Toy Industry Looks to YouTube Talent for Next Generation of Merchandise

YouTube stars such as Stevin “Blippi” John draw retailers’ interest as children seek products based on what they watch online

“Blippi" creator Stevin John holds a "surprise box" toy.

Photo: Jazwares Inc.

Children used to want toys based on their favorite movies and TV shows, whether it was “Star Wars,” “My Little Pony” or “Teenage Mutant Ninja Turtles.”

Those remain in demand—witness the interest in the so-called Baby Yoda character from the Star Wars series “The Mandalorian,” or anything from “Frozen II”—but more recently, kids have also been seeking out toys and other merchandise based on their favorite YouTube stars and channels. That has manufacturers and retailers working with new kinds of companies on toys and playthings to sell.

Jazwares LLC, which makes toys and other consumer products based on licensed properties such as “Fortnite” and “Peppa Pig,” will release merchandise based on three YouTube properties in 2020: Blippi, a preschool education-and-entertainment character with more than 21 million subscribers on the video platform; toy-unboxing and reviews channel CKN Toys, which has 14.7 million subscribers; and Cocomelon, a channel known for nursery rhymes, which has 74 million subscribers.

For Blippi, Jazwares has created a line of items that include a “My Buddy Blippi” plush toy featuring 15 of the character’s sounds and phrases, toy vehicles and “surprise boxes” aimed at helping children count or learn colors by putting accessories inside numbered or colored boxes.

Other YouTube kids programmers that have struck new toy licensing deals include Moonbug Entertainment Ltd. and YouTube stars Collins and Devan Key.

The deals come as the industry has gathered for Toy Fair New York, one of its biggest trade shows, which is taking place through Tuesday.

The toy industry’s growing interest in online talent is based on the fact that YouTube is where many kids are going to watch videos, said Laura Zebersky, chief commercial officer of Jazwares.

“The world has changed and you will see properties ranging from ‘Fortnite’ to influencers on YouTube who are leading and competing against movies and TV shows on a day-to-day basis,” she said.

Stars on YouTube, a unit of Alphabet Inc.’s Google, are also proving capable of getting fans to go beyond watching videos and actually purchase items—or get their parents to do so.

Revenue for the Blippi brand, excluding YouTube ad revenue, is projected to hit $30 million in 2020, according to people familiar with the matter. That spans toys, apparel, books and other sources of revenue outside of YouTube advertising.

Before the deal with Jazwares, Stevin John, the creator and performer behind Blippi, was already selling merchandise directly on his website, a business that was bringing in low-seven figures in annual revenue, he said.

“A lot of people in the toy industry are looking at YouTube brands to see if they’re going to be the new thing,” Mr. John said. “It was nice for me that I had already decided to do merch on Blippi.com. I was able to show that there are people out there who are purchasing these things.”

Based on early sales, Blippi is on track to be Jazwares’ largest new preschool launch of the year, the company said, though it declined to provide exact figures.

Jazwares’ Blippi items include figures, plush toys and vehicles priced from $3.99 to $19.99. The items were released through Walmart Inc. and Amazon.com Inc. in the U.S. in early January, as well as through other retailers in the U.K. A Walmart spokeswoman said Blippi toys are popular, but she declined to provide sales figures. A test of Blippi products on Amazon at the end of last year sold thousands of units in days, Ms. Zebersky said.

The North Star for many in the toy industry isRyan Kaji, the 8-year-old performer at the center of the “Ryan’s World” YouTube channel, which has more than 24 million subscribers. Retail sales for Ryan-branded products hit $200 million in 2019, according to pocket.watch, a studio that represents Ryan. The channel has also led to a TV series with ViacomCBS Inc.’s Nickelodeon.

“Three years ago, we might not have even considered [YouTube stars],” said Anne Marie Kehoe, vice president of toys at Walmart. “Now, based on the success of Ryan and understanding what kids are coming in for, we’re committing space to putting [Blippi and other YouTube-based toys] in stores.”

For YouTube stars, toys and other consumer products offer an opportunity to make money that goes beyond advertising.

Top YouTube channels are striking toy and merchandising deals on terms in the middle of the pack for the industry, according to a person familiar with such deals.

Advances on toys and merchandising deals can range between $50,000 and $1 million, with guarantees as high as $250,000 to $3 million, the person said. Royalties are usually 10% to 20% of sales, this person said.

The toy industry itself had a down year in 2019, with U.S. retail sales of toys hitting $20.9 billion, a decline from $21.8 billion in 2018, according to market research firm the NPD Group.

Some of that 4% drop can be attributed to the length of last year’s holiday-shopping season, which had six fewer days between Thanksgiving and Christmas, said Jackie Breyer, group publisher of publications The Toy Book, The Toy Insider and The Pop Insider.

Other factors include Toys “R” Us Inc. going out of business: The retail toy giant filed for bankruptcy in 2017 and shuttered its stores the following year.

The company’s closure affected toy sales, Ms. Breyer said. “Not all of the sales have shifted to other retailers, completely,” she said.

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