Analyst Insight by Jane Nguyen - Research Analyst
In 2014 sales of traditional toys and games in Asia hit US$19 billion, marking 7% year-on-year growth and an 8% CAGR over 2009-2014. Being the runner-up in both market size and growth rate, Asia should have boosted its impressive performance in traditional toys and games. However, the rise of digital gaming, age compression and the prevalence of copycat products put mounting pressure on toymakers in the region. New growth avenues should be sought.
Disruption from sharing economy
In late 2005 toy rental services started to make headlines in Western countries. Four years later, when the global financial crisis hit hard in many parts of the world, the Netflix business for toys also stepped into Asia. During that time toy rental met the demand of parents in Asia, who needed to cut discretionary spending due to economic difficulties. Upon the economy recovery toy rental is surprisingly not out of vogue. Instead, it is prospering. In Indonesia the number of online rental companies exceeded 30 in 2014. In Vietnam and India, despite no official statistics, news regarding toy rental services is spreading widely. In Singapore three new toy rental companies entered the market in 2014, bringing the number to six. The success is largely attributed to improved delivery services, favourable return policies, attractive pricing and high standards of sanitation.