Emerging Markets Hold the Key for Further Success in Toys and Games

Date: February 18, 2014

Emerging Markets Hold the Key for Further Success in Toys and Games

As explore in Euromonitor International's new global briefing "Toys and Games in Emerging Markets: Consumer Fundamentals Falling into Place", emerging economies already account for a considerable share of the global toy market, and will provide the strongest boost to global toy and games sales between 2012 and 2017. Latin America has been one of the fastest growing toys and games market globally, while in a few short years Asia Pacific is projected to become the largest toys market, overtaking both North America and Western Europe. Hence, all major global toys manufacturers are increasingly seeking ways to enter and expand their presence in these markets. The strategies they adopt now will determine their success in coming years.


Asia Pacific is the digital gaming capital of the world

Asia Pacific is by far the largest digital gaming market, accounting for 42% of global sales in 2012. Values sales of digital gaming in the region exceeded US$7.7 billion in 2012, having grown by 16% in that year in constant terms. Sales are projected to exceed US$12.6 billion by 2017.

Mobile games was the fastest growing category in the region in 2012 recording 18% value growth in constant terms to reach US$2.4 billion. Among the most popular mobile games are Angry Birds, Plants vs Zombies, Sonic and Fruit Ninja.

Online games, the biggest category in overall video games, also showed an impressive performance to hit US$4.1 billion in value sales in 2012.

Games for hand-held video games consoles is the only category that is projected to record a decline over 2012-2017, suffering from increasing popularity of mobile and online games.




Traditional toys: Which countries are shaping up for growth?

The UAE was the leader in terms of per capita spends among 0-14 year-olds in emerging markets in 2012, recording US$296 and US$289 per child, respectively. There is a huge contrast between across markets. In 2012, toys spend per child stood at US$122 in Russia, and just US$1 in India.

China is projected to be the most dynamic country globally between 2012 and 2017, with a 10% CAGR, translating into US$48 billion in extra sales in actual terms.

Brazil is another market which should not be overlooked. It’s predicted 7% CAGR between 2012 and 2017 will translate into just under US$1.6 billion in additional sales. Spend per child is forecast to increase from US$8.1 in 2012 to US$125 in 2017.

Mexico also offers good opportunities in terms of absolute sales as the traditional toys and games is forecast to expand by US$306 million by 2017. The growth is likely to be driven by a strong birth rate (by 2017, the 0-14 year old population is expected to surpass 32 million), increasing household disposable incomes and a rising number of working women. 


Key Findings:

Disposable income is more important for toys

Nine of the world’s top 10 countries in terms of child population are emerging economies. However, it is the rise in disposable incomes in emerging economies that is contributing most to market size gains.

Latin America among the most dynamic regions in toys and games in 2012

Sales of traditional toys and games in Latin America exceeded US$10 billion for the first time in 2012. Brazil is projected to become the fourth biggest traditional toys market globally by 2017, overtaking both France and the UK along the way. In video games, Mexico accounted for almost 36% of the region’s sales in 2012

Asia Pacific is set to become the largest traditional toys market

In just a few short years, Asia Pacific is forecast to surpass North America, becoming the largest traditional toy market by 2014, accounting for 26% of global sales by 2017. In 2012, China became the second largest traditional toys and games market globally, overtaking Japan. The region is also the digital gaming market capital of the world, accounting for 42% of global sales in 2012.

Eastern Europe – Russia is the country to target

Over 62% of Eastern Europe’s projected growth in overall toys and games is forecast to come from Russia, equating to more than US$1.2 billion, making it the most attractive regional market.

Traditional toy stores remains as the key channel

Although internet retailing is one of the most dynamic sales channels, it represented just a fraction of toys distribution in almost all emerging markets, accounting for less than 10% of traditional toys and games sales in all but two markets.

The right category and price could determine success

Pre-school is generally the category to aim for when considering emerging market expansion. A carefully implemented pricing strategy is also one of they key areas to focus on, as most of these markets are still price sensitive.


By Euromonitor International
Established in 1972, Euromonitor International is the world leader in strategy research for consumer markets. Comprehensive international coverage and leading edge innovation make our products an essential resource for companies locally and worldwide.

More information at http://www.euromonitor.com/.

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