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The growing popularity of smartphones and tablets over the past few years has had a mixed range of consequences for the global toys and games industry. Aside from providing fertile ground for the development and popularisation of mobile games, the popularisation of connected devices greatly increased consumer access to media, resulting in greater demand for licensed toys based on popular entertainment franchises. The popularity of smartphones and tablets has also been a significant drain on holiday spending budgets, as the products were popular gift items around the world. The dynamic became particularly negative for toymakers as mobile games made smartphones and tablets ever more appealing for young children. However, by 2015 market saturation and price erosion resulted in declining value sales in both smartphones and tablets, leaving more room for toys in holiday spending budgets.
Global Retail Value Sales Growth in Smartphones and Tablets
Source: Euromonitor International
By 2015 smartphones and tablets had become mainstream devices, even in many emerging markets, as prices steadily declined, making the products more and more affordable each year. As the devices became increasingly popular, many manufacturers struggled to differentiate their products as they all shared a narrow range of component and software suppliers. Apple Inc had the most success differentiating its range from the competition, but, by 2015, the company struggled to offer significant enough product updates to generate the level of enthusiasm earlier generations of its tablets and smartphones enjoyed. As first-time buyers disappeared from the market and replacement purchases came to dominate demand, smartphones and tablets lost their lustre.
The slowdown is a natural part of a product lifecycle in consumer electronics, and manufacturers hoped that wearable electronics would offset the slowdowns in tablets and smartphones. Due to strong sales growth in 2015 global volume sales of wearable electronics are expected to reach almost 85 million units. But sales are expected to continue to be dominated by simple passive fitness trackers, keeping the global average unit price at around US$147: significantly below the smartphone and tablet prices manufacturers saw over the past few years.
So, despite strong sales gains in 2015, wearable electronics will have a marginal effect on holiday shopping budgets. More importantly, wearable electronics are not popular with children as smartphones and tablets have been in the past, which will minimise their impact on toy sales. The proliferation of tablets and smartphones over the historic period has contributed to an environment where children are extremely comfortable with technology.
Within this environment, new toys-to-life launches as well as video games are poised to do well over the holiday season. The release of Star Wars Episode VII will also have a significant impact on demand for related licensed toys. We therefore expect to see significant growth in sales of toys and games in 2015, compared to the previous year, with total global retail value sales growth reaching 3.6% in constant terms for the year.