MGA Entertainment: A privately-owned toy company doing billions in revenue

https://julieyoung.substack.com/p/insane-companies-no-one-talks-about

by dsr12 • 6 years ago

152 100 6 years ago

julieyoung.substack.com

Just want to highlight the fact that manufacturing huge volumes of cheap plastic toys is not necessarily something to be celebrated.

bluedevil2k2• 6 years ago

Moral police alert!! Care to expand on your condemnation of the company? Or is this just a random “big companies are evil” kind of negative comment?

ireflect• 6 years ago

For many kids, this kind of toy has a short window of novelty and then waits in a closet until its time comes to go to the landfill. We should be extra skeptical of consumerism that targets children. I think that’s what GP was getting at.

TaylorAlexander5• 6 years ago

I think I made myself clear. Manufacturing huge volumes of cheap plastic is currently a very ecologically damaging thing. Since my home town is currently engulfed in flames I have been thinking a lot about human impact on the climate. And it feels increasingly shortsighted to read articles that say “wow look at all the money this person made” without addressing the ecological impact of their work. Some toy companies make long lasting toys from 100 percent post consumer recycled plastics with minimal packaging. But this guy who made billions probably did it with big shipments of virgin plastic made from who knows where.

I see no reason why highlighting the effects of such businesses should be condemned here. I wanted to temper some of the euphoria that comes to us Silicon Valley types when billions in revenue comes up.

kgraves2• 6 years ago

Why?

At least they aren't yet another subscription company ever. Let the kids have their toys.

TaylorAlexander5• 6 years ago

Plastic waste is a major ecological problem.

https://youtu.be/c8aVYb-a7Uw

maxden• 6 years ago

"We need to make the ultimate unboxing toy." from the article certainly makes that worse too.

zuppy2• 6 years ago

that’s not supposed to be interesting for you, but for a kid. and belive me it is, you can see it in their eyes. how they shine after you get the first paper printed clue (that is hidden before one of the layers), how they can’t wait for you to help them remove the others and the final joy when they find a new toy (and there are many different dolls, you will find new ones pretty often).

do i like it? yes and no, all i’m thinking of while unboxing is of how much plastic is wasted, but this in not for the kid to worry

bitwize2• 6 years ago

As noted in the article, this was the company also responsible for Bratz, the 2000s (decade) fashion-doll phenomenon that served as the Sonic to Barbie's Mario: hipper, edgier, and ultimately flash-in-the-pan-ier. They're like experts at no-holds-barred marketing to kids.

agency• 6 years ago

Yeah the focus on making the “perfect unboxing you” is a brilliant business move but it’s kind of dystopian. Just imagining all these kids watching endless algorithm-recommended unboxing videos.

bitwize2• 6 years ago

One need not imagine this. Round about the same time as the ElsaGate phenomenon (and often lumped in with it) was a series of unusual YouTube videos that featured adults unwrapping Kinder Surprise and other such small toys, over and over. Kids were supposedly transfixed and would stare slack-jawed at the screen, waiting for the next toy to be revealed seconds after the last one was. Presumably, LOL Surprise capitalizes on this phenomenon as well. To be honest, I don't see the appeal and find the naked attempt to capture children's eyeballs worrisome.

Now if you will excuse me, I'm going to go watch LGR unpack a new-old-stock 286 and attempt to boot Commander Keen on it...

donw11• 6 years ago

There's a lot of great lessons here.

(1) Billion-dollar companies are often built on products that consumers don't know what they want, until they see and experience it.

Plenty of MP3 players pre-dated the iPod. But the iPod changed the market and put Apple back on the game board.

The iPod had an experience, the form-factor, the capacity, and the horizontal integration -- being able to buy music directly on iTunes -- and once you experienced it, you realized that this was just better.

(2) Find your blind spots and fix them.

A wide variety of dolls, covering the full palette of skin colors, opened up a huge market for all the girls that didn't just want an Industry Standard Barbie Available In One Skin Tone.

Rhianna had the same problem -- she could never find makeup that worked with her skin color. So she introduced her own makeup brand -- marketed as being for all women -- which is now valued in excess of three billion dollars.

We see this a lot in Japan, by the way -- Silicon Valley companies come here, and engage in what I would say are aggressive levels of cultural ignorance.

(3) Recognize the context around your customers.

MGA recognized that Kids These Days spend a lot of time on YouTube, so they built a product designed to be YouTubed.

Glock is a great example of this. The founder, Gaston Glock, didn't come from a gunsmithing or firearms manufacturing background.

To create the first Glock pistol, Gaston put together a cross-functional working group, including metallurgists, plastic-manufacturing specialists, and members of the Austrian police and military that would actually use the design.

Focusing on how the pistol would be used -- from both a tactical and logistical standpoint -- they created something which was a total departure from everything else on the market. A completely integrated safety system. Tool-less takedown and reassembly. Easy maintenance. Most companies require a unique magazine for each different type of pistol -- Glock magazines are totally interchangeable within the same feed mechanism.

Today, Glock is the biggest pistol brand, and every other pistol manufacturer carries Glock-inspired design.

Being able to look at problems from the outside is powerful.

duderific• 6 years ago

#3 makes a lot of sense to me. However, it seems like that could be tricky, because the context is always changing. For example, by the time your product comes out, you could have built it in the context of Snapchat but now everyone is using TikTok.

donw11• 6 years ago

Context shifts at different speeds for different markets.

For teens, keeping up is tough. Fashion moves fast. Nobody is in fisticuffs over Beanie Babies in 2020.

For chefs? Professional and commercial kitchens have evolved they way they have for reasons. Think there was even a front-page article on this a few months ago, actually.

samwestdev3• 6 years ago

We see this a lot in Japan, by the way -- Silicon Valley companies come here, and engage in what I would say are aggressive levels of cultural ignorance.

Any concrete example of this? I'm working in Tokyo right now and I see Japanese companies pretty much engage in anything SV throws this way (stuff like apple, slack, uber eats, github etc etc).

donw11• 6 years ago

Sure!

Apple is a bit of an exception because they created a completely new market -- the smartphone. Japanese companies move slowly, and are hobbled by design-by-committee, so their response to new market entrants is... leisurely.

I'm not sure how that will play out long-term. We'll see where Apple is in twenty years. And Macs are very uncommon, compared to Windows PCs.

SV tech tends to show up at startups, often started by Westerners that have moved here.

That's a common pattern, and if you're in the foreigner bubble, it can be hard to notice.

But in the rest of Japan?

Slack? I'm not sure I actually know any Japanese companies that use it, and the market statistics don't show a lot of grip outside of the US/EU.

Uber Eats is doing well! Especially with COVID-19.

But that's after Uber fell totally flat launching here in Japan. And it remains to be seen if they can hold on to their lead.

It took Uber years of flailing around when they first arrived here, during which they ignored advice like "Japanese taxis are super safe" and "Thumbing your nose at regulators here isn't going to work like it does in the US."

Line totally dominates Japanese instant messaging. It's the WeChat of Japan. Facebook didn't really understand Japanese privacy needs until recently, and I don't see them un-seating Line.

Apple Pay is a second-rate payment system in Japan, and doesn't work if you have a foreign credit card. Japanese banking is... complicated. I once had a gym that outright refused to take my monthly payment on a credit card -- until they realized that my bank and their bank didn't have a "relationship".

Never in the US was I told that, in order to pay for a service, Wells Fargo first needed to take USAA out for dinner and a movie.

Anyhow, Meetup never caught on here, because they didn't understand the market. Gap is around, but they never felt like a major player in the fashion space. None of the education offerings in the US have any traction here.

OpenTable? Nope. You use TableCheck if you want a reservation somewhere.

Overall, I don't see any of the companies on this list[1] having any traction at all here, outside of major players which (a) have invested billions; and (b) took years to understand the local market well enough to adapt their offerings.

And even then... Google still has to to advertise in Japan, and I strongly suspect that Google Maps plays second fiddle to Norikae.

[1] https://en.wikipedia.org/wiki/List_of_companies_based_in_the...

andreareina• 6 years ago

Uber trying to compete with Japanese taxis didn't work very well, at least until I left in 2016.

harpratap2• 6 years ago

You are cherry picking your examples. Uber eats didn't really become popular until the pandemic, I'm not sure if it will even sustain that after things go back to normal because a conbini is good enough most of the times. Uber's ride share never took off in Japan. Slack/Github are tech tools, they don't have much cultural influence because it's not used by general public. Look at iMessage vs Line for example. Or instagram vs Twitter. No lime/bird in Japan, Docomo is trying with Bikeshare since 2011 but it never took off.

iaresee• 6 years ago

Square.

Japan was their first international foray. There were visions of the serene design aesthetics of Square clearing the clutter from countless Japanese shops. It was going to be the perfect society to embrace Square’s vision and form for credit card based payments.

Guess who has a banking system that’s archaic and runs on faxes? And a society that largely eschews credit and credit cards?

It was not the glorious meeting of culture and technology they had envisioned.

The pre-launch research was poor. It was a vanity expansion.

fomine32• 6 years ago

I'd suggest Google Pixel as a example. Pixel 3 was first Pixel in Japan. At launch, they did much advertises but not sold well.

thaumasiotes3• 6 years ago

The iPod had an experience, the form-factor, the capacity, and the horizontal integration -- being able to buy music directly on iTunes -- and once you experienced it, you realized that this was just better.

Well, no. I was given an iPod, used it once, and determined it was worthless. And heavy. By contrast, I intentionally purchased a $30 Zen Stone and used it all the time, to play music in my car. The iPod's form factor, interface, and relation to iTunes are all downsides. The Zen Stone operated like any other USB drive, and you could easily operate it without looking at it.

the-dude• 6 years ago

Yeah, no wireless. Less space than a Nomad. Lame.

twic• 6 years ago

All those things seem like downsides to me too, and as a consequence, i've never owned an iPod.

But clearly, empirically, lots of people love them.

donw writes as if the appeal of an iPod is universal, but maybe this is just another example of their second point - MP3 player manufacturers before Apple had assumed that people want a tiny electronic gizmo that is an almost forgettable adjunct to their PCs, just a way to shovel music from hard disk to ear. Whereas it turned out there was a significant market for a player that was an artifact in its own right.

ericls2• 6 years ago

Isn't this gambling?

smabie3• 6 years ago

Buying dolls is gambling? I'm gonna go with.. no? And even if we contort the definition and say it is, does it matter?

ericls2• 6 years ago

It feel it might not be fair for other participants in gambling industry that are more strictly regulated.

It's like selling drugs that are not yet categorized as drugs.

theshrike79• 6 years ago

They’re not dolls like Barbies are.

You buy them completely sight unseen, like CCG cards or Kinder eggs. They literally come in eggs you open and collect.

bmn__2• 6 years ago

GP refers to the collecting aspect mentioned in the article. Whether it's gambling or not depends on how it's implemented precisely. When a consumer cannot know the probability of obtaining a rare item with a purchase, and must spend an unknown quantity of money to achieve the goal, then – so the argument goes – it is an exploitative manipulation of the mind and breaks anti-gambling laws and anti-consumer regulations.

The digital equivalent ("loot-boxes") has been brought to court in Belgium and restricted/regulated in the EU since. Regulated collecting by purchase shows the probabilities, and allows obtaining a rare item or set for a fixed, predetermined price.

N_A_T_E• 6 years ago

I had a similar thought. Regardless of whether it is legal gambling, the mystery box aspect seems to be a gamification which relies on taking money for each turn to play. Each turn is a random chance at getting something super valuable (a rare, new or previously unowned toy). Looks like the same mechanism as the baseball or Pokémon card packs. I wonder if there is an underground trading market, maybe just ebay.

wnevets• 6 years ago

The lol dolls are just the worst. The amount of waste plastic is insane. Then you have the outright terrible dolls that reveal lingerie when you wet them.

https://www.snopes.com/fact-check/lol-surprise-dolls-water/

kennydude• 6 years ago

Yup, they're so expensive and have multiple layers of waste plastic. And I thought twisty ties were bad enough for packaging things

rl33• 6 years ago

Upon viewing the product video[0], I immediately wondered whether anyone's studied the effects of aggressive jump cuts on child psychology. Turns out, they have! Kind of.[1]

Personally I find jump cuts jarring if not repulsive, emblematic of the "Like and subscribe!" cultural, intellectual wasteland that is most YouTube and Twitch content. It's arguably not healthy for adults, let alone children.

Then again, I grew up watching The Ren & Stimpy Show, so far be it from me to talk.

[0] https://www.youtube.com/watch?v=r9IqcnQ9GQU

[1] https://psycnet.apa.org/record/2012-35066-001

l33tbro2• 6 years ago

I think you mean quick cutting. Jump cuts refer to when the filmmaker uses roughly the same frame size and jumps forward in time. Godard's 'Breathless' being the first prominent use.

rl33• 6 years ago

Jump cuts refer to when the filmmaker uses roughly the same frame size and jumps forward in time.

I believe I was referring to that. YouTube content is notorious for them, and jump cuts are part of the lexicon in that space as a result. There's even a YC company with the namesake.

Fast cutting or quick cutting doesn't have the same-frame restriction as far as I'm aware.

scandox• 6 years ago

I banned unboxing videos for my kids. The only thing I ever had to explicitly ban. I didn't have a big issue with them per se but when I saw the effect on the kids I couldn't allow it.

They were...strung out.

rootsudo• 6 years ago

I come here for these kinds of posts. Informing, interesting, and quite sad in a way.

vmception• 6 years ago

Larian initially did not love the Bratz sketches, saying they looked like aliens. However, his 12 year-old daughter Jasmin was also in the meeting. She was immediately enthralled with the dolls, exclaiming “These are so cool - I need these!”

This is unironically the inclusivity we need. The corporation concept doesn’t exist to satisfy employees’ ego, it exists to access a market.

There should be people with different, unfamiliar backgrounds closer to the market you want to access, in the decision making process.

jfoster• 6 years ago

Sounds like the sketches essentially served as an MVP.

jgalt212• 6 years ago

I suggest you watch the movie Big.

mgh22• 6 years ago

The original article had a long insightful comment- the author has since deleted it (some may have noticed the censoring). I will not be surprised if MGA's attack on Mucciolo's might be deleted as well- as MGA deleted its tweets. Here is a record just in case: https://www.fa-mag.com/news/toy-billionaire-deletes-post-sla...

I detect some biased portrayal on part of the author towards MGA (investment newsletter)- we get that they made a killing on a 'great' product, but its negative implications cannot be understated.

Takeaways:

1. MGA is just profiting from trendy cultural uprisings, without actually believing in any values it embodies- as seen in its attack on Mucciolo

2. MGA is brainwashing girls into following counter-culture examples to fuel #1

So yes, MGA might be an underdog here (that is why the appeal), but not all underdogs are good: portraying as one is just another marketing stunt to accomplish 1 & 2

Note: "Fully developed brain" for girls as described in the article denies the fact that they are more susceptible than the general public to marketing tricks

chrisseaton• 6 years ago

I'm not sure what you think is a 'cultural uprising' or 'counter-cultural' about Bratz dolls? They're mainstream dolls. The article talks about how they were different to the mainstream Barbie... twenty years ago. They were novel before some parents today were born, let alone the children.

ralfd2• 6 years ago

To be fair: MGA claims the design was done before Mucciolo styled herself that way:

https://mobile.twitter.com/MGAEnt/status/1270904973727952897...

And the designer of the doll swearing herself that:

https://pbs.twimg.com/media/EbgLX6wXYAEonlk?format=jpg&name=...

I see the similarity, but I can also belief that it is coincidence. Margot Robbie as Harley Quinn made the twin rope hairstyle 2016 popular and also that colorful neon turquoise.

mgh22• 6 years ago

Nice resource, thanks. If I were MGA, I would not risk the company’s reputation on copying from a freelancer. If I were the freelancer, I will create buzz on social media to gain popularity as a victim. So not sure were the truth lies, but incentives can reveal insights sometimes.

footlose_3815• 6 years ago

Those kids dolls are skimpy and slutty as hell. Literally marketing these barely-dressed dolls to little girls, while seeing this old man smile makes me sick to my stomach.

ralfd2• 6 years ago

People do not really take kids seriously, and they especially do not take young girls seriously. (How many times have you read articles about how great Fortnite is, with no mention of Roblox?

I have never heard of Roblox!

It was discussed though a few days ago here on hacker news I learned through a search. Interestingly through a specific nerdy lense:

https://news.ycombinator.com/item?id=24221010

segmondy• 6 years ago

I work for a privately owned company that has been doing billions for more than a decade. I live 10 miles away and never even heard about them until I started working for them, most people don't that live here don't know about it or what they do. It made me realize and look into businesses that are privately held that are doing well. Killed that idea for me that you need SV or VC funding to scale.

MGA Entertainment: A privately-owned toy company doing billions in revenue

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