<story><title>Why are toys such a bad business?</title><url>https://diff.substack.com/p/why-are-toys-such-a-bad-business</url></story><parent_chain><item><author>ethbro</author><text>Because most toy companies don&amp;#x27;t &amp;#x2F; can&amp;#x27;t understand vertical integration and increasing value capture.&lt;p&gt;Or, in other words, they don&amp;#x27;t have their own version of this strategy chart: &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;johnaugust.com&amp;#x2F;wp-content&amp;#x2F;uploads&amp;#x2F;2014&amp;#x2F;07&amp;#x2F;disney_chart.jpg&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;johnaugust.com&amp;#x2F;wp-content&amp;#x2F;uploads&amp;#x2F;2014&amp;#x2F;07&amp;#x2F;disney_cha...&lt;/a&gt; (Disney corporate synergy, dated 1957)&lt;p&gt;Your primary consumer has the attention span of a 10-year-old, and no disposable income. Why are we surprised this is a terrible industry?&lt;p&gt;A smarter approach would be what Tim Sweeney is talking about with Fortnite (and Amazon infamously does): you have to do everything you can to pivot any initial success into a durable advantage, by aggressively expanding into adjacent opportunities, even if they&amp;#x27;re very different businesses (e.g. movie theaters).&lt;p&gt;They&amp;#x27;ve made token moves towards this with the physical toy + computer game mash-up genre, but from an external perspective I don&amp;#x27;t think any of them quite &lt;i&gt;get&lt;/i&gt; how it&amp;#x27;s supposed to work. Efforts seem under -capitalized &amp;#x2F; -resourced &amp;#x2F; -inspired.</text></item></parent_chain><comment><author>philwelch</author><text>&amp;gt; Or, in other words, they don&amp;#x27;t have their own version of this strategy chart: &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;johnaugust.com&amp;#x2F;wp-content&amp;#x2F;uploads&amp;#x2F;2014&amp;#x2F;07&amp;#x2F;disney_cha..&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;johnaugust.com&amp;#x2F;wp-content&amp;#x2F;uploads&amp;#x2F;2014&amp;#x2F;07&amp;#x2F;disney_cha...&lt;/a&gt;. (Disney corporate synergy, dated 1957)&lt;p&gt;I really love that chart because it tells you so much about the company culture that drew it up. Almost any other company would draw this diagram in some depressingly corporate way, but Disney drew it as a cartoon with little characters running around. It&amp;#x27;s a corporate strategy, expressed in concrete terms, in a way that demonstrates that the company was still run by artists.</text></comment>
<story><title>Why are toys such a bad business?</title><url>https://diff.substack.com/p/why-are-toys-such-a-bad-business</url></story><parent_chain><item><author>ethbro</author><text>Because most toy companies don&amp;#x27;t &amp;#x2F; can&amp;#x27;t understand vertical integration and increasing value capture.&lt;p&gt;Or, in other words, they don&amp;#x27;t have their own version of this strategy chart: &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;johnaugust.com&amp;#x2F;wp-content&amp;#x2F;uploads&amp;#x2F;2014&amp;#x2F;07&amp;#x2F;disney_chart.jpg&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;johnaugust.com&amp;#x2F;wp-content&amp;#x2F;uploads&amp;#x2F;2014&amp;#x2F;07&amp;#x2F;disney_cha...&lt;/a&gt; (Disney corporate synergy, dated 1957)&lt;p&gt;Your primary consumer has the attention span of a 10-year-old, and no disposable income. Why are we surprised this is a terrible industry?&lt;p&gt;A smarter approach would be what Tim Sweeney is talking about with Fortnite (and Amazon infamously does): you have to do everything you can to pivot any initial success into a durable advantage, by aggressively expanding into adjacent opportunities, even if they&amp;#x27;re very different businesses (e.g. movie theaters).&lt;p&gt;They&amp;#x27;ve made token moves towards this with the physical toy + computer game mash-up genre, but from an external perspective I don&amp;#x27;t think any of them quite &lt;i&gt;get&lt;/i&gt; how it&amp;#x27;s supposed to work. Efforts seem under -capitalized &amp;#x2F; -resourced &amp;#x2F; -inspired.</text></item></parent_chain><comment><author>fanf2</author><text>The most common example of being in two businesses is the toy&amp;#x2F;cartoon pairing, e.g. Transformers or He Man or My Little Pony or Care Bears. These work well because you can keep selling the cartoons on repeat for years, and they act as ads for the toys.</text></comment>