While 2015 was a big year for toys-to-life, Disney has announced that they are ending their Disney Infinity line of products. This says something about Disney’s place in the market and toys-to-life as a whole.
To Infinity and Nowhere
Disney recently announced that it would be discontinuing their Disney Infinity line and that developer Avalanche Software would be shuttered, affecting some 300 jobs. This announcement came as a shock to some, given signs that Disney Infinity had risen to the top of the toys-to-life category and that Disney had already planned for more Disney Infinity releases for 2016.
“The team behind Disney Infinity created an incredible product. It was a critical success that inspired a deeply engaged community of players,” said Disney in a statement. “But, despite Disney Infinity’s quality, it has become difficult to financially justify continued investment given the lack of growth in the toys-to-life market. Coupled with high development costs, the economics of our current vertical business model no longer add up.”
Disney indicated that they’d be continuing their “console gaming presence” via licenses to partners like Electronic Arts and Square Enix. It’s easy enough to read into one aspect of this announcement: maintaining a pipeline for support of a toys-to-life platform (which includes paying hundreds of game developer’s on a yearly basis in addition to however many people work on designing the figures themselves and the prohibitive cost of manufacturing everything) is far riskier than just letting other companies make software based on Disney properties. The announcement was also heading off a problem Disney Infinity would have had if Disney had wanted to continue on with it.
no new line up like marvel or star wars left to add
Probably the most significant reason for this move was that Disney saw no path forward for easy growth. In three years, Disney has burned through its major catalog of properties, from its own homegrown animated and live-action characters, to Marvel super heroes and finally to Star Wars; where else could they go? There was no other major brand to tap into that was new in 2016. The latest Disney movies are seeing the final Infinity releases, from The Jungle Book, Alice Through the Looking Glass and Finding Dory. Star Wars: Rogue One and Doctor Strange might have provided fuel for those properties, but Disney Infinity is being nipped in the bud before that can happen.
Simply put, there’s nothing that would obviously make a Disney Infinity 4.0 radically different; it would have to be an amalgam of Disney’s various properties. Still, nothing’s stopping them from releasing regular toys where it makes sense for their different properties instead of tying it all to one line (where some sets reportedly sold much better than others) and there’s some reason to believe that the software itself was not a huge mover.
A large part of this decision sounds like one of calculated business: they had gotten their money out of Disney Infinity, and rather than run the risk of diminishing returns over time, they simply got out while they were ahead. Leading the toys-to-life category for Disney is small potatoes for a company that generates billions of U.S. dollars from its movies, TV networks and theme parks.
Three Way Fight in Toys-to-Life
Disney Infinity had a number of factors leading to its cancellation, some of it very particular to the company it was attached to, and the remaining players in the toys-to-life category have challenges of their own. In a way, Disney Infinity leaving the space is a good one for the other toys-to-life line ups, since it removes a competitor from what was becoming a very crowded field.
For Disney Infinity, Skylanders and Lego Dimensions, the model is that consumers spend money on a base set (around +$60) and then spend money on various extra figures and bundles (running as low as $12 to above $50 for certain bundles) and all that can add up quick. Since these toys-to-life are targeted towards young children with little disposable income, it means that the buyers are principally parents, and it’s hard for most parents to invest in more than one series of expensive toys-to-life figures per holiday season. With Disney Infinity gone, they’re no longer competing for shelf space on stores and in the the hearts and minds (and wallets) of families.
Disney’s loss may be Activison’s gain and Skylanders has a couple of advantages: it was the first mover in the category, so it roped in kids years before anyone else got their comparative platforms off the ground. It also has the advantage that it is not tied to a property outside of video games (it will have a TV show launch later in 2016) which allows Toys for Bob to shift focus every year, like vehicles in last year’s Superchargers. Still, sales of last year’s Skylander’s release didn’t meet sales expectations and this year’s projections aren’t hugely optimistic either.
Nintendo’s amiibos are unique in this category, having the benefit of not being tied to a particular game franchise and doesn’t require purchasing a “starter pack”. They will likely be compatible with NX since they’re an important upsell to its most loyal customers. Still, the way amiibos are implemented in games hasn’t pleased everyone though right now, the sales have been a huge positive for Nintendo over the past couple of years and are expected to remain so in 2016.
Lego Dimensions has by far the biggest barrier to entry of all when it comes to their “starter pack”, but unlike Skylanders and Disney Infinity, they are not planning on releasing a yearly update. Instead, there are plans for various add-ons until at least 2018. It remains to be seen whether interest will be maintained for that long, and some reports have placed the sales of Lego Dimensions behind the others in the toys-to-life category.
The Future for Toys-to-Life
It’s clear that even without Disney Infinity that the toys-to-life category will continue to be supported in 2016. While 2015 was the best year ever for toys-to-life, the NPD is already predicting that sales were going to go down before the complete cessation of Disney Infinity releases. The main reason many have predicted a downturn is a lack of innovation in toys-to-life; just putting out new figurines and new software products every year isn’t enough to keep people excited and there’s always the push/pull between allowing consumers to use the older toys that they already own and validating the sales of a new set of toys.
There are also key demographic issues that are working against toys-to-life. In the five years since they were introduced in the original Skylanders: Spyro’s Adventure, tablet computers and mobile devices have become much more prevalent among the 8-12 year old demographic that the toys-to-life is seeking to capture, and free-to-play software are often more continent and appealing to young children without much disposable income. Additionally, toys-to-life are a luxury of established markets in the U.S., Europe and Japan – their difficulty in penetrating emerging markets which have traditionally been elusive for console games coupled with the emergence of VR and other digital toys means a challenging road for all toys-to-life.
On top of everything, there’s also the fact that people are paying extra for features that could easily be included as part of a main game or in the least as part of a cheap digital DLC. The same effects of having characters transfer over between games could be achieved by a universal log-in and a connection to a server that keeps track of all a player’s progress – granted, this is less “magical” for a child then have a literal physical embodiment of their on screen avatar, but it serves to show how the toys themselves are a bit of a contrivance.
Now that the novelty of toys-to-life has worn off and the growth seems to have peaked, rather than considering this as some sort of burgeoning category, it’s best to think of it as three different product lines. After all, it seems doubtful some new entrant is going to enter now and succeed where Disney has not. Music games also seemed like a sure bet at one point in time, and then the market was saturated and it went away, and the recent attempts to bring back Rock Band and Guitar Hero were disappointing from a sales perspective. While there’s still a presence for toys-to-life, it remains to be seen how much of a future there will be.
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