Latest / The Demographics Podcast with Fexingo: Aging Populations, Birth Rates, and Economic Impact / How Falling Birth Rates Are Reshaping the Toy Industry
Transcript
- Lucas: So here's something that might surprise you. In 2025, LEGO sold more sets to adults than to children for the first time in its history. That's not a small pivot, that's a seismic shift in a company that basically built its brand on childhood imagination. Luna: Wait, really? I know they've had the adult line for a while, but outselling the kids' line? That's wild. What's driving that? Lucas: A big part is just math. Birth rates have been falling across the developed world for decades, and the toy industry has been feeling that pinch for a long time. So companies like LEGO and Hasbro have had to ask themselves: if there are fewer kids, who do we sell to? And the answer they keep landing on is adults. Luna: So they're not just pivoting, they're chasing a whole new demographic. But isn't that risky? I mean, toys for adults, that's a pretty big cultural shift. Lucas: It is, but the numbers are pretty compelling. The 'kidult' market, which is adults buying toys for themselves, has been growing at a steady clip. In some markets, it's now the fastest-growing segment in the industry. And it's not just LEGO. Hasbro has been pushing its adult-focused lines hard, and even Mattel is repositioning some of its classic brands toward nostalgic adults. Luna: Nostalgia is a hell of a drug. I guess growing up with these brands makes you want to reconnect with them as an adult. But how are they actually marketing to adults? Lucas: That's where it gets really interesting. Instead of just putting a set on a shelf, they're creating entire ecosystems. LEGO has its own streaming service now, with shows and documentaries aimed at adult fans. They've also leaned into sets based on adult franchises like Star Wars, Harry Potter, and even the Beatles. It's about building a community, not just selling a product. Luna: So they're going from toy maker to entertainment company. That's a big leap. But doesn't that blur the line between toys and something else entirely? Lucas: Exactly. And that's the shift we're seeing across the industry. Companies are becoming less about plastic bricks and more about experiences, storytelling, and digital engagement. Hasbro, for example, is investing heavily in digital gaming and streaming content around its franchises, like Dungeons and Dragons and Magic: The Gathering. They know that the next generation of fans might not even pick up a physical toy. Luna: So if the toy as a physical object is dying, what replaces it? Because I have to say, my nephew is more into his tablet than any action figure I ever got him. Lucas: Right, and that's the other piece. It's not just about falling birth rates; it's about how kids play. Digital play, gaming, streaming—that's where the attention is. So the toy industry is having to compete not just with each other, but with an entire entertainment landscape. And the companies that are winning are the ones that are willing to follow the kids wherever they go, even if that means leaving the toy aisle behind. Luna: That's a pretty radical rethink. But what does this mean for the broader economy? Because if the toy industry is just becoming an offshoot of entertainment, that's got to have ripple effects. Lucas: It does. And it's a perfect example of how demographics can reshape entire sectors. We're not just seeing fewer kids, we're seeing a different kind of childhood, with different spending patterns. And that's going to impact everything from retail to media to the way we think about play and leisure. Luna: You know, this whole conversation makes me think about something you said earlier. And I want to be honest here, because it kind of ties into why we can have these deep dives without ads. A handful of listeners chip in monthly through buy me a coffee dot com slash fexingo, and that's literally what funds making this many of these shows. It's not a big ask, but it's how we keep the podcast going. Lucas: Yeah, and I think that's worth saying out loud. We don't have ads, we don't have sponsors, we just have a community of people who care about understanding the economy. If that's you, and you're in a position to support, even a small monthly amount makes a real difference. But no pressure, we're just glad you're here. Luna: Exactly. And it's because of that support that we can spend an entire episode on something like the toy industry without having to squeeze in a commercial break. So, back to the kidults – what does this mean for the traditional toy store? Lucas: Great question. So you're seeing stores like Toys R Us, which came back from the dead in the US, but it's not the same as it was. They're focusing more on experiences, like in-store events and interactive displays, rather than just shelves of boxes. And you're also seeing specialty stores that cater specifically to adult collectors, like brick and mortar shops dedicated to LEGO or vintage action figures. Luna: So the retail model is shifting from a place to buy stuff to a place to hang out and geek out. That's a pretty big change from the days of 'get in, grab a toy, get out.' Lucas: Absolutely. And it's not just the stores. Even the way toys are marketed has changed. Instead of Saturday morning cartoons, you have influencer unboxings on YouTube and TikTok. That's where the kids are, and increasingly, the adults too. So the toy companies are having to rethink their entire marketing funnel. Luna: That makes sense. But I'm curious, are there any challenges to this shift? I mean, relying on adults for growth – is that sustainable in the long run? Lucas: There are definitely challenges. For one, adults are more discerning and have different spending priorities. They're not going to buy a toy on a whim, they need a reason. So the product has to have real value, whether that's nostalgia, collectibility, or just pure design. And there's also the risk of alienating the core kid audience, which is still a big part of the business. It's a delicate balance. Luna: So they're walking a tightrope. But from what you're saying, it sounds like the companies that are doing well are the ones that are embracing this duality – serving both kids and kidults, but in different ways. Lucas: Exactly. And that's the smart play. LEGO, for example, has separate product lines for kids and adults, and they've created different experiences for each. They know that a five-year-old wants a simple set with a fun story, while a 35-year-old wants a complex build that takes hours. They're not trying to make a one-size-fits-all product; they're meeting each generation where they are. Luna: That's a really good point. So it's not just about selling to adults, it's about creating tailored experiences for every age group. And in a world where kids have endless digital options, maybe that's the key to keeping them interested in physical toys. Lucas: Right. And that's what makes this such an interesting economic story. The toy industry is being forced to innovate not just because of falling birth rates, but because the very nature of childhood is changing. And the companies that are willing to adapt are the ones that are going to survive and thrive. It's a lesson that applies far beyond toys. Luna: So what's the big takeaway for our listeners? If they're investors, or just curious about the economy, what should they keep an eye on? Lucas: I'd say watch the companies that are actually making the shift successfully. Look at their revenue mix, see how much is coming from adult lines versus kids' lines. And also watch the cultural side – are these adult-focused products becoming mainstream? Because when you see something like a LEGO set for adults being sold at Target, that's a signal that the market is really changing. Luna: That's a great way to put it. And I think it also speaks to the broader trend we've been exploring on this show – how demographics are reshaping just about every industry, from toys to travel to taxes. Lucas: Exactly. And it's a reminder that we can't take any industry for granted. The world is changing, and the companies and individuals who understand those changes are the ones who are going to come out ahead. So whether you're buying a LEGO set for yourself or just watching the market, it's worth paying attention to these shifts. Luna: Absolutely. And on that note, I think we've given our listeners a lot to chew on. Thanks for joining us, and we'll catch you next time. Lucas: Thanks, everyone, for listening. And remember, if you want to support the show, you know where to find us. Buy me a coffee dot com slash fexingo. See you next time.