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Euromonitor International
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Strong Demand for Newer Toys and Games Expected Over Forecast Period
As the Indian toys and games market is likely to mature further for branded toys, strong demand is likely for newer toys and games that provide consumers with good value. Innovation, coupled with the correct pricing, will help marketers differentiate themselves in the Indian toys and games market, and grow at a faster pace than its peers. The forecast period is likely to witness strong growth for toys that also facilitate learning and development of children. Toys in segments such as pre-school, scientific/educational, infant and construction are likely to witness stronger growth than others.
KEY TRENDS AND DEVELOPMENTS Branded Toys See Growth As Demand and Availability Improve
As an overall percentage of the total market branded toys have always struggled in India due to their perceived high cost, lack of distribution and weaker retailing infrastructure. However, this seemed to be changing in 2010, with branded toys market witnessing high double-digit growth, indicating a complete turnaround in India. With rising income and growth in awareness regarding the health hazards of cheaper toys, consumers were increasingly seeking to adopt branded toys for their children. An increased number of innovative products from both domestic and international players helped the overall toys market to shift preferences towards branded toys. Current impact Branded toys and games witnessed an upswing in India due to improved consumer demand and availability. Branded toys were estimated to account for less than 20% of the total toys and games market at the end of the review period. Growth in demand for branded toys was good news for toys providers, as this is the segment where most organised players (both domestic and international) operate, and compete directly with unorganised players who are cheaper but low in terms of quality and innovation. Growth in demand for branded toys also indicated the changing dynamics for toys and games in India, as people were willing to pay for better quality, safety and innovation. Rising income levels among Indias middle class population (estimated to number around 110 million at the time of writing) and growth in number of toy providers, helped the overall toys and games market in India in 2010. Urban India drives demand for branded toys and games. Indias urban consumers have higher levels of disposable income, are more aware of global trends in toys and games, and are more willing and able to spend on their childrens growth and happiness. Access to organised retailing chain was also better for the urban population, helping them to buy the best toys and games. Outlook As the Indian economy is likely to continue to witness real GDP growth of around 8% per annum in the short to medium term overall per capita income in India is likely to rise further. Increased income among consumers is likely to help demand for toys and games, which is increasingly shifting towards branded toys. Even though income is likely to rise for all segments of society, the middle class and uppermiddle class segments are likely to benefit most from this trend in the short to medium term. The
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urban middle class population is likely to have better retail access than suburban and rural consumers. Growth in demand for branded toys is likely to help marketers in expanding their distribution networks and improving brand presence. As an increasing number of branded toys are purchased, marketers will increasingly be able to differentiate themselves from non-branded toys and present a clear value proposition to customers. Future impact Over the forecast period growth in demand for branded toys is likely to help toys and games providers (both traditional and video games) to expand their portfolios and gain share in India. However, the share for branded toys is likely to remain at less than half of the total market. Expansion of branded toys is likely to benefit consumers as well. Consumers are likely to have more choice in toys and games. The numbers of international brands is likely to grow further as many international players look to tap into growth of the Indian toy market and its huge potential. Focus on product quality is likely to increase and innovation in toys and games are likely to be key differentiators for providers. The average price point is likely to hold up as newer products with more features are likely to be introduced in the Indian market.
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Outlook Over the short to medium term partnerships and distribution tie-ups in the Indian toys and games industry is likely to continue for both traditional and video games. As the market for toys in India is likely to become more mature and adopt branded products, providers will seek to expand their footprint further and make their products as ubiquitous as possible. For example, Hamleys plans to open 20 new stores over the forecast period in different cities in India. Newer partnerships are likely to create a win-win situation for both providers as well as consumers, as more global products become available to a wider range of consumers. Newer partnerships are likely to spur competition and help bring further quality and innovations to the Indian toys and games market. Overall consumer experience for toys and games is likely to improve, with many newer toys and dedicated retail space significantly contributing to this trend. Future impact In the longer term partnerships and tie-ups are likely to become more mature, targeting areas beyond metros and cities. Due to economic growth consumption capacity is rising in smaller towns as well. Also, the fact that smaller towns are still largely untapped with regard to toys makes them attractive. Innovation in toys and games is likely to be boosted as partners in the industry look to share their technologies and know-how. Foreign partners are likely to help local manufacturers in terms of toys manufacturing design and technology, spurring innovation. Over the forecast period a clearer policy regarding foreign participation in organised retailing is likely to emerge (at the time of writing foreign players are not allowed to open their own retail outlets). This will help international toy retailers such as Hamleys to have specialised toy stores in their own name, and such players will not have to rely on a local partner for sales in India.
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The focus is on providing value-for-money toys that cater to many segments of society. Domestic players are also upgrading their manufacturing systems and adopting the technologies of international players in order to improve overall quality. Newer distribution patterns have emerged, with even bookstores such as Landmark increasingly marketing and selling toys. Many hypermarkets such as Hypercity have dedicated toy areas. Toy sales via the Internet are also growing. Besides toy companies own websites, there are third-party websites such as indiaplaza.com, homeshop18.com, retailmart.com, toysindia.com, etc, which offer a wide range of toys in India. Outlook Over the short to medium term competition from international players is likely to grow further for domestic toy suppliers. This is likely to improve the overall quality and safety of toys offered in India. The urban population is likely to benefit most from this trend, with better access to organised retail chains. There are strict import quality guidelines for Chinese toys in India at present, and these are likely to remain in place in the short term. This is likely to give a further advantage to international toy players in India, as they will not have to compete in terms of price, wherein Chinese toys have a distinct advantage. With competition rising greater specialisation by international companies on regional varieties of toy is likely to become more important in India. Local mythological figures such as Rama and Hanuman are likely to be adopted by both international as well as domestic players in order to further their distribution in suburban and rural India. Future impact Over the forecast period competition in toys is likely to intensify, with many foreign brands (both American as well as European toy brands) entering the Indian market due to its high untapped potential. Adoption of local, country-specific content and characters and games is likely to accelerate further as marketers look to push their toys beyond metro cities, to areas where international games are not popular. An increasing number of local figures are likely to surface in games offered in India. Overall, unit prices of traditional toys are likely to hold as the share of more expansive branded toys is likely to grow in the long term. However, video game unit prices might come down due to increased consumption of such products in India.
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Current impact International companies such as Mattel, Inc and Funskool India Ltd have particularly benefited from the rise in demand for scientific/educational toys. Due to their wide product range, international companies were better placed than domestic companies to tap this demand, and are able to achieve a good hold over this environment. There are games such as educational kids laptops and reading systems, counting games and different types of learning phones, etc, which are becoming increasingly popular in India. Most of these games improve the logical skills in children and help them with basic learning of letters and numbers. The concept of learning while having fun is increasingly popular in India. Parents are looking to provide their children with toys that facilitate learning and do not mind paying extra for such products. This has proven to be a great segment for toy marketers, enabling them to charge a premium for their products without adversely impacting their share. Outlook Over the short to medium term growth in demand for scientific/educational toys is likely to remain strong, as there is still a large segment of market that is untapped. Though growing rapidly, the scientific/educational toys category is still relatively small and there is a lot of scope for growth of such products in India. In the short term, sales of scientific/educational toys are likely to remain limited to urban India due to their higher costs and lack of availability in rural areas. Scientific/educational toys represent a great learning experience and are thus likely to maintain good sales in urban India. It is expected that international toy makers such as Mattel will continue to hold a major share in the Indian scientific/educational toys category in the short to medium term. There is no domestic competition available and it will prove difficult to dislodge already established players. Future impact In the long run, with growth in per capita income, per capita expenditure on toys is also likely to increase significantly. This will be driven by expenditure in urban areas, propelled through the advent of newer organised retail chains. This will boost demand for scientific/educational toys, making them more important in the Indian market. Scientific/educational toys are also likely to become cheaper as volume increases. Newer innovations such as play and learning letters and numbers, newer childrens laptops coupled with expected local production of such toys is likely to make these products more profitable for marketers and less expensive for consumers.
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Static consoles grew better than handhelds due to their superior quality and graphics. Handheld consoles face many competitors in the form of cheaper Chinese games, and thus saw limited growth in India. The growth of static consoles also led to a rapid increase in demand for related software, with all the leading games launched in India by global producers such as Sega Corp and Konami. Outlook New handheld consoles releases in 2011, such as Nintendos 3DS and Sonys Vita are likely to stimulate growth in the handheld market over the next years. Handheld game consoles are currently more popular in India than their static counterparts in terms of market share, and the handheld market will be an area of major growth during the next couple of years. Static game consoles are becoming more established in India too, and related accessories are likely to continue to sell well. Sales of accessories such as Sony Move for PlayStation 3, Microsoft Kinect for Xbox 360 are forecasted to grow further over the 2011-2015 forecast period. The motion sensing technology appeals more to family gamers than hardcore gamers, as these accessories are only available for the consoles at the moment. The dominance of electronics stores for sales of static video games consoles is likely to be maintained in the short to medium term as more such stores are likely to enter the Indian market. Specialised retail stores provide a good environment for marketers to showcase their products, and helps consumers make purchasing decisions. Future impact In the longer term the popularity of video game consoles is likely to continue to rise as consumers disposable incomes improve. The say of children in the average Indian household is likely to grow as focus increases on childrens desires and well-being. Established marketers such as Microsoft India Ltd, Sony India Ltd and Nintendo Co Ltd are likely to have an edge over others in console hardware due to their established distribution lines and familiar brands. The average price of console video games is likely to drop further as volumes are expected to rise and duty rationalisation on imported electronic products such as video games is likely to come down in India.
MARKET DATA
Table 1 Rs million 2005 Traditional Toys and Games Video Games Toys and Games
Source:
Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources
Table 2
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Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources
2008 12.3 9.1 1.9 1.9 2.6 1.8 1.3 1.2 0.7 1.9 0.6 0.3 0.4 0.3 0.2 0.3 8.7 54.4 100.0
2009 13.6 10.9 3.3 2.7 2.9 2.0 1.8 1.4 1.1 1.7 0.8 0.5 0.5 0.3 0.4 0.3 0.4 9.2 46.3 100.0
2010 14.0 11.6 4.5 3.5 3.3 2.3 2.3 1.7 1.6 1.5 0.9 0.8 0.6 0.6 0.5 0.4 0.4 9.8 39.8 100.0
Mattel Toys (India) Pvt Ltd Funskool India Ltd Nintendo Co Ltd Microsoft Corp (India) Pvt Ltd Hanung Toys & Textiles Ltd The Walt Disney Co (India) Pvt Ltd Sony India Pvt Ltd OK Play India Ltd Atari India Ltd Archies Greetings & Gifts Ltd Mitashi Edutainment Pvt Ltd Me n Moms Pvt Ltd My Baby Excels Ltd Sega Corp E-xpress Interactive Ltd Activision India Ltd Crayola LLC Private Label Others Total
Source:
Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources
Table 4 % retail value rsp Brand Funskool Fisher-Price Barbie Play-n-Pets OK Play Archies Soft Toys Hot Wheels Wii Mattel Xbox Mitashi Nintendo DS Atari Mee Mee Lego
Company Funskool India Ltd Mattel Toys (India) Pvt Ltd Mattel Toys (India) Pvt Ltd Hanung Toys & Textiles Ltd OK Play India Ltd Archies Greetings & Gifts Ltd Mattel Toys (India) Pvt Ltd Nintendo Co Ltd Mattel Toys (India) Pvt Ltd Microsoft Corp (India) Pvt Ltd Mitashi Edutainment Pvt Ltd Nintendo Co Ltd Atari India Ltd Me n Moms Pvt Ltd Funskool India Ltd
2008 2.9 2.4 2.3 2.0 1.2 1.9 1.1 0.6 0.9 0.6 0.6 0.5 0.4 0.3 0.5
2009 3.1 2.7 2.6 2.2 1.4 1.7 1.3 0.9 0.9 0.8 0.8 0.8 0.6 0.5 0.6
2010 3.3 3.0 2.5 2.5 1.7 1.5 1.3 1.2 1.0 1.0 0.9 0.9 0.8 0.8 0.8
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Sony PlayStation Disney Precious Princess Playskool Crayola Wii-nintendo Harry Potter & The Half Blood Prince Wii-nintendo Furu Furu Park Sony PlayStation 3 Play-Doh Wii-nintendo Fifa Soccer 09 Matchbox Fable Disney Pixar Sega Disney Wii-nintendo Ice Age 2 Private label Others Total
Source:
Sony India Pvt Ltd The Walt Disney Co (India) Pvt Ltd Funskool India Ltd Crayola LLC Nintendo Co Ltd
Nintendo Co Ltd Sony India Pvt Ltd Funskool India Ltd Nintendo Co Ltd Mattel Toys (India) Pvt Ltd Microsoft Corp (India) Pvt Ltd The Walt Disney Co (India) Pvt Ltd E-xpress Interactive Ltd The Walt Disney Co (India) Pvt Ltd Nintendo Co Ltd Private Label
0.2 0.1 0.2 0.2 0.3 0.2 0.3 0.2 0.2 0.2 8.7 69.4 100.0
0.2 0.2 0.3 0.2 0.3 0.2 0.3 0.2 0.3 0.2 9.2 65.2 100.0
0.4 0.4 0.4 0.3 0.3 0.3 0.3 0.3 0.3 0.3 9.8 61.1 100.0
Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources
2005 Store-Based Retailing - Grocery Retailers - - Discounters - - Hypermarkets - - Supermarkets - - Other Grocery Retailers - Non-Grocery Retailers - - Electronics and Appliance Specialist Retailers - - Mixed Retailers - - - Department Stores - - - Mass Merchandisers - - - Variety Stores - - - Warehouse Clubs - - Leisure and Personal Goods Specialist Retailers - - - Traditional Toys and Games Stores - - - Media Products Stores - - - Other Leisure and Personal Goods 98.4 29.6 4.1 9.3 7.7 8.4 68.8 4.0
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10
Specialist Retailers - - Other Non-Grocery Retailers Non-Store Retailing - Vending - Homeshopping - Internet Retailing - Direct Selling Total
Source:
Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources
Table 6 Rs million
2010 Traditional Toys and Games Video Games Toys and Games
Source:
Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources
Table 7
% constant value growth 2010-15 CAGR Traditional Toys and Games Video Games Toys and Games
Source:
Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources
SOURCES
Sources used during research include the following: Summary 1 Research Sources Official Sources
Business World NCAER- National Council of Applied Economic Research Prowess Database Registrar of Cos
Trade Associations
All India Toy Manufacturers As Sports Goods Export Promotion Council (SGEPC) Toy Association Of India Toys Association of India
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11
Trade Press
Business India Business Standard Business Today CIOL Economic Times Gifts & Accessories IBID indianindustry.com International Business Times Live Mint MAGINIDA rediff.com screenindia.com The Indian
Source:
Euromonitor International
Euromonitor International