The coronavirus crisis has led to a bloodletting in retail, but one celebrated comic book entrepreneur believes there’s still life in geek culture, as some consumers divert money they would have used for convention travel into collectibles and toys.
Shockwaves stemming from the COVID-19 pandemic have reverberated across industries, with retail companies particularly hard-hit. And it hasn’t been fun and games for the toy industry for some time, with Hasbro (HAS) and Mattel (MAT) under pressure since well before the pandemic.
Yet Todd McFarlane, CEO of McFarlane Toys and creator of the comic book character Spawn, told Yahoo Finance that there is some good news in a beleaguered market. He believes that cancelled comic book conventions mean would-be attendees have extra money to spend since they’re not traveling to major events — or even going out all that much.
“They're spending more under guilty pleasures,” said the artist-turned-entrepreneur. “Instead of spending $40 they'll spend $80 through the internet,” on McFarlane Toys, which is showing up via Target (TGT) and Walmart (WMT).
“They're ordering 300% higher and the velocity of the sell through is coming in about 400% faster,” McFarlane added. “So there might not be going into the store, but they still have the money in their pocket. And they're spending it on the geek level.”
McFarlane Toys just signed a deal with Walmart to roll out a line of exclusive collectibles, and that deal has shown the CEO what retailers are looking for in a product. Among other things, McFarlane has created a generic line of toys.
“Why? Because any CEO for a public company is listening for toys. You give them plastic, lots of it, you give them a great price, and you put a brand name on it, that's a home run, that's a Grand Slam,” he told Yahoo Finance.
“So I'm going to give them a value pack, which is what they're looking for right now. The Walmart buyer’s saying ‘give me value,’” he added.
Funko (FNKO) has been a big beneficiary of geek culture, but has been struggling even before the COVID-19 crisis. McFarlane summed it up as the company relying heavily on “one form factor...and put all their eggs in a basket. Once people tire of that one form factor, you have to come up with another option, [and] they haven't come up with another option.”
The movie effect
With the coronavirus still spreading, there’s now concern that it may linger further into 2020 because of a unique issue in the supply chain: The disruption coronavirus has exerted on Hollywood.
Entertainment giants like Disney (DIS), Warner Brothers (T), Paramount (VIAC) and Sony (SNE) are key to geek culture, McFarlane explained, because “toy makers basically bet their year on those brands.”
With major movies in the deep freeze, “there are no Avengers movies this summer. There are no Wonder Woman movies, they have to bump them. The big sort of branded toy movies that aren’t out there,” the CEO stated.
“So that pain is still yet to come because they're not going to be able to hit their home run this summer and then carry it over into Christmas,” McFarlane added.