Step inside the secretive world of toymakers

At a $3-billion toy company in downtown Toronto, kindergarteners file in with parents and siblings, clad in snowsuits and ready to offer their expertise.

They pass a toy museum decked out with Paw Patrol toys, Tech Decks, Bakugan and more, and eventually arrive at a small room with a large two-way mirror.

Soon, they’ll be presented with toys.

This is called a play test, and Spin Master, the toy company behind Paw Patrol, Hatchimals, Air Hogs and more runs them a few times a month to help develop their toys.

“Toy development is such a science and art blend,” said Sanya Siddiqui, one of Spin Master’s product development engineers.

“It’s crazy because you want to create a magical moment, but you also need to make sure that it can be done and that it’s safe.”

Spin Master works with thousands of toy inventors to come up with ideas, engineers to develop the toys and designers to determine what colours and materials will be “in” when the product hits the shelf.

But the 2023 holiday season is forecast to be a difficult one for the toy industry. After years of high sales during the pandemic, people worldwide are watching their spending.

‘How would a kid actually play with this?’

The toy company’s building has floors of engineers and designers, and there’s a lab to build prototypes in the basement.

“It’s so much play testing! We do that all the time,” said Siddiqui.

“Obviously, we have adult hands, not kid hands. We use adult forces to open and push down on things. So I would say that’s the thing that we always try to look out for too is, ‘How would a kid actually play with this?'”

Play tests with actual kids can be nerve-racking for people who have spent years developing toys, but toy developers watch closely to see what parts kids like and where they get stumped.

On a recent test, one girl dunked Hatchimals in water upside down — not realizing the mechanism to make the pet “hatch” was in the bottom of the egg.

Another was enamoured with a small towel the Hatchimal came with and carefully dried off her new pet rather than trying to hatch more eggs.

This year’s ‘must-have’ toy

Dianne Buckner takes a look inside Spin Master, the Canadian maker of ‘Hatchimals’

That, Siddiqui said, is not abnormal. Sometimes a small feature can become the star.

Spin Master co-founder Ben Varadi said play testing is critical to the company’s success.

He points to a story about a man who wrote a letter complaining that a character kept falling out of his Paw Patrol plane when he did a loop-de-loop.

“Your inclination as an adult might be to say, ‘Well, so what!’ Right? ‘Don’t do the loop-de-loop,'” said Varadi.

“But in a way, that’s like going into the doctor and they cut off the wrong arm. That’s a serious problem. It really is. If you don’t pick up a toy and play with it, you won’t notice those things.”

Spin Master now has Paw Patrol planes with characters that tuck into little plastic belts.

Keeping it top secret

Varadi is one of three founders of Spin Master, a toy company that was started in Toronto in 1994 with a single toy: the Earth Buddy.

It was a nylon stocking around a ball of sawdust that grew grass hair. Earth Buddy made $1.5 million in sales within the first six months of its launch.

After that, Spin Master had another hit: AirHogs, a fleet of flying toys.

Since then, they’ve developed a bunch of original toys including Hatchimals (toys literally hatch out of synthetic eggs), Bakugan (little spheres that reveal characters) and Kinetic Sand (kind of a mix between slime and sand that holds its shape). The company has also bought up legacy brands such as Rubik’s Cube and Etch-A-Sketch.

Varadi said they’ve had to focus on developing new toys out of necessity. Hasbro and Mattel set up Canadian offices back in the ’90s, so simply distributing other company’s toys wasn’t an option.

“The only way we could survive was to come up with our own innovative products right out of the gate,” he said.

And now, the business is both incredibly successful (Spin Master created the Paw Patrol series, movies and toys, which saw global retail sales hit $14 billion US this year) and incredibly secretive.

The company gets thousands of toy ideas and inventions from their network of inventors and internal engineers every year. Only a few of those end up on shelves, and the entire toy development pipeline takes years.

This is serious business. Every step of the way, it has to be kept secret from competitors or others who might try to replicate the toy.

To access the building you have to fill out a form and get a special badge. No filming is allowed in most of the space to protect toys in development.

Coming up with a new toy

Toronto-based toy-inventor Rob Schuyler, one of the thousands of inventors Spin Master works with, said the industry is filled with “all these strange, creative genius, brilliant people doing bizarre little things.”

Valuable toy ideas do not come from sitting at a desk, he said.

“It’s more about bumping into other creative people being out, maybe attending a magic show or going to a technology show.… The idea can’t really come from sitting still,” he said.

He got into toys almost by accident.

Schuyler was a mechanical engineer working with the military when he biked past Spin Master’s office in Toronto years ago. Back then, you could see right inside the space from the street.

“I saw these little airplanes. I parked my bike, went up to the window, I looked in and there were just toys everywhere, like just chaos,” he said. “I quit my job right away [and] applied.”

Schuyler worked for Spin Master for a while, but now runs DiscoNifty, a company that invents and sells toys to toy companies, including Spin Master.

DiscoNifty has created a lot of toys, including a doll that turns into a bracelet, a farting car and a hedgehog plushie that unfurls and coos when you touch it.

He feels the same way Varadi does about toy-making. A lot of it is failing and moving on (weighted blankets for kids were not a hit, he’s quick to tell you), or failing for the time being and bringing back that idea at the right time.

“It’s like one or two per cent of all the ideas,” he said. “The odds are really low. So you really have to stick with it.”

A bad year for toys?

This year, coming up with ideas and keeping the toys under wraps isn’t the only challenge: The toy industry seems to be facing tough times.

In November, Canadian retailer Mastermind Toys filed for creditor protection, and last week, Hasbro announced another 900 layoffs (adding to 800 jobs it cut earlier in the year).

People are buying fewer toys than they were during the pandemic, when the market grew 30 per cent while parents were desperate to find things to keep their kids busy, and economic conditions are making things even more difficult.

“Three-quarters of Canadians are telling us they’re going to cut back spending due to inflation and that figure is actually even higher amongst those under 45 years old, so think of your core toy buyer — your parent,” said Jeff Bowes, an industry analyst with Circana, a company that researches consumer behaviour.

“We’re seeing this globally in toys, so this isn’t just a Canada issue.”

Varadi said keeping costs down on toys is a perennial issue.

“Toys can’t be $300,” said Varadi. “We’re always constrained a little bit when it comes to price point. It’s just natural in the toy industry, so it’s harder and harder to do it.”

Still, Bowes said the toy industry isn’t in a terrible position, with consumers signalling “toys are at the bottom of the list of categories consumers are going to cut back on.”

And that’s why Varadi isn’t too concerned about the potentially tough season ahead, saying toys are relatively protected against difficult economic conditions.

“At the end of the day most parents will say, ‘I’m going to get something for my kids versus myself,'” said Varadi. “Parents always sacrifice for their kids.”