Toy industry gets back in the game

updated 1:11 p.m. ET Feb. 9, 2007

NEW YORK - When Spin Master Ltd. started peddling its Air Hogs Zero Gravity vehicle two years ago, retailers doubted whether parents would be willing to pay $59.99 for a radio-controlled toy — even if it climbed walls.

But the item ended up being a hit and was followed by the equally popular $79.99 Storm Launcher. This year, Spin Master is pushing a $110 Robo Copter that transforms from a robot to a helicopter.

“This just proved to us that if it is a great toy, provides a wow and introduces new functions, consumers are willing to spend the money,” said Harold Chizick, vice president of global promotional marketing for the Toronto-based toy maker. “We just decided to step it up.”

For years, the increasing power of discounters like Wal-Mart Stores Inc. kept the toy industry locked in fierce price wars. But the toy makers are encouraged by parents who last holiday were willing to spend $300 on Hasbro Inc.’s robotic Butterscotch pony and $249 for a Mindstorms NXT robotics kit from Lego Systems Inc. As the annual American International Toy Fair starts Sunday, the toy makers are getting bolder when it comes to pushing pricier, higher-quality toys.

Zizzle LLC., which did well with its $300 pinball machines last year, is adding more lights and sounds, and increased the price to $350, according to CEO Roger Shiffman. MGA Entertainment Inc., the maker of the popular funky Bratz doll, is coming out with toys that break the $150 barrier; last year, the threshold was $100.

Among the items at the fair, which features toys expected in stores later this year: Hasbro’s $69.99 Squawkers McCaw Parrot, which repeats words and responds to touch; Mattel Inc.’s Fisher-Price guitar system, priced at $99.99, that plugs into the TV; VTech Holdings Ltd.’s $99.99 Gadget, which functions as a digital photo and video camera and music player; and Spin Master’s $80 Wheels ’n Whistles foam coach.

“This game is about better quality,” said Ronald D. Boire, president of Toys “R” Us’s U.S. toy business. “It is not about plastic by the pound. We have been playing plastic by the pound for way too long.” He said Toys “R” Us will be making a bigger push to carry higher-grade toys.

Consumers’ willingness to spend on toys is helping to revive the toy industry, after struggling for several years with declining sales as kids opted for digital music players and video games.

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