Rumor Hunters June 1, 2006

The Rumor Hunters are an embittered troupe of performance artists who were hired years ago to play Smurfs during Toy Fair.  They were never paid.  To gain revenge, they compile all the nasty rumors and innuendo about the toy industry for your enjoyment.  However, it must be stressed that THIS IS A HUMOR COLUMN.  There is nothing here that you can sue anybody over.  While the Rumor Hunters do their best to remain anonymous, they can be easily spotted due to them being painted blue.  In addition to being stiffed on their pay, the dye used on their skin for the job has never come off...over twenty years later!   Let their Smurfy-vengeance unleash itself upon the world!

Dateline: Hollywood.......Avi Arad, the plucky Israeli immigrant who parlayed his stewardship of a fourth-rate toy company into a position as head of the world’s largest comic book company, has flown the coop!   Having established himself as a major player in Hollywood with the successful Spider-man and X Men movie franchises, Arad is departing Marvel to set up his own movie production company.   This may not have much of an effect on Marvel.  Earlier this year, Marvel announced that they would be ending their first-hand ties to the toy business.  Effective January 1, 2007, Hasbro will be the master toy licensee for all Marvel-based properties.  It’s still not clear if Toy Biz, Marvel’s in-house toy company, and the business started by Arad long ago, will be maintained in any form.  There has been talk of the division of Marvel staying around to consult on new toy designs, or even continuing as a specialty company serving the hobby market, but nothing official has been announced yet.   There is no evidence that Arad’s departure was in any way linked to the apparent end of one of his first companies.   This does leave a bit of a question mark at Marvel Comics, because new management will come in, and nobody knows if they’ll want to stay the course or clean house. 

Dateline: DongYuan Province, China.....One of China’s leading illegal toy manufacturing plants has shut its doors.   The unnamed plant was not driven out of business by any sort of crackdown on bootleg merchandise producers.  This plant had simply chosen the wrong toys to manufacture illegally over the last few years, and managed to go out of business when they couldn’t get retailers, even “everything’s a dollar” store to buy any of what they’d been cranking out.   Warehouses full of near-perfect bootleg versions of Galidor, Thunderbirds, Fantastic Four, and McFarlane Sports action figures were sold for pennies per ton, to be ground up and recycled into lawn furniture for South America.   The shocker here is that the plant actually produced as many figures as they did without having orders for them.  Usually, knockoff manufactures don’t actually produce anything in great quantities until they have orders for them.  Chinese officials are said to be looking into irregularities in the plant’s accounting.   Evidently, it’s okay to make pirated merchandise in China, just as long as you pay all your taxes. 

Dateline: The Magic Kingdom.....Disney has announced that they are ending their relationship with McDonalds.  After this year, there will be no Disney Happy Meal promotions.  The official statement from Disney claims that they are doing this out of concern over childhood obesity and other health issues.  Meanwhile, McDonalds will continue to operate restaurants at Disney theme parks.  Also, another tourist died on a ride at one of those theme parks.  The third in recent months. 

Dateline: Chesterfield Michigan....Lionel Trains seems to have weathered the storm from their legal trouble last year, when they were found guilty of stealing a competing company’s train design.   Earlier this year they completed the purchase of K-Line Toy Trains and will be reintroducing the brand in the next few months.  However, they may have a minor PR problem coming up.   Members of the Right-Wing Blogosphere are trying to organize a boycott of Lionel, because minority owner Neil Young has released a scathing anti-administration album, “Living With War”, which features the song “Let’s Impeach The President”.  Thus far, the boycott has gotten nowhere, since most train enthusiasts aren’t political junkies, and those that are tend to admire Neil Young more than they do the President these days.

Dateline: Kuwait.....The price of oil has been steadily rising for the past three years, but the toy industry has been largely sheltered from those price increases due to savvy manipulation of the futures market.  But that can’t last forever.   In the coming months, toy makers can look forward to the cost of raw materials for plastics doubling or tripling.  Packaging costs will rise too.   While the toy companies have held the line as long as possible, they are going to have to start hiking their retail prices.   This has already begun in a subtle manner.  Some action figures are getting smaller and come with fewer accessories.  Other companies will begin going back to single-blister packaging, so save on the base cost.  Prices have been inching upwards since last year, but may make a major jump in August, when the new Christmas toys start hitting retail.  

This all comes a horrible time for action figures, who have seen their market share shrink every year for the last decade.  Mattel executives openly gloated to the Wall Street Journal that they had high expectations for toys based on the Disney/Pixar film “Cars”, because toy cars still sell very well, while action figures based on Disney movies tend to perform poorly.   As the price for a basic five-inch action figure vaults past the ten-dollar mark, sales will plummet even further.  Hasbro and Mattel are getting choosier about which movie licenses they immortalize in action figure form.  Over the last five years, the movie-based lines that have flopped have greatly outnumbered the successes. 

There is a very real danger that the continued rising price of oil will force the toy industry to have to deal with higher manufacturing costs, energy costs, greater shipping charges, and an economy that could slip into a recession or even a depression.   It could create a deadly game of dominoes.  Which, curiously enough, are usually made of wood, and wouldn’t be affected quite as much as other toys.

That’s it for this edition of Rumor Hunters.  Check back for more of the latest rumor, humor and innuendo from the Rumor Hunters.  For now, we’ll just sit around and sing the blues.