state of the toy industry april 3, 2007 annual 2006 data

State of the Toy Industry

April 3, 2007

Annual 2006 Data

Toy Industry Overview

Supercategory Overview

Boys & Girls

Retailers

Licensing Opportunities

Movies

Wuz^ With Kids?

Agenda

Overview

2006 Was The Year Of The Rebound For Toys

$22.7$22.2 $22.3

2004 2005 2006

3.3

3.13.0

2004 2005 2006

Billions of Dollars Billions of Units

+0.3%-1.9%

- 4.6% - 4.4%

Source: The NPD Group / Consumer Tracking Service

2004 2006

$10.00 +

$5.00-9.99

$0.00-4.99

Average Retail Price, Unit Sales Distribution

Unit Price Mix Has Changed

57% 55%

23%22%

21%

23%

3.3B

3.0B -9%

Unit % Change

+2%

-10%

-12%


Big 5 European Countries Combined Grow Value Sales by 2%

€2,204€2,312

€1,477 €1,450€1,945 €1,950

€621 €635 €652 €684

UK Germany France Italy Spain

2005 2006

Change vs. 2005

+5% +5%-2% +2%Flat

POS

Quarterly Trends Show Growth

-3.1%

1.8%

0.3%

1.0%

Q1 '06 v '05 Q2 '06 v '05 Q3 '06 v '05 Q4 '06 v '05

Total Industry % Change – by Quarter in 2006 v 2005

Easter in 2006 was in April (Q2) whereas Easter in 2005 was in March (Q1).


Toys Increases Time Share Among 5-12 Year Olds

TV/Movies

Toys

Music

Video Games

Computer, No Homw

Hang w/ Friends

Rec. Reading

Hobbies

Sports/Outdoor

All Other

14.9%

9.4%All Other

6.8%

6.5%

6.4%5.7%4.9%

4.8%4.7%

-0.6

+0.7

+0.8

+0.3

+0.2

-0.6

-0.2

-0.4

-0.4

Pt Chg

Source: The NPD Group / Kids Leisure Time II All Other includes non-elective activities such as eating dinner, personal hygiene, and taking naps.

Parents Love Toys!

64%

65%

71%

71%

83%

86%Toys help my child learn.

The time we spend playing with toys together brings us closer together.

Source: The NPD Group / Parents’ Opinions on Toys

Toys keep my child from watching too much TV.

Playing with toys allows my family to interact with each other without distractions.

I think toys are more interesting and stimulating today than they used to be.

I feel that I am a good parent when my child plays with toys.

Statements Evaluated – Top 2 Box Agree

-9%

-5%

-4%

-2%

-2%

-1%

0%

5%

22%

0%

2%

4%

Innovation, Adaptation, Evolution Drove Sales In 2006

Dollar

Sales (MM)

Total Traditional Toys $22.3 B

Youth Electronics $1,058

Vehicles $2,106

Arts & Crafts $2,604

Infant/Preschool $3,278

Dolls $2,732

Building Sets $676

Outdoor & Sports Toys $2,848

Games/Puzzles $2,411

Plush $1,320

All Other Toys $2,002

Action Figures & Accessories $1,252

Annual 2006 vs. 2005

Dollar % Change

53%

20%

27%


8.4%

8.1%

6.9%

3.5%

3.0%

2.5%

2.2%

1.8%

1.6%

1.5%

Fisher-Price

Mattel

Hasbro Toys

Hasbro Games

MGA Entertainment

LeapFrog

Crayola

LEGO Systems

Rose Art

Vtech

Dollar Share (%)Share Point Change

2006 vs. 2005

0.5 6.7%

0.2 3.1%

0.5 8.4%

0.2 7.2%

0.2 8.8%

-0.3 -10.6%

0.3 16.4%

_ _ 1.2%

-0.2 -11.6%

0.4 38.7%

Annual 2005 Ranking

Dollar Volume Percent Change

2006 vs. 2005

Top 10 Manufacturers, 2006 Dollar Share

1

2

3

4

6

5

7

9

8

14

Most Top Manufacturers Grew


22%

28%20%

13%

17%

Age 0-2

Age 3-5

Age 6-8

Age 9-11

Age 12+

Boys, By Age of Recipient Dollars, 2006

+9%

-2%

+1%

+10%

-6%

Two Boy’s Segments Showed Significant Increases


22%

31%22%

12%

13%

Age 0-2

Age 3-5

Age 6-8

Age 9-11

Age 12+

Girls, By Age of Recipient Dollars, 2006

+5%

+8%

+3%

-9%

-14%

Girls 0-8 Grew


More Toy Dollars Are Spent Per Child/Year Than Ten Years Ago

Per Capita Estimates Of Toy Dollars Across Age Ranges, Annual 2006

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

$500

Ages 0-2 Ages 3-5 Ages 6-8 Ages 9-11 Ages 12-17 Ages 18+

1996

2006

Note: Population estimates used are based on Census Bureau Projections of U.S. Population

More Kids

Source: U.S. Census BureauProjections of Kids

2005 (,000)

2010 (,000)

5 & Under 24,409 25,610

6-8 11,594 12,402

9-12 16,215 15,911

+5%+7%-2%

•Industry Sales are on the upswing

•Kids are spending more time playing with toys and their parents like that

•Innovation is paying off for manufacturers

•The core consumer is showing significant growth

•Growth expected to continue as the population of kids goes up over the next few years

The Building Blocks Are In Place

Supercategory Overview

Four Supercategories Drove Sales In 2006

Dollar

Sales (MM)

Total Traditional Toys $22,287


Vehicles $2,106



Dolls $2,732

Building Sets $676


Games & Puzzles $2,411

Plush $1,320




Dollar % Change


-9%

-5%

-4%

-2%

-2%

-1%

0%

5%

22%

0%

2%

4%

-9%

-5%

-4%

-1%

-2%

-2%

0%

5%

22%

0%

2%

4%

Youth Electronics

Dollar

Sales (MM)

Total Traditional Toys $22.3


Vehicles $2,106



Dolls $2,732



Building Sets $676

Plush $1,320




Dollar % Change

http://www.amazon.com/gp/product/images/B000F3GNW6/ref=dp_image_0/002-4137456-7857609?ie=UTF8&n=165793011&s=toys-and-games

http://www.amazon.com/gp/product/images/B000ENW5Q0/ref=dp_image_0/002-4137456-7857609?ie=UTF8&n=165793011&s=toys-and-games

http://www.amazon.com/gp/product/images/B000EQHJQ8/ref=dp_image_0/104-1326509-6943925?ie=UTF8&n=165793011&s=toys-and-games

-9%

-5%

-4%

-1%

-2%

-2%

0%

5%

22%

0%

4%

2%

Vehicles

Dollar

Sales (MM)



Vehicles $2,106



Dolls $2,732



Building Sets $676

Plush $1,320




Dollar % Change

-9%

-5%

-4%

-1%

-2%

-2%

0%

5%

22%

0%

2%

4%

Arts & Crafts

Dollar

Sales (MM)



Vehicles $2,106



Dolls $2,732



Building Sets $676

Plush $1,320




Dollar % Change

http://www.amazon.com/gp/product/images/B0000959KE/ref=dp_image_0/002-4137456-7857609?ie=UTF8&n=165793011&s=toys-and-games

http://www.amazon.com/gp/product/images/B000EULZRS/sr=8-1/qid=1173128496/ref=dp_image_0/103-5338398-1823018?ie=UTF8&n=165793011&s=toys-and-games&qid=1173128496&sr=8-1

http://www.amazon.com/gp/product/images/B00000IRTI/sr=1-4/qid=1175099064/ref=dp_image_0/104-1326509-6943925?ie=UTF8&n=165793011&s=toys-and-games&qid=1175099064&sr=1-4

-9%

-5%

-4%

-1%

-2%

-2%

0%

5%

22%

0%

2%

4%

Infant / Preschool

Dollar

Sales (MM)



Vehicles $2,106



Dolls $2,732



Building Sets $676

Plush $1,320




Dollar % Change

http://www.amazon.com/gp/product/images/B000284ZNI/ref=dp_image_0/002-4137456-7857609?ie=UTF8&n=165793011&s=toys-and-games

http://www.amazon.com/Shake-Go-Racers-Raceway-Playset/dp/B0007WWZJA/sr=1-1/qid=1170351466/ref=pd_bbs_1/002-4137456-7857609?ie=UTF8&s=toys-and-games

http://www.amazon.com/gp/product/images/B000BTNQUQ/ref=dp_image_0/002-4137456-7857609?ie=UTF8&n=165793011&s=toys-and-games

http://www.amazon.com/gp/product/images/B00004U95H/ref=dp_image_0/104-1326509-6943925?ie=UTF8&n=165793011&s=toys-and-games

-9%

-5%

-4%

-2%

-2%

-1%

0%

5%

22%

0%

2%

4%

Dolls

Dollar

Sales (MM)



Vehicles $2,106



Dolls $2,732



Building Sets $676

Plush $1,320




Dollar % Change

http://www.amazon.com/gp/product/images/B000EMRVO2/ref=dp_image_0/002-4137456-7857609?ie=UTF8&n=165793011&s=toys-and-games

http://www.amazon.com/gp/product/images/B000ETRDSY/ref=dp_image_0/104-1326509-6943925?ie=UTF8&n=165793011&s=toys-and-games

http://www.amazon.com/gp/product/images/B000EXYZ36/ref=dp_image_z_0/002-4137456-7857609?ie=UTF8&n=165793011&s=toys-and-games

-9%

-5%

-4%

-2%

-2%

-1%

0%

5%

22%

0%

2%

4%

Building Sets

Dollar

Sales (MM)



Vehicles $2,106



Dolls $2,732

Building Sets $676



Plush $1,320




Dollar % Change

-9%

-5%

-4%

-2%

-2%

-1%

0%

5%

22%

0%

2%

4%

Outdoor & Sports Toys

Dollar

Sales (MM)



Vehicles $2,106



Dolls $2,732

Building Sets $676



Plush $1,320




Dollar % Change

-9%

-5%

-4%

-2%

-2%

-1%

0%

5%

22%

0%

2%

4%

Games & Puzzles

Dollar

Sales (MM)



Vehicles $2,106



Dolls $2,732

Building Sets $676



Plush $1,320




Dollar % Change

http://www.amazon.com/gp/product/images/B000HBS5CC/ref=dp_image_0/002-4137456-7857609?ie=UTF8&n=165793011&s=toys-and-games

http://www.amazon.com/Radica-75038-20Q-Challenge/dp/B0007Q1JFW/sr=1-2/qid=1170351416/ref=pd_bbs_sr_2/002-4137456-7857609?ie=UTF8&s=toys-and-games

http://www.toysrus.com/product/index.jsp?productId=2335869&cp=&sr=1&f=Taxonomy%2FTRUS%2F2254197&origkw=yu-gi-oh&kw=yu-gi-oh&parentPage=search

-9%

-5%

-4%

-1%

-2%

-2%

0%

5%

22%

0%

2%

4%

Plush

Dollar

Sales (MM)



Vehicles $2,106



Dolls $2,732



Building Sets $676

Plush $1,320




Dollar % Change


-9%

-5%

-4%

-1%

-2%

-2%

0%

5%

22%

0%

2%

4%

All Other Toys

Dollar

Sales (MM)



Vehicles $2,106



Dolls $2,732



Building Sets $676

Plush $1,320




Dollar % Change


-9%

-5%

-4%

-1%

-2%

-2%

0%

5%

22%

0%

2%

4%

Action Figures & Accessories

Dollar

Sales (MM)



Vehicles $2,106



Dolls $2,732



Building Sets $676

Plush $1,320




Dollar % Change


http://www.amazon.com/gp/product/images/B000B5MV4C/ref=dp_image_0/002-4137456-7857609?ie=UTF8&n=165793011&s=toys-and-games

http://www.amazon.com/gp/product/images/B000GWG90C/ref=dp_image_0/002-4137456-7857609?ie=UTF8&n=165793011&s=toys-and-games

http://www.amazon.com/gp/product/images/B000EUKRV8/ref=dp_image_0/002-4137456-7857609?ie=UTF8&n=165793011&s=toys-and-games

Demographics

22%

28%20%

13%

17%Age 0-2

Age 3-5

Age 6-8

Age 9-11

Age 12+

Boys, By Age of Recipient Dollars, 2006

+9%

-2%

+1%

+10%

-6%

Two Boy’s Segments Showed Significant Increases


$145

$104

$96

$95

$85

$77

$298All Other Infant Toys

PS Vehicles

PS ElectronicLearning

Traditional Plush

Sports Activities &Games

Battery Op Ride-Ons &Access

PS Role Playing

Boys, 0-2 Years Old

2005: $2.0B

2006: $2.2B

% Change: 8.7%

Top Dollar Sales Categories (MM) – Annual 2006 vs. 2005

Boys, 0-2 Years Old

Key Findings & Opportunities:

Toys for 0-2 year old boys have the highest average retail price, at $9.32

27% of toys for 0-2 year old boys are purchased by grandparents

Purchases made by Hispanics and Asians helped drive the overall growth for this age group


$197

$185

$162

$145

$138

$136

$236Action Figures

PS Vehicles


Mini Vehicles

Radio/Remote Cont.Vehicles

Cray/Mrkr/Pen/Chlk


Boys, 3-5 Years Old

2005: $2.9B

2006: $2.9B

% Change: -2.3%



Toys for this group have the lowest average retail price, at $7.32

3-5 year olds have the highest share of Licensed sales, at 35%

Approximately half of 3-5 year old boys ask for specific and/or brand/type of toy

Boys, 3-5 Years Old


$206

$158

$149

$81

$75

$67

$215Action Figures


Building Sets

Radio/Remote CtrlVehicles

Miscellaneous Toys

Cray/Mrkr/Pen/Chlk

Robotic/Int Playmates

Boys, 6-8 Years Old

2005: $2.0B

2006: $2.0B

% Change: 1.4%



While Mass Merchants were the #1 channel for this group, the Online Channel grew the most

Purchases made for Christmas/Hanukah and Birthday’s grew, which offset declines for other occasions

Boys, 6-8 Years Old


Boys, 9-11 Years Old

2005: $1.2B

2006: $1.3B

% Change: 9.8%


+35%

-7%

-15%

+5%

+3%

+80%

+167%

$128

$122

$120

$59

$45

$44

$131Action Figures


Radio/Remote CtrlVehicles

Building Sets

Strategic Trad CardGames

Skate/Sktbd/Scooter

Friction/Pump/Pull-Back


Average retail prices climbed to $8.79 in 2006 vs. $7.73 in 2005, a 14% increase

Boys 9-11 are more likely to ask for a specific toy more than any other age group

Purchases made by Grandparents increased +4 share points

Boys, 9-11 Years Old


22%

31%22%

12%

13%Age 0-2Age 3-5Age 6-8Age 9-11Age 12+

Girls, By Age of Recipient Dollars, 2006

+5%

+8%

+3%

-9%

-14%

Girls 0-8 Grew


Top Dollar Sales Categories (MM) – Annual 2006 vs. 2005 Girls, 0-2 Years Old

2005: $2.0B

2006: $2.1B

% Change: 4.8%

$154

$113

$85

$82

$73

$69

$277All Other Infant Toys

Traditional Plush

PS Role Playing

Nurturing Dolls


Cray/Mrkr/Pen/Chlk

Special Feature Plush


Toys for this group have the highest average retail price, at $9.42

Girls 0-2 years old have the highest share of Licensed toys, at 30%

29% of toys for 0-2 year old girls are purchased by the grandparent

Girls, 0-2 Years Old



2005: $2.8B

2006: $3.0B

% Change: 7.8%

$223

$182

$153

$149

$140

$123

$294Fashion Themed

Dolls/Figs

Traditional Plush


Youth Elect/Comm

Fashion RolePlay/Access

Nurturing Dolls

Craft/School Supplies


Average retail prices climbed to $8.50 in 2006 vs. $7.62 in 2005, a 11% increase

Purchases made by Parents increased 4 share points while purchases made by Grandparents decreased -2 share points

Purchases made for Birthday’s are up 22% to almost $700MM




2005: $2.1B

2006: $2.1B

% Change: 2.8%

$168

$150

$140

$94

$88

$83

$350Fashion Themed

Dolls/Figs

Playset Themed Fig &Access

Traditional Plush

Cray/Mrkr/Pen/Chlk

Fashion Role Play &Access

Fashion ThemedAccess

Youth Elect/Comm


Girls are becoming more vocal! 2/3 of 6-8 year olds are asking for a toy, most of that comes from girls asking for a specific toy

6-8 year old girls under-indexed for purchases made by African Americans

Purchases made for Christmas/Hanukah and Birthday’s contributed to overall growth in this segment




2005: $1.2B

2006: $1.1B

% Change: -9.0%

$87

$79

$60

$59

$57

$51

$137Fashion Themed

Dolls/Figs

Traditional Plush

Cray/Mrkr/Pen/Chlk

Youth Elect/Comm

Craft Kits

Playset Themed Fig &Access

Fashion Role Play &Access

Key Findings & Opportunities

33% of sales came from items introduced in 2006, vs. 27% from items introduced in 2005

71% of 9-11 year old girls are asking for a specific toy

Hallmark was the fastest growing retailer among this age group, and the Toy Store Channel grew the most



Retailers

The Big Get Bigger…And Target Is Gunning For #2

28.5% 29.4% 28.9%

15.6% 16.0% 14.9%

11.8% 12.3% 14.2%

37.1% 36.4% 36.1%

2004 2005 2006

All Other

KB Toys

Kmart

Target

Toys R Us

Wal-Mart

Retailer Dollar Share


$2,109 $2,047 $1,936

$5,188$5,679

$2,052 $1,961 $2,132

$5,248

2004 2005 2006 2004 2005 2006 2004 2005 2006

Per Store Sales Stronger For Toys ‘R Us For 2 Consecutive Years

Retailer Dollar Sales Per Store (,000) – Annual 2006

Wal-Mart Toys ‘R Us Target

+8%+1%

# Stores 3,066 3,189 3,331 681 679 586 1,308 1,397 1,448


29% 32% 31% 32% 26%

15% 14% 13% 13% 17%

14% 14% 14% 14% 15%

36% 37% 35% 37% 36%

Annual 2006 Q1'06 Q2'06 Q3'06 Q4'06

Wal-Mart Toys R Us Target Kmart KB Toys All Other

It’s A Seasonal Game

Retailer Dollar Share – Annual 2006


+2

-1

-1

% Chg.

$914 $885 $835

$2,668

$3,082

$974 $946 $1,039

$2,790

Q4'04 Q4'05 Q4'06 Q4'04 Q4'05 Q4'06 Q4'04 Q4'05 Q4'06

Both Toys ‘R Us And Target Had Double-digit Growth Per Store In Q4

Retailer Dollar Sales Per Store (,000) – 4th Quarter


+10%

+10%


There Are Regional Ups & Downs for the Big 3 Retailers

Retailer Dollar % Change – Annual 2006 vs. 2005

Wal-Mart+1%

Toys R Us -16%

Target+10%

Wal-Mart -1%Toys R Us 0% Target +6%

Wal-Mart +2% Toys R Us -2% Target +29%

In Northeast MSAs with population >2.5M

TRU +9%

Wal-Mart -3% Toys R Us -9% Target +25%

WEST

CENTRAL

NORTHEAST

SOUTH


The Big 3 Are Evenly Matched In The Largest Metro Areas

18%

29%

35%32%

48%

24%

19%

7%

14% 14% 15% 17%19%

6%12% 12% 13%

17%

<50,000 50,000-249,000 250,000-499,000

500,000-999,000

1,000,000-2,500,000

2,500,000+

Wal-Mart Toys R Us Target

Retailer Dollar Share by MSA (Market Size Area) – Annual 2006

55%45%


PopulationSize

$6.50 $6.74 $6.78

$14.30$15.08

$7.15 $7.64$8.32

$14.52

2004 2005 2006 2004 2005 2006 2004 2005 2006

Price Strategy Matters

Average Consumer Reported Price by Retailer – Annual 2006



Price Matters

61%

19%

48%

21%

29%

27%

8%

17%

11%

6%

15%

8%7%

10%

Wal-Mart Toys R Us Target

$100+

$50-$100

$30-$50

$20-$30

$15-$20

$10-$15

$5-$10

<$5

Unit Distribution of Sales by Price Point – Annual 2006

18%25%

52%


Target Focused

• Grew sales on a per store basis

and expanded the # of stores to

1,443 in 2006 vs. 1,350 in 2005

• Grew in all regions

• Strong in 4th quarter

• Strong development in hot new

properties (e.g. 29% of Go Diego

Go sales in 2006)

Toys ‘R Us Refocused

• Per store sales grew +8% in 2006 (4th quarter +10%)• Held price assortment strategy of toys• Grew with blockbuster properties (Cars The Movie,

Sesame Street, Littlest Pet Shop)• Grew with the right new properties (Kid Tough,

Designer World, Go Diego Go)• Grew with originality (Shake N Go Racers, LEGO City,

Six Flags)

Wal-Mart Opportunities

• Focus on per store sales• Build 4th quarter appeal• Focus on shifting trends in the toy industry (Youth

Electronics flat 2006 vs. 2005)• Price distribution strategy for toys doesn’t match with

growth areas (largest share of toys in $0-$5 range, but

this range has largest unit declines in industry)• Missed hot items with higher price points (Designer

World, Roboreptile)

Licensing Opportunities

Licensed Toys Were Flat

Non-Licensed Toys

73%

Licensed Toys

27%

Annual 2006

Non-Licensed Toys

73%

Licensed Toys

27%

Annual 2005

Dollar Share of Licensed vs. Non-Licensed Toys

Annual 2004

Non-Licensed Toys

75%

Licensed Toys

25%


$587

$505

$460

$432

$306

$303

$293

$252

$718

$248

Barbie

Bratz

Crayola

Dora the Explorer

Star Wars

Cars the Movie

Hot Wheels

Sesame Street

Disney Princess

Thomas and Friends

Annual 2005Ranking Dollar Volume (MM)

1 3 4

5 2

NA 6

13 8

12

-8%

5%

14%

28%

-27%

>200%

-11%

46%

1%

23%

Top 10 Properties - Ranked on Annual 2006 Dollar Sales

A Perspective On Top Properties

Annual 2006 vs. 2005% Change


Dora The Explorer Skips Past Star Wars In Race To The Wire

$432

$306

$293

$252

$248

$145

$144

$144

$460

$131

Dora the Explorer

Star Wars

Cars the Movie

Sesame Street

Disney Princess

Thomas and Friends

Barbie

Spider-Man

SpongeBobSquarePants

Power Rangers

Annual 2005Ranking

Annual 2006 vs. 2005% ChangeDollar Volume (MM)

2

1

na

6

3

5

9

7

16

15

28%

-27%

na

46%

1%

23%

-14%

-26%

38%

17%

Licensed Sales Only, Brand Data ExcludedTop 10 Licenses - Ranked on Annual 2006 Dollar Sales


Annual ‘06 Dollar Volume (MM)

Cars Easily Drove Into #1 Growth License Spot

Annual ‘06 vs. ’05% Change

$306

$100

$92

$71

$65

$59

$46

$41

$40

$39

Cars the Movie

Dora the Explorer

Sesame Street

Superman

Pirates of the Caribbean

Go Diego Go!

Thomas and Friends

WWE

SpongeBob SquarePants

Deal or No Deal

Absolute $ Growth Change Annual ‘06 vs. Annual ‘05 (MM)

$306

$460

$293

$75

$65

$59

$248

$91

$144

$39

na

28%

46%

+>200%

na

na

23%

84%

38%

na

Licensed Sales Only, Brand Data ExcludedTop 10 Absolute Dollar Growth Licenses


7 Of The Top 10 New Licenses Were Based On TV Shows, Not Movies

$65

$59

$39

$37

$20

$16

$12

$12

$306

$10

Cars the Movie

Pirates of theCaribbean

Go Diego Go!

Deal or No Deal

Backyardigans

Ben 10

Avatar

Naruto

Yu-Gi-Oh GX

Happy Feet

New licenses are those with <$1MM in prior year.Top 10 New Licenses - Ranked on Annual 2006 Dollar Sales (MM)

In it’s first year (2002), Dora the Explorer had $68MM in sales


Top 10 Licenses By Descending Dollars for Ages 0-2, 1999-2006

Only Sesame Street, Winnie The Pooh, & Thomas and Friends Have Licensing Staying Power For Kids Ages 0-2

1999 2000 2001 2002 2003 2004 2005 2006

1 SESAME STREET SESAME STREET SESAME STREET SESAME STREET SESAME STREET SESAME STREET SESAME STREET SESAME STREET

2 WINNIE THE POOH WINNIE THE POOH WINNIE THE POOH WINNIE THE POOH WINNIE THE POOHWINNIE THE POOH & FRIENDS

DORA THE EXPLORER

DORA THE EXPLORER

3 TELETUBBIES BLUES CLUES BLUES CLUES BOB THE BUILDERDORA THE EXPLORER

DORA THE EXPLORER

WINNIE THE POOH & FRIENDS

THOMAS AND FRIENDS

4DISNEY STD.CHARACTERS

DISNEY STD.CHARACTERS BARBIE MICKEY & FRIENDS CARE BEARS CARE BEARS

THOMAS AND FRIENDS

WINNIE THE POOH & FRIENDS

5 BLUES CLUES BARBIE JOHN DEERE BLUES CLUESTHOMAS AND FRIENDS

THOMAS AND FRIENDS DISNEY PRINCESS CARS THE MOVIE

6 BARNEY JEEP TONKATHOMAS AND FRIENDS MICKEY & FRIENDS DISNEY PRINCESS CARE BEARS DISNEY PRINCESS

7 JEEPTHOMAS AND FRIENDS

DISNEY STD.CHARACTERS TONKA DISNEY PRINCESS WIGGLES CABBAGE PATCH CABBAGE PATCH

8 BARBIE TONKATHOMAS AND FRIENDS BARNEY BOB THE BUILDER SPIDERMAN JOHN DEERE JOHN DEERE

9 TOY STORY BARNEY BOB THE BUILDERSPONGEBOB SQUAREPANTS TONKA MICKEY & FRIENDS

SPONGEBOB SQUAREPANTS


10THOMAS AND FRIENDS TOY STORY JEEP MAGNA DOODLE


SPONGEBOB SQUAREPANTS SPIDERMAN BACKYARDIGANS



Only Barbie and Power Rangers Have Consistently Made The Top 10 Licenses List Since 1999 For Kids Ages 3-5

1999 2000 2001 2002 2003 2004 2005 2006

1 BARBIE BARBIE BARBIE BARBIE BARBIE SPIDERMANDORA THE EXPLORER

DORA THE EXPLORER

2 POKEMON POKEMONTHOMAS AND FRIENDS SPIDERMAN DISNEY PRINCESS DISNEY PRINCESS DISNEY PRINCESS

THOMAS AND FRIENDS

3 STAR WARS TOY STORY POWER RANGERSTHOMAS AND FRIENDS SPIDERMAN

DORA THE EXPLORER STAR WARS CARS THE MOVIE

4 WINNIE THE POOH BLUES CLUES TONKA POWER RANGERS POWER RANGERS BARBIETHOMAS AND FRIENDS DISNEY PRINCESS

5 TOY STORY WINNIE THE POOH BOB THE BUILDER BOB THE BUILDERTHOMAS AND FRIENDS POWER RANGERS SPIDERMAN BARBIE

6 POWER RANGERS POWER RANGERS HOT WHEELS JEEP CARE BEARS CARE BEARS BATMAN SPIDERMAN

7 BLUES CLUES HOT WHEELS MONSTERS, INC. TOY STORYDORA THE EXPLORER

THOMAS AND FRIENDS BARBIE POWER RANGERS

8 KAWASAKI TONKA TOY STORY STAR WARS HULKSPONGEBOB SQUAREPANTS POWER RANGERS STAR WARS

9 SESAME STREET CHEVROLET SCOOBY DOO DISNEY PRINCESS JEEPNINJA TURTLES(TMNT)

NINJA TURTLES(TMNT)


10 HOT WHEELS SESAME STREET WINNIE THE POOH TONKA TRANSFORMERS TOY STORY CARE BEARS SESAME STREET



For Kids Ages 6-8, Barbie and Power Rangers Consistently Make The Top 10 Licenses List

1999 2000 2001 2002 2003 2004 2005 2006

1 POKEMON POKEMON BARBIE BARBIE YU-GI-OH YU-GI-OH STAR WARS STAR WARS

2 STAR WARS BARBIE POKEMON STAR WARS BARBIE SPIDERMAN YU-GI-OH CARS THE MOVIE

3 BARBIE STAR WARS HARRY POTTER SPIDERMAN BEYBLADE BARBIE BARBIE DISNEY PRINCESS

4 POWER RANGERS POWER RANGERS POWER RANGERS YU-GI-OH SPIDERMAN POWER RANGERS DISNEY PRINCESS BARBIE

5 WWF DIGIMON STAR WARS HARRY POTTER HULK TRANSFORMERS BATMAN YU-GI-OH

6 NASCAR CHEVROLET DIGIMON POKEMON TRANSFORMERS NINJA TURTLES(TMNT) SPIDERMAN SPIDERMAN

7 WCW POWERPUFF GIRLS POWERPUFF GIRLS POWER RANGERS POWER RANGERS BEYBLADE CABBAGE PATCH POWER RANGERS

8

BEAST WARS/ TRANSFORMERS BRITNEY SPEARS WWF ZOIDS POKEMON CARE BEARS POWER RANGERS DORA THE EXPLORER

9 WINNIE THE POOH WWF NASCAR TRANSFORMERS HARRY POTTERSPONGEBOB

SQUAREPANTS DISNEY ALL OTHER BATMAN

10 TOY STORY HOT WHEELS DRAGON BALL Z RAPUNZEL HUMMER POKEMON NINJA TURTLES(TMNT)SPONGEBOB

SQUAREPANTS


27

73

85

15

10

90

25

75

19

81

27

73

26

74

17

83

19

81

34

66

31

69

31

69

Total Industry

Action Figures & Access.

Arts & Crafts

Building Sets Dolls

Games/Puzzles

Infant/Preschool

Youth Electronics

Outdoor & Sports Toys

Plush

Vehicles

All Other Toys

Not Licensed

Licensed

Importance Of Licensed Toys Has Remained Stable With A Few Notable Changes

2006 Dollar Share of Licensed vs. Non-Licensed Toys By Supercategory

Share Chg. from 2005 for Licensed 0 +1 +2+1 +6 +1-1 -4 0 +1-4+2


Action Figures Is The Largest Licensed Category By A Wide Margin

13.5

4.3 4.03.5 3.2 3.1 2.9 2.8 2.8 2.8

6%

Top 10 Licensed Categories, % Dollar Share with Dollar Percent Change from 2005-2006

7%25% 10% 21% 22% 3% 37% 25%14%


Kids 0-2 Is Fastest Growing Segment

60%40%

Male Female

Gender

Dollar Share of Licensed Toys by Gender and Age of Recipient, Share Change Annual 2005 v. Annual 2006

+1 pt.-1 pt.

23%

35%18%

10%4% 6% 4%

Age 0-2 Age 3-5 Age 6-8Age 9-11 Age 12-17 Age 18-34Age 35+

Age of Recipient

+1 pt.

-1 pt.

+3 pts.-2


Although Licensed Toys For Boys Was Up Only 1%, Licensed Toys For Ages 2 And 3 Saw A Big Jump

Age Distribution of Licensed Toys for Boys, Annual 2005 and 2006, Dollar Volume (MM)*

Licensed Sales Only, Brand Data Excluded

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

<1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Male 2006

Male 2005

Declines in ages 5-6 mostly due to Star Wars, Yu-Gi-Oh, Batman, Spider-Man and Ninja Turtles. (Video games a factor?)

Declines in ages 11-12 mostly due to Star Wars and New Bright.

Declines in age 8 mostly due to Yu-Gi-Oh and Star Wars.

Gains in ages 2-3 mostly due to Cars, Go Diego Go, Thomas & Friends and Bob the Builder.

Gains in age 9-10 mostly due to Transformers and WWE


Largest Shift In Girls Licensing Was Declines In Girls Ages 2-3

Age Distribution of Licensed Toys for Boys vs. Girls, Annual 2005 and 2006, Dollar Volume (MM)*


$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

<1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Female 2006

Female 2005

Declines in ages 2-3 mostly due to Care Bears, Disney Princess, Cinderella and Mickey & Friends.

Gains in ages 0-1 mostly due to Disney Princess and Sesame Street.

Gains in age 4 mostly due to Barbie and Little Mermaid.

Declines in ages 5-6 mostly due to Care Bears, Strawberry Shortcake and Cabbage Patch.


Boys Beat Out Girls In All Groups Except Age 2, Still Revealing A Lot Of Opportunity For Girl’s Licensing

Age Distribution of Licensed Toys for Boys vs. Girls, Annual 2006, Dollar Volume (MM)


$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

<1year

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Male

Female

Age 3Age 2

Gap is $748MM

Gap is $23MM


Half Of The Top 10 Manufacturers Of Licensed Toys Have 50% Or More Of Their Portfolio Tied To Licenses

$585

$533

$189

$169

$136

$135

$131

$130

$814

$124

Fisher-Price (Mattel)

Mattel

Hasbro Toys

Play Along (JAKKS)

Bandai America

Toy Biz

LEGO Systems

JAKKS Pacific

Hasbro Games

Learning Curve Toys(RC2)

% of Total Sales LicensedLicensed Dollar Volume (MM)

44%

32%

35%

66%

84%

95%

33%

80%

17%

92%

Top 10 Manufacturers for Licensed Toys, Ranked on Annual 2006 Licensed Dollar Sales


Half Of The Top 10 Licensors Showed Growth

$782

$432

$315

$315

$293

$271

$257

$26

$1,279

$24

Disney

Nickelodeon

Lucas Licensing

HIT Entertainment

4Kids Entertainment

Sesame Workshop

Warner Bros.

Marvel Enterprises

DIC Entertainment

Universal

% Chg. ’06 vs. ‘05Dollar Volume (MM)

41%

46%

-27%

7%

-35%

46%

-13%

-22%

-38%

108%

Top 10 Licensors, Ranked on Annual 2006 Dollar Sales


8%

95%

87%

6%

92%

88%

53%

97%

49%

92%

13%

54%

94%

12%

47%

60%

51%

7%

46%

3%

93%

8%

5%

40%

Total Toy Industry

All Licenses

Dora the Explorer

Star Wars

Cars the Movie

Sesame Street

Disney Princess

Thomas and Friends

Barbie

Spider-Man

SpongeBob SquarePants

Power Rangers

Male Female

Licensed Sales Only, Brand Data ExcludedTop 10 Licenses, Gender of Recipient, Dollar Share Annual 2006

With Few Exceptions, Top Licenses Are Gender Specific


Star Wars Impact On Most Top Boys Properties Was Forceful

$196

$149

$101

$99

$89

$84

$80

$68

$263

$61

Spider-Man

Hot Wheels

Yu-Gi-Oh

Power Rangers

Crayola

LeapPad

Ninja Turtles

Thomas and Friends

Tyco R/C

Tonka

Post Star WarsRanking

(Apr’05-Mar’06)

Apr’05-Mar’06 vs. Apr’04-Mar’05

% ChangeDollar Volume Apr’04-Mar’05 (MM)

6

2

9

7

5

16

11

4

18

10

-61%

-10%

-55%

-11%

8%

-50%

-26%

38%

-40%

9%

Top 10 Properties for Boys Ages 3-8, Apr’04-Mar’05, Ranked on Dollar Sales

Star Wars movie premiered 5/19/05Source: The NPD Group / Consumer Tracking Service

Cars Rolled Over The Competition; Thomas Chugged Along and Crayola Survived

$85

$81

$81

$62

$60

$55

$51

$42

$99

$39

Hot Wheel

Star Wars

Batman

Thomas and Friends

Spider-Man

Crayola

V.Smile

Power Rangers

Tonka

Ninja Turtles

Post Cars the MovieRanking (5/06-1/07)

May’06-Jan’07 vs. YAG% ChangeDollar Volume (MM)

3

9

22

2

6

4

5

8

15

43

-19%

-52%

-77%

29%

-24%

0%

-14%

-9%

-35%

-75%

Top 10 Properties for Boys Ages 3-5, May’05-Jan’06, Ranked on Dollar Sales


Leveraging The Opportunities In Licensing

Girls, Girls, Girls Crowded boys market in 2007, but what about after that? More new kids in the U.S.

Investigate thoroughly what’s coming in and going out in years ahead and seize opportunities

Consider entering areas that are not penetrated with licenses where it makes sense

Understand which manufacturers are best by age, gender and product category

In most cases, pick a gender In most cases, develop toys across broad age range but target

those groups with the appropriate toys

Movies

February 16 – Ghost Rider – Hasbro

March 30 – Ninja Turtles – Playmates

May 4 – Spider-Man 3 – Hasbro

May 18 – Shrek 3 – MGA Entertainment

May 25 – Pirates of the Caribbean – Zizzle

June 15 – Fantastic Four – Hasbro

June 29 – Ratatouille – Fisher-Price

July 4 – Transformers – Hasbro

July 13 – Harry Potter – Mattel

July 27 – The Simpsons – McFarlane

August 10 – Bratz: The Movie – MGA Entertainment

So, Wuz ^ With Kids?

Wuz ^ With Kids?

0

10

20

30

40

50

60

70

80

90

100

Age 2-4 Age 5-6 Age 7-8 Age 9-10 Age 11-12

Source: The NPD Group / Kids Leisure Time II

Play With Toys and/or Board Games

Kids Of All Ages Are Watching TV/Movies

0

10

20

30

40

50

60

70

80

90

100



Watch TV or Movies

12 hours/ week14

hours/ week

Top 2006 VHS/DVD Sales With Kids <12 As Primary Viewers

Tops In Movies

Source: The NPD Group, Inc/ VideoWatch

http://www.amazon.com/gp/product/images/B00005JNS0/ref=dp_image_0/102-4756833-6578551?ie=UTF8&n=130&s=dvd

http://www.amazon.com/gp/product/images/B000DWMYQ8/ref=dp_image_0/102-4756833-6578551?ie=UTF8&n=130&s=dvd

http://www.amazon.com/gp/product/images/B00005JO1X/ref=dp_image_0/102-4756833-6578551?ie=UTF8&n=130&s=dvd

http://www.amazon.com/gp/product/images/B000H7JCK0/ref=dp_image_0/102-4756833-6578551?ie=UTF8&n=130&s=dvd

http://www.amazon.com/gp/product/images/B000E6EK2Y/ref=dp_image_0/102-4756833-6578551?ie=UTF8&n=130&s=dvd

http://www.amazon.com/gp/product/images/B000GUJZ00/ref=dp_image_0/102-4756833-6578551?ie=UTF8&n=130&s=dvd

http://www.amazon.com/gp/product/images/B00001QEE7/ref=dp_image_0/102-4756833-6578551?ie=UTF8&n=130&s=dvd

http://www.amazon.com/gp/product/images/B00005JNX0/ref=dp_image_0/102-4756833-6578551?ie=UTF8&n=130&s=dvd

http://www.amazon.com/gp/product/images/B00005JO20/ref=dp_image_0/102-4756833-6578551?ie=UTF8&n=130&s=dvd

Listening to Music, Penetration

68%

54%

64%67%

80%



8 hours/ week10

hours/ week

Top Music Artists (CD)

Source: Kids Market Monitor – 2006 Kids Ages 12 & Under

http://www.amazon.com/gp/product/images/B000H4VV52/sr=1-1/qid=1173451378/ref=dp_image_0/102-6088585-2964942?ie=UTF8&n=5174&s=music&qid=1173451378&sr=1-1

http://www.amazon.com/gp/product/images/B0002OERI0/sr=1-1/qid=1173451631/ref=dp_image_0/102-6088585-2964942?ie=UTF8&n=5174&s=music&qid=1173451631&sr=1-1

http://www.amazon.com/gp/product/images/B000ILYYI0/sr=1-1/qid=1173451665/ref=dp_image_0/102-6088585-2964942?ie=UTF8&n=5174&s=music&qid=1173451665&sr=1-1

http://www.amazon.com/gp/product/images/B000H30MYY/sr=1-1/qid=1173451700/ref=dp_image_0/102-6088585-2964942?ie=UTF8&n=5174&s=music&qid=1173451700&sr=1-1

http://www.amazon.com/gp/product/images/B000CCXCTW/sr=1-1/qid=1173451760/ref=dp_image_0/102-6088585-2964942?ie=UTF8&n=5174&s=music&qid=1173451760&sr=1-1

http://www.amazon.com/gp/product/images/B000K2V7BY/sr=1-1/qid=1173451787/ref=dp_image_0/102-6088585-2964942?ie=UTF8&n=5174&s=music&qid=1173451787&sr=1-1

http://www.amazon.com/gp/product/images/B0000A03AA/sr=1-2/qid=1173451811/ref=dp_image_0/102-6088585-2964942?ie=UTF8&n=5174&s=music&qid=1173451811&sr=1-2

http://www.amazon.com/gp/product/images/B000BGR18W/sr=1-1/qid=1173451852/ref=dp_image_0/102-6088585-2964942?ie=UTF8&n=5174&s=music&qid=1173451852&sr=1-1

http://www.amazon.com/gp/product/images/B000EUMPBS/sr=1-1/qid=1173451886/ref=dp_image_0/102-6088585-2964942?ie=UTF8&n=5174&s=music&qid=1173451886&sr=1-1

Let’s Go Shopping!

0

10

20

30

40

50

60

70

80

90

100



Shopping/ Errands

4.7 hours/ week5 ½

hours/ week

Where Are Kids Age 12 & Under Getting Their Stuff?

Toys

Video Games

Apparel

Footwear

Movie Videos

Music CD’s

Source: Kids Market Monitor – 2006 Kids Ages 12 & Under

Computer Usage, Penetration (Not Homework Related)

31%

81%

57%

68%

79%



Overall Kids’ Favorite Websites (Ages 2-14)

Source: The NPD Group / Kids & Digital Content, Verbatim Responses, Ranking Only

Video Game Playing, Penetration

19%

68%

74%77%

58%



The Video Games Industry Breaks New Records

0

2

4

6

8

10

12

14

2004 2005 2006

Dollar Sales, Billions

$11.0B $11.5B

$13.5B

PC Games SoftwareVG Accessories

VG Hardware

VG Software

+43%

+6%

+19%

+1%

Retail games Industry sales

grew 18% overall(+$2B)

Source: The NPD Group / Video Games

PS2 & Nintendo DS Rule for the 12 & Under Crowd

26.7

0% 20% 40% 60% 80% 100%

2005

2006 PS2

GBA

Nintendo DSGameCube

PSP

Xbox

Xbox 360Wii


Platform Unit Share, Kids 12 & Under, 2006

66%

67%

The Total Market Expands but Kids’ Share Decreases

27%

9.03

21%15%

16%

12%

7& Under Tweens 8-12 Teens 13-17Y/A 18-24 24-34 35+

2005:$10.5B 36%

Dollar Share, Total Video Games Industry


9%

2006:$12.5B

26%

9.03

20%18%

15%

13%

34%

8%

Source: The NPD Group, Inc./Consumer Information

Top Games For Kids 12 & Under In 2006

Wuz ^ With Kids?

0

10

20

30

40

50

60

70

80

90

100


Play with toys and/or board games Watch TV or movies

Listen to music Shopping/errands

Use computer, not homework related Play video games


The Building Blocks Are In Place

• Industry on the upswing

• Innovation has paid off

• Core consumer is growing

• Birthrates going up

• Wal-Mart, Toys R Us, Target

• Properties stable

• Big movie year

Thank You

state of the toy industry april 3, 2007 annual 2006 data

Documents

toys toys

data slide

place slide

agenda slide

supercategory overview

kids source

flat pos slide

dollar sales