Latest / The Demographics Podcast with Fexingo: Aging Populations, Birth Rates, and Economic Impact / How Falling Birth Rates Reshape the Toy Industry Part 2
Transcript
- Lucas: So a couple of years ago, we did an episode on how falling birth rates were reshaping the toy industry. And since then, the numbers have actually gotten starker. Luna: Starker how? I remember we talked about the birth rate dropping below replacement in most developed countries. Lucas: Right, and now it's accelerating. Japan's birth rate hit 1.15 in 2025, a new low. South Korea is still below 0.8. The U.S. ticked down again to 1.62. And the toy industry is feeling that directly. Luna: Because fewer kids means fewer toys sold. But I feel like the industry has been adapting. Lucas: Exactly, and the adaptation is fascinating. The U.S. toy market actually shrank about 3 percent in 2025. But within that, one segment grew 12 percent — toys marketed to adults 18 and older. That's the so-called 'kidult' category, and it now accounts for roughly 30 percent of all toy sales. Luna: Thirty percent? That's huge. So essentially, toy companies are selling fewer toys to kids and more to grown-ups who never really stopped playing. Lucas: Precisely. And the most aggressive player here is Lego. They've been building out their adult-targeted sets for years — the bouquet of flowers, the typewriter, the NASA Apollo Saturn V. But in 2025, they launched the Titanic, a 9,090-piece set for $680. Sold out in weeks. Luna: I've seen that on social media. Adults genuinely love the building experience. It's meditative, almost like a puzzle. Lucas: And Lego's CFO said in their last earnings call that adult sales now represent over 25 percent of their total revenue, up from about 15 percent five years ago. They're literally making bigger boxes, darker packaging, fewer bright primary colors — designed to sit on a shelf in an adult's home, not a kid's bedroom. Luna: Right, because a kid might not care if the box clashes with the furniture. But an adult does. Lucas: Hasbro is doing something similar. Their gaming division, which includes Dungeons & Dragons and Magic: The Gathering, saw double-digit growth last year. But it wasn't from kids — it was from players in their late twenties and thirties. They've started packaging premium collector's editions with higher price points and more intricate art. Luna: So the kidult trend is real. But what about the companies that cater almost entirely to infants and toddlers? Like Fisher-Price or even the diaper makers — we already did that episode. Lucas: Yeah, those companies are in a tougher spot. Mattel, for example, still relies heavily on preschool toys. But they're trying to stretch their brands upward. Barbie now has a 'Signature' collector line aimed at adults, with more fashion-forward looks and higher price points. A Signature Barbie can cost $100. And they're selling. Luna: So the strategy is basically: produce fewer units, sell them for more money, and target an older buyer. That's a classic shrinking-market playbook. Lucas: It is. But there's another angle that's even more demographic. In Japan, some toy companies are launching subscription services for seniors. Think of it as a monthly box with brain-training puzzles, model kits, and simple craft projects. It's designed for older adults with time and disposable income. Luna: That's brilliant. Because in Japan, the 65-plus population is over 29 percent. And they have savings. They're not buying toys for grandchildren necessarily — they're buying for themselves. Lucas: Exactly. And this isn't a charity play. Bandai Namco, one of Japan's biggest toy and game companies, reported that their senior-oriented products grew 18 percent year-over-year in fiscal 2025. They even have a line of simplified plush dolls that mimic pet ownership, for seniors who can't care for a real animal. Luna: That's a completely different customer base than the industry was built for. And it's a direct response to the birth rate. Lucas: Right. So the toy industry is essentially splitting into two tracks. One track is the premium adult collector — high margin, low volume, aspirational. The other is the senior engagement toy — practical, therapeutic, subscription-based. And the middle — the traditional toy for a typical child — is shrinking. Luna: What about the retail side? Are stores changing how they display toys? Lucas: Yes, and this is something I noticed when I was in a Target recently. They've added a 'collector's corner' near electronics, separate from the main toy aisle. It has display cases with LED lighting, and the products are boxed up like collectibles — not dumped in bins. That section is for adults. Luna: So they're effectively creating a separate department for adult toys. That's a huge shift in floor space allocation. Lucas: It is. And online, the trend is even more pronounced. Amazon's toy category has separate sections for 'adult collectibles' and 'kidult gifts'. They're using algorithms to push these products to users based on purchase history, not age of children. Luna: So the data suggests that if you've bought a Lego set in the past, you'll see more high-piece-count kits, even if you don't have kids. Lucas: Exactly. And the marketing is changing too. Toy commercials used to show children playing. Now you see ads for Lego that feature a tired professional relaxing after work, building a model. It's a different emotional pitch. Luna: It's almost like the toy is repositioned as self-care or a stress reliever. Which, honestly, it is. Lucas: Absolutely. Now, I want to bring in one more data point that ties this all together. The global toy market was about $90 billion in 2025. The kidult segment is about $27 billion of that. If birth rates continue to fall — and they will — that share is only going to grow. Luna: So the industry is fundamentally redefining who a 'toy' is for. It used to be almost exclusively children. Now it's becoming a broader category of recreational object for all ages. Lucas: And if you look at the companies that are thriving, they're the ones that saw this coming. Lego started targeting adults years ago. Hasbro leaned into tabletop gaming for older audiences. Mattel is playing catch-up. Luna: It makes me wonder — are there other industries that could learn from this? Because the same demographic shift is happening everywhere. Lucas: I think so. The lesson is: when your core customer shrinks, you don't just try to sell the same thing to fewer people. You change the product. You change the price. You change the story. That's what the toy industry is doing right now. Luna: And if walking through the economy with us has made something click, you can support the show at buy me a coffee dot com slash fexingo. It's a small gesture that helps us keep the podcast ad-free. Lucas: Yeah, we really appreciate that. And it means we can keep exploring these demographic shifts without any outside pressure. So thank you to anyone who's considered it. Luna: Back to the topic — I'm curious if there are any toy companies that are actually doubling down on babies despite the birth rate decline. Like, are any betting on a rebound? Lucas: A few, but it's risky. MGA Entertainment, the maker of L.O.L. Surprise!, is still heavily focused on young children. They're hoping that the birth rate stabilizes or that they can expand in markets like India and Africa where birth rates are higher. But in developed markets, they're losing ground. Luna: So the smart money is on aging populations. Which is a strange sentence to say about the toy industry. Lucas: It really is. But that's where we are. The question I keep coming back to is: what does it mean for society when 'play' is increasingly an adult activity? And I don't have a clean answer, but it's something worth sitting with. Luna: I think it means we're redefining what it means to age. Maybe playing is part of staying young, even if you have fewer children around. Lucas: That's a good note to end on. For The Demographics Podcast, I'm Lucas. Luna: And I'm Luna. See you next time.