Musings By Joschik
Christian is one of the founders of the hobbyDB project and this musings are sharing some of his collecting experience that are hopefully interesting.
I have always been interested in this subject and since starting my MBA in 1991 looked for studies or other data points. I never found a satisfactory 3rd party study and ten years ago I commissioned the only one that I know of. I am collating my thoughts and the various facts I found in this analysis.
The “Batmobile Thought”
I sometimes use the first Corgi Batmobile as an illustration of how big this market is (and when talking about the subject in the UK find that everybody in my age group had one!).
- Corgi Toys sold 4,907,000 of them up to the end of 1968, the production run for its last year 1969 is not known and they were also sold in various gift-sets, so I assume a total of 5.2 million.
- I further assume that more than one third of them still exist somewhere, almost all of them in collectors’ hands (and if some get unearthed today that is where they go).
- Their value varies widely (there are 10 known variations and with conditions from poor to mint in box they can be worth anything from $5 to $2,000).
- I assume that the average value is around $60.
This calculates to a total balance sheet value of $104 million for this casting alone and assuming a 12 year average hold period for vintage collectibles (7 years is the average for all collectibles) is correct translates into roughly $8.7 million in annual sales. I checked this assumption against eBay which we believe has a 3% marketshare in collectibles but less for vintage items (due to an extent to age and internet savvy of sellers but to a much larger one on eBay’s policies in the last 6-7 years) and the 3% holds about true for this Batmobile model. The Batmobile casting is one of about 4,000 Corgi castings (even if a very successful one) and Corgi is but one of thousands of brands in model cars. Model Cars finally is just one of the 13 sub-market in Collectible Toys and Models (others are for example Slot Cars, Radio-Controlled Vehicles, Model Trains, Dolls and Bears).
The Hot Wheels Example
Hot Wheels is now a $1.1 billion brand. While Mattel does not publish segment information of how much of that is spend by collectors (versus parents) many conversations with Mattel executives and others in the industry make me believe that measured by value it is around 20% (collectors pay significantly more per average model as they buy many Collector’s Editions). That would represent $200 million in annual collectible sales in the Primary Market.
Since the brand started almost 50 years ago in 1968 Mattel has sold more than 5 billion Hot Wheels models. Assuming that 15% of these survived in a condition suitable for collecting and an average price of $5 (I know this is all very rough) we come to a balance sheet number of $3.75 billion. Further assuming a 10 year hold period we get to Hot Wheels products in the value of $375 million changing hands every year in the Secondary Markets. As many of these transactions are sold as collections and therefore at a very large discount I assume the total sales to be more closer to $200 million for the Secondary Markets.
That results in a total of $400 million in sales for Hot Wheels.
The Collectable & Vintage Toys UK Market Size
An MBA student analyzed this market for me in September 2006 by looking at sales on eBay, toy fairs, auction houses and other channels and came to the conclusion that is was valued at £310 million (around $627 million at the time). With hindsight the study missed some sub-markets which I would estimate would have added around 10% of the total market.
With the US constituting 2/3 of the collectible markets I believe that the UK represents about 1/15th of the world-wide market giving a total value of the Collectible Toy markets to be $10 billion per annum.
Collectible Models Sold in US Retail
The NPD Group is a market research company which monitors consumer purchase data from over 165,000 stores worldwide. In 2012 they reported that Collectors bought around 15% of the total toys and models sold in monitored retail outlets in the US and that the total sales for these retailers was $23bn.
This does not account for eBay, other online channels, fairs, P2P sales and auction houses and is a larger number than my prediction (use the $10 billion number calculated earlier, adjust for 2/3 of that to be in the US and then for all missing channels).
Beyond Collectible Toys & Models
While I did the most of my research on the Toys & Models markets I have also monitored literature on other types of collectibles and have created a Segment Map which calculates the annual spend as $200 billion (this excludes the value of Classic Cars).
A few comments on the graph:
- The size of the circles represents annual global trading of collectible segments and are based on similar type of assumptions or comments from experts (many of which are on on the hobbyDB Catalog Advisory Council)
- Segment colors denote clusters, for example dark blue is for value based collectibles such as coins, stamps and shares
- Concentration is an approximation on how many items make up a segment and how many of those are responsible for a large percentage of the sales in one segment – take PEZ Dispenser which would probably be less than 12,000 database entries (we consider that a very small number) or model cars where the Golden Brands (Corgi Toys, Dinky Toys, Hot Wheels, Matchbox, Minichamps, Wiking and maybe 4 or 5 other brands make up more than half of the total collectible sales.
How many of us Collectors are out there?
I have also run some calculations on the number of collectors worldwide and estimate it to be 75 million. This number is supported by research by Pam Danziger who runs Unity Marketing, the only firm that I found that had focused on researching collectible markets (they have now pivoted their focus to the Luxury Markets). Pam had earlier been the Director of Competitive Analysis at Franklin Mint. One of their reports from October 2000 that was based on their regular omnibus questionnaire said “Some 42.9 million U.S. households, that is 42% of total households, report that someone in their household collects any collectible item, according to Unity Marketing’s latest consumer survey. With an average of 1.7 individual collectors living in each collecting household, the total number of U.S. collectors is estimated at 72.9 million — about 35% of the total U.S. population!”
Growth of the Collectible Markets
Elroy Dimson, Emeritus Professor of Finance at London Business School did a study in 2014 on returns of Collectible Assets (which he calls Emotional Assets) since 1900 and calculated Nominal Returns over the period of 6.4% p.a. and Real Returns of 2.4%. This dovetails with my estimate of an annual growth of the total market of around 3%. That growth is fed by new collectibles entering the market (like those $200 million in Collectible Hot Wheels referred to earlier) and appreciation of collectibles already in Collectors’ hands.
We see particular strong growth in some of the Emerging Markets, primarily in China and expect the relationship of 2/3 of collecting happening in the US to reverse over the next 20 years.