Escalante
Then you cross-breed talking animals and virtual pets and you get these hamsters, which fascinate me.
This is maybe too small to see, but look at these two points they call out:
“Hilarious Sounds!”
“Artificially Intelligent!”
There’s a lot of AI around at the moment.
I find this kind of stuff interesting because we’re now getting into the same territories that smart products, products connected to the Internet, will have to get into: what happens when physical things have unpredictable behaviour? I don’t know.
But I want to turn to looking at the economics of the situation. It’s kind of weird to imagine.
You get this hamster for £9.99. Knock off sales tax and convert to US dollars, which is how the global market thinks, that’s $14. 60% of that goes to the shop, so you’re left with $5.60. Now the likelihood is you’ll not sell this to the shop yourself, so you’ll go through a company like Mattel or Hasbro to place it, and they’ll also look after advertising and marketing and so on. You’ll make, as the inventor of this hamster, you’ll make maximum 5%, or 25 cents, per item. You’ve got about 40% of that $5.60 for making the item, and you’ll pay maybe 50 cents for packaging, warehousing and shipping over from China.
So really ou’re left with a bit under $2 to manufacture the hamster. And you’ve got child safety, making sure the hair won’t catch fire, making sure that the plastics won’t poison or choke a good. I mean, these numbers are insane. These are all important things, but they cost money. That $2 is only possible when you’re making in the range of 100,000 plus units.
I don’t want to baffle you with numbers; my point is simple:
The job here in in Big Toys, in Big Product, is not how to make fun, it’s not to design. It’s how you pack artificial intelligence and hilarious sounds into a chip that costs you 7 cents.
That’s your entire budget. I mean, these toys are brilliant. I buy a lot of them myself. But the job here isn’t good design and it isn’t fun and it isn’t to educate kids. It’s marketing and logistics and large-scale manufacture.