The move -- due to declining sales and growing competition --
could be a boon to toys-to-life rivals
By Sarah E. Needleman
Walt Disney Co.'s decision to discontinue its "Infinity" product
line suggests the once-hot marriage between videogames and
collectible figurines is flaming out.
But the surprise move could end up a boon for rivals such as
Activision Blizzard Inc. and Warner Bros., which appear no longer
to have to contend with a powerful brand, analysts said.
"Disney Infinity" is in a genre of videogames known as "toys to
life," in which players pair figurines with devices to make digital
versions of the characters pop up in games. With "Infinity,"
players place figurines on a mat that communicates with a game
console.
A typical starter pack -- game software, a device to connect to
consoles and a few figurines -- could run upward of $100. The beefy
price turned off some buyers, yet Disney released three starter
packs in as many years.
The games, pioneered by Activision Blizzard's "Skylanders"
series in 2011, were a hit with consumers, particularly collectors
who wanted to own all the figurines.
Revenue for the toys-to-life category in 2015 rose 7% in the
U.S. to $720.5 million, according to market researcher NPD
Group.
The increase, however, was driven by figurines. Software sales
declined 4%. That suggests buyers were less interested in new
versions of the games than new toys to put on shelves.
Disney's ability to leverage characters from its namesake brand,
as well as those of Pixar, Marvel Entertainment and "Star Wars" --
allowing, for example, Mickey Mouse to run alongside Iron Man --
made "Infinity" a formidable competitor.
As the market heated up, though, it became saturated. Nintendo
Co. released figurines called amiibo, featuring iconic characters
such as Mario and Pikachu from "Pokémon." Warner Bros. last fall
introduced "Lego Dimensions," a digital universe with fan favorites
such as Batman, Gandalf from "The Lord of the Rings" and the Time
Lord from the "Dr. Who" science-fiction series.
On an earnings conference call with analysts on Tuesday, Disney
Chief Executive Robert A. Iger said the company, which spent $100
million getting "Infinity" off the ground, lacked confidence in the
genre's future amid declining sales and mounting competition.
Disney still plans to release two final updates with characters
from the movies "Alice Through the Looking Glass" and "Finding
Dory."
"The shelf is crowded," said Michael Pachter, an analyst at
Wedbush Securities, who estimates toys-to-life category generated
$1.25 billion in revenue world-wide in 2015, about the same as the
year before.
While the overall space isn't growing, it isn't declining
rapidly either, Mr. Pachter said. The absence of Disney "leaves a
whole lot of room for remaining players," he said.
Toys-to-life sales at Activision Blizzard slowed after
characters from Warner Bros. and Disney showed up. "Skylanders"
games aren't tied to any well-known characters outside their
own.
Activision, which has released a new "Skylanders" game every
year, is moving ahead with a new installment and an animated TV
series later this year.
"We've got a tremendous plan for this holiday [season] in
place," said Josh Taub, a senior vice president at Activision
Publishing.
Nintendo is quiet about amiibo revenue, but in its April
quarterly financial report said it sold 24.7 million toys during
the fiscal year ending in March and that "sales continued to
maintain momentum." The company declined to comment on
Wednesday.
A spokesman for Time Warner Inc.'s Warner Bros. Entertainment,
which partners with Lego on "Dimensions," said a sequel is coming
in the fall.
One way toys to life can start growing again is by expanding
into new areas such as role-playing games, or targeting female
players and different age groups, said Liam Callahan, an analyst at
NPD.
Toys-to-life competitors will have to work at winning over
stunned "Infinity" gamers. Sean Callaway said he has spent about
$400 on all three "Infinity" games and a few dozen figurines for
his 7-year-old son, Connor.
The technology worker from Yorba Linda, Calif., was disappointed
to learn it is coming to an end. "We probably would've picked up
another play set or two," he said.
He isn't interested in buying other toys-to-life games. "I'm
afraid they'll all disappear," he said. "I don't want to spend more
money on something that may not have a future."
Write to Sarah E. Needleman at sarah.needleman@wsj.com
(END) Dow Jones Newswires
May 12, 2016 02:48 ET (06:48 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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