Pay to Play Toying With Technology

The toy sector is showing strong growth in Germany, with companies focusing on innovative new high-tech products. But many at the Nuremberg Toy Fair say traditional items are still their core strength.
Kids play with Lego's new Nexo Knights castle, which combines online gaming with physical play.

A 3D printer that kids can build themselves? It’s about to become a reality.

Soon, tiny tinkerers will be able to assemble 600 parts to create a high-tech 3D printer and realize their own designs.

The product by Fischertechnik, a family-owned company in Germany's southwestern Baden region, is just one example of the toy industry’s increased creativity in recent years. The results are on display at the world's largest toy trade show in Nuremberg.

And when the convention halls opened on Wednesday, the mood was buoyant inside. That’s because exciting new products are drawing customers to shops in droves.

Last year was really fantastic. Ulrich Brobeil, Head of the BVS national toymakers association

"Last year was really fantastic," said Ulrich Brobeil, head of the national association of toy manufacturers, or BVS.

Sales in German toy stores shot up by about 6 percent. By comparison, sporting goods stores in Germany saw sales increase by only 1 percent in 2015.

Toy makers are particularly pleased that it isn't just electronic gadgets that are responsible for the strong sales figures.

 

Zowi the robot is just one example of how companies are integrating new technology with toys. Credit: dpa/Daniel Karmann

 

Traditional southern German toy maker Ravensburger, which is famous for its jigsaw puzzles, saw its income grow by almost a fifth, to €445 million ($484 million), for example. While the growth was mainly attributable to the takeover of wooden toy train manufacturer Brio, the family-owned company also managed to achieve 8-percent growth with its existing products. Its puzzles were especially popular among consumers.

Simba-Dickie, Germany's largest toy manufacturer with sales of €616 million, also makes big money with traditional toys.

"We really shouldn't even exist anymore," said Michael Sieber, Simba-Dickie’s founder and chief executive.

For years, experts have predicted that the smartphone boom would spell the demise of companies such as Simba-Dickie. But the opposite seems to be true.

"We are growing, but many mobile phone producers have already gone under," said Mr. Sieber.

The Simba-Dickie Group includes well-known brands such as Schuco, Noris, Märklin and Big, and almost all specialize in traditional toys.

But that doesn't mean that technology isn't a major factor in the industry. At the Nuremberg show, many manufacturers demonstrated innovative ways to combine tradition with modern information technology.

Düsseldorf-based startup Tonies is a case in point. The company’s founders, Marcus Stahl and Patric Fassbender, have declared an "audio revolution for children's rooms." They developed a colorful box that enables children ages 3 to 6 to enjoy audio stories easily.

The cube-shaped miniature stereo system isn’t much bigger than a coffee cup. Children simply place a small plastic figure on top of the device to listen to the corresponding story. They can also create their own listening program with the wireless device, which is connected to the Internet so that parents can send messages from afar.

Thanks in part to such innovations, the toy trade association's Mr. Brobeil is certain that "2016 will be another good year."

He recently surveyed BVS members and found that companies are even more optimistic than they were last year. The manufacturers' association includes all major brands, from Lego to Mattel and Hasbro to Playmobil, as well as many small and mid-sized businesses.

 

</a> Playmobil is among Germany's most popular toy brands. Credit: dpa/Daniel Karmann

 

But the producers are not entirely without worry. For instance, they have been quarreling for years with carmakers over license fees for products, with no agreement in sight. They also fear the business of drones for play might suffer if tougher flight rules are imposed. And because many games now require an Internet connection, the subject of data protection takes high priority on their agendas.

Among the major brands represented at the Nuremberg show was Lego, which has also taken to techie details with a new toy called Nexo Knights. The rolling castle with a "hi-tech HQ" features scannable options to create different "shields," combining online gaming with physical play.

“We are building a whole new world with this product line,” said Frédéric Lehmann, Lego’s new chief executive for Germany.

The Danish company has a well-known core business of plastic construction blocks, but has now also developed an app for smartphones and tablets. Within a few days, fans downloaded the app more than 60,000 times. The program allows users to build with Lego outside the playroom.

Nexo Knights is Lego’s attempt to pursue a strategy of combining colorful building blocks with modern media. Two years ago, the firm brought a 3D movie to cinemas. Many customers bought Lego figures, vehicles and buildings thanks to "The Lego Movie."

Though the Lego brand is benefiting from its combination of tradition and modernity, classic products still take priority. “The building blocks will remain the core of the brand,” said Mr. Lehmann.

German company Playmobil is a lot more reluctant about new media, though. That might explain why the company isn’t in the top rank of toymakers worldwide.

Lego, on the other hand, has managed to catch up with the big American toy companies such as Hasbro and Mattel. It will present its latest financial figures on March 1. Revenues are expected to have soared, and the company had good results during the Christmas gift-buying season.

In Germany, no one sells as many toys as Lego, so Mr. Lehmann is optimistic about the future.

“We are marching with a tail wind in 2016,” he told Handelsblatt.

 

Joachim Hofer covers the high-tech industry and IT sector for Handelsblatt. To contact the author: [email protected]