New Versions of Old Playthings at Trade Fair

Furby’s sporting six new colors, Ernie and Elmo are ready to rock ‘n’ roll, Barbie’s celebrating her 40th birthday.

Updated versions of these familiar lines, along with thousands of new toys, will take center stage next week at the American International Toy Fair. The annual trade show in New York is expected to attract 20,000 buyers and 1,700 exhibitors. The fair starts Monday and will run until Feb. 15.

Once again, Hasbro and Mattel, the world’s two largest toy manufacturers, have the lion’s share of the products generating the most buzz at the fair.

The 1999 lineup will feature numerous high-tech toys. Mattel and Intel have teamed up to create the $100 X3 Microscope, which lets kids magnify bugs and other objects and view the images on their personal computers. Using a digital video camera, the $80 Me2Cam, another Mattel-Intel creation, allows children to transfer images to computer games.

“The focus is on digital imaging,” said Doug Glen, Mattel’s chief strategy officer. “This partnership with Intel is ongoing. Each year, you’ll be seeing more and more products like these.”

Many in the industry, however, believe Hasbro’s “Star Wars” line will be the closest thing to a sure hit. This year, Hasbro’s revenue tied to the franchise is expected to more than double, to about $600 million, said Jill Krutick, an analyst at Salomon Smith Barney.

“If there’s any movie you want to be associated with, it’s ‘Star Wars,’ ” she said.

The toys will land on store shelves a few weeks before the late-May debut of the prequel “Episode I: The Phantom Menace.” Hasbro isn’t letting the media view the coveted collection; buyers are allowed to see the toys, but they’re required to sign confidentiality agreements promising not to reveal details about what they see.

“We’re keeping the toys secret to help build the excitement around the film,” said Hasbro spokesman Wayne Charness.

Despite the optimism behind such toys, it’s a tenuous time for toy makers.

Significant inventory cutbacks at major retailers such as Toys R Us prompted flat sales last year. Wholesale shipments of toys declined 0.3% to $15.2 billion, according to the Toy Manufacturers of America. The trade group predicted only a modest 2% to 3% growth of traditional toys in 1999.

Among last year’s hardest-hit categories were action figures and virtual pets. Action-figure sales fell from $1.05 billion to $907 million in 1998, while sales of virtual pets, such as Tamagotchi and Giga Pets, dropped from $206 million to $45 million.

David Miller, president of the Toy Manufacturers of America, attributed part of the industry’s problems to failed licensing efforts.

“A highly promoted movie doesn’t necessarily translate to high ticket sales or to high toy sales,” he said.

Even hit films such as “A Bug’s Life” didn’t result in blockbuster toy sales.

While “Star Wars” toys remained hidden behind black curtains at Hasbro’s Manhattan showroom, Furby was quite visible at Tiger Electronics, a division of Hasbro. The mad rush for the $35 interactive plush toy last Christmas helped boost Hasbro’s fourth-quarter profit 18%, the company said.

Because many toys tend to be one-year wonders, the folks at Tiger are trying to keep the Furby momentum alive by expanding the line.

Furby Babies, miniature versions of the original pet, are targeted at the preschool set. And along with Furby’s six new colors, four limited-edition Furbys will be sold at different times of the year.

Mattel also is trying to repeat the past successes of its Sing ‘N Snore Ernie and Tickle Me Elmo, with the latest Sesame Street toy, Rock & Roll Elmo & Ernie. Decked out in faux-leather jackets, the characters sing tunes such as “Rock Around the Clock” and “ABC.” They also belt out rap versions of the songs.

Also in the preschool category, Mattel believes its Chat Pals could become a sleeper hit. Using radio frequencies, Winnie the Pooh and Tigger talk with children and each other, turning their heads in the direction of the speaker.

Mattel is hoping to cash in on Barbie’s 40th birthday with events and collectible dolls. The El Segundo-based toy maker, which saw its fourth-quarter profit drop 67%, also will introduce dolls of celebrities such as Lucille Ball, Elvis Presley and Elizabeth Taylor.

“Overall industry trends remain difficult,” said analyst Krutick. “Hasbro has more product momentum, but long-term, Mattel looks attractive.”