So the hundred million dollar question now is... Is this just the first domino that falls on TTL as a genre, or is this just a new opportunity for those that are left?
If you were working on one of these other TTL brands, does this make you more nervous for the future and make you want to get conservative, or does it look like a chance to double down and go bigger???
So, I guess I'd view this differently for each vendor.
Nintendo:
- Nintendo's business model is pretty different. A large portion (perhaps even a notable majority) of their figurines are being sold to 18-40 year olds instead of 6-15 year olds, so they're able to retain price much better, which is important to margins.
- Ignoring Animal Crossing, the games being made for Amiibo are products that Nintendo would be making anyway, so the actual cost of supporting the toy line is way cheaper.
- For the toys that are being sold to children, this is one of the fews ways they can currently engage with them outside of them beyond their video games right now. They want to make TV shows, anime, and film as well, but whatever they can do in the short term to maintain relevance with younger children is helpful.
- Amiibo sales are actually going up IIRC. Hard to come up with a stronger argument than that to keep going.
Activision:
- They made the genre, and Disney Infinity was the biggest thorn in their side, so I feel this helps them significantly. If someone wants to buy their kid a Toys to Life game this Fall that actually leverages the full concept of the genre, they're the only new retail product in town.
- I suspect Activision is much better at controlling costs than Disney, whose experience is limited to making one console game as far as the modern market goes.
- Activision's television and supporting media efforts are starting to come online, and it's hard to imagine that hurting the series. Disney's big advantage was that everyone knows who their characters are, and if Activision can get to that same point, at least among younger children, it should be a big boon to the product.
- Disney is an endlessly larger company than Activision, so any success Activision is seeing in this genre is going to be much more of a boon to them than it was going to be for Disney.
- To be honest, the Activision subdivision of Activision Blizzard has very poor prospects for growth, so killing off one of their only remaining product lines is going to hurt a lot for the subdivision's management, and they will likely try to avoid that at all costs.
Warner Bros:
- They're the only company in town with franchises that people know outside of gaming. This is helpful with appealing to parents who are looking to buy gifts for their children as well as with the children themselves.
- However, by the same token, they're the only making a game without using wholly owned IP. LEGO is a license, as is much of the IP they're using, and presumably they have to pay for the LEGOs they're making at a price notably above cost given they don't manufacture them themselves.
- The licensing model though does mean they can keep adjusting what IPs they're using based on changing tastes in the market. If people stop liking DC super heroes after the DC Cinematic Universe gets through with them, they can still sell consumers Simpsons minifigures.
- Warner Bros is not as big of a company as Disney, and isn't doing super hot either, but they're still a lot bigger than Activision. The success of LEGO Dimensions would be more appealing to them than Disney Infinity is for Disney, but less appealing than Skylanders is for Activision Blizzard.
- LEGOs themselves are not going away, so the idea of the toys themselves being appealing is basically assured for the long term. The prices on LEGOs are also very high even outside the TTL genre, so the audience that's buying them might be more accepting of maintaining a high cost base for the product.
For Nintendo and Activision at least, I'd stay the course and see what happens. For Warner Bros, I think it's a harder business decision, but a lot of that is driven by us having no real public statements on how LEGO Dimensions is doing to judge its success off of. Is it losing lots of money? Well, maybe it's time to ask if it's worth continuing. Is it making lots of money? Hey, the market is now a lot less crowded! Is it breaking even (or thereabouts)? Harder call, though probably worth trying at least one more product, and if not, just wait to see how Skylanders does with no competition and make a call from there.
For new entrants, I wouldn't even bother until it's clear where the genre is heading and if it's going to stick around for the long term. It's already too late to get in on the ground floor anyway.
