If you have children, or if your memories stretch back to your own childhood, you are probably aware of the symbiotic relationship between the entertainment industry and the toy manufacturing sector.
With a selection of leading movies, TV series and games that appeal to children and young people, branded toys are likely to be sold in retail stores around the world.
This is lucrative territory for the world’s leading toy brands such as Lego, Hasbro and Mattel, and good news for entertainment producers. Estimates vary, but according to Grandview Research, the global toy market will be worth $291 billion in 2021, rising to $308 billion the following year. Branded toys are an important component of the whole.
These are numbers that should whet the appetite of both entrepreneurs and investors. After all, nothing is more attractive than a big market. But there is another issue to consider. Is the branded toy market in some way disrupted? Is there room for entrepreneurs to step in, do things differently and eventually carve out their own niche?
Darran Garnham is CEO of Toikido, a two-year-old British company that creates toys for brands in the entertainment industry. It currently sells to 100 markets around the world through some 70,000 points of sale.
When I spoke with Ghanam, I told him that it is a young business competing with established toy makers, as well as having to negotiate with entertainment companies about turning two-dimensional assets into three-dimensional products. I asked him earnestly about this reality.
As Garnham admits, it’s much easier to break into the branded toy space if you already have a track record in the industry. “Before starting the company, I worked in retail, entertainment and toys. I led his team at Universal in his studio,” he says.
So why quit a high-profile, possibly high-paying job?
Like many modern entrepreneurial stories, the pandemic was the catalyst. That’s partly because Ghana has begun to reassess his own priorities, asking himself if he wants to stay away from his home and family in a job that requires a lot of travel. I had a more practical reason. “Big companies were responding to the crisis through furloughs and job restructuring. It was a good time to bring the team together,” he says.
Things are going well, but how does early business start to make an impact in a market with a long history? Garnham says his approach is to give potential partners something different. was to provide
In practice, it usually takes about 18 months to bring a toy concept from design to retail, he says. Considering how many balls you have to juggle, that’s probably not surprising. Studios that own intellectual property must plan their own campaigns. On top of that, toy deals must be negotiated, and design and manufacturing time must be taken into account.
“We set out to streamline that process,” says Garnham. “And we run Toikido like a tech company.”
As a result, many internal processes have been accelerated by minimizing meeting times and making decisions quickly. But that leaves the other side of the equation. To reduce time-to-market by six to eight months, IP owners need to act quickly, too. Is it faster than usual? is there a problem?
Garnham said entertainment companies themselves are demanding more speed. He cites his Netflix project based on the show Back to the Outback. “They chose us because we were the only ones who could deliver in four months,” he says.
To date, Toikida’s list of media partners includes the aforementioned Netflix, Apple, Roblox and Skydance Animation.
In addition to developing toys with partners, the company is partnering with PMI and Character Options to market its own IP-based assets in the form of Pinata Smashlings.
So how did all this funding come about? Ghanam said he sold his stake in Calm, his first investment company. The relationship was more than an investment. “We worked with Gary on a project and used his brand to launch products into all of Macy’s stores in America,” Garnum says.
All of this sounds ambitious for a small team business. The key to getting things done is our relationship with our three manufacturing partners and our network of distributors. Again, our background in the industry has helped Garnham and his team establish these relationships. Last year his turnover was £60m and his profit was £4m.
And Ghana sees room for growth. “We want him to be a $200 million to $300 million company by 2025,” he says.
The toy industry is huge, but it doesn’t get a lot of attention, at least in terms of entrepreneurial activity. However, there seems to be an opportunity to quickly build a profitable business. That said, for branded toy producers, a background in this field probably doesn’t hurt at all.