggested retail price of $99.99.

In addition to taking video input from a conventional source such as a DVD player, this projector will accept the video produced by the Jakks series of TV Games. These TV Games are a series of low-cost (MSRP under $50 for all 2009 products), stand-alone game controllers with the game software and hardware built into the controller. The series all have video and audio output to plug into a display such as the EyeClops or any TV with audio and composite video inputs.

As the price of displays in general and pico-projectors in particular come down, we can expect to see more projectors and better quality displays incorporated into toys. The upcoming Insight Media 2009 Low-Cost and Toy Projector report will detail how projectors with retail prices under $300 can be used in toys and other cost-sensitive applications.