The Diff | Byrne Hobart | Substack

Because it’s a hit-driven industry, toy companies that succeed can be immensely profitable for a while. The problem is that the difference between a cultural landmark and a fad is visible after a decade or so, while the decision of how much to order and how much to spend on marketing has to happen every year regardless. So toy companies with a hit ... See more

This locks toy companies into a challenging bet. Every year, they have to a) predict trends, b) invent them, and c) commit capital to them. All without knowing how the rest of the year will turn out. Since toy trends exist, but don’t last for very long, they have to invent new products every year—but the technological state of the art doesn’t advan... See more

There are a few reasons, and a few relevant lessons.

The toy industry has not been kind to investors, at any level.

First, the toy business operates on an annual cycle. Historically, about 40% of toy sales happen during the holiday season, and about half of those were in the two weeks before Christmas