· Brand value of top 25 toy brands totals US$9.4 billion, almost half from Lego
· Lego is the most valuable toy brand and the second most powerful brand globally
· My Little Pony is the fastest growing toy brand this year with a 40% rise in value
· Barbie enjoys 20% growth after focusing on improving diversity and equality
Every year, leading branded business valuation and strategy consultancy Brand Finance puts thousands of the world’s top brands to the test. They are evaluated to determine which are the most powerful and the most valuable by country, by industry and against all other brands worldwide. The most valuable toy brands can be found in the Brand Finance Toys 25.
The total brand value of the table is US$9.4 billion. The United States is home to 16 brands in the table, contributing US$3.5 billion to the overall sum. Japan follows with seven brands and a national value of US$1.2 billion. Although Denmark is home to only one brand in the table, it contributes US$4.5 billion to the total, higher than the total brand value of the United States’ 16 brands. Canada finishes off the table with one brand valued at US$132 million.
Denmark’s Lego is by far the most valuable toy brand this year, with a brand value of US$4.5 billion, making up half of the table’s total brand value. It is the world’s second most powerful brand with an AAA+ rating. Disney overtook Lego as the world’s most powerful brand after the release of Star Wars VII: The Force Awakens last year. Despite that, Lego shows continual growth, with films and television shows playing a large role in its success – The Lego Movie was a major driver of value, and the brand’s rapid expansion in China and ongoing growth in core western European markets have also had a strong positive impact.
My Little Pony is the fastest growing toy brand this year, enjoying 40% growth to a value of US$141 million. The television show ‘My Little pony: Friendship is Magic” re-established interest in the brand just as The Lego Movie enhanced Lego’s. The My Little Pony movie is set to be released in October and, should it follow in Lego’s footsteps, the brand can expect to enjoy further success in the future.
Barbie is ranked third in the table, with a brand value of $571 million after an impressive 20% increase. Manufacturers are increasingly grappling with social and economic pressures to think beyond the conventional marketing of dolls and action figures. Barbie has faced criticism on the grounds of ethnic diversity and the negative image the dolls convey. The brand addressed these concerns with the launch of new Barbie dolls in seven different skin tones and dolls with ‘real’ body shapes and sizes. This represented a significant departure from Barbie’s traditional marketing strategy but the brand has recognised that times have changed and it must evolve in order to stay competitive.
Play-Doh and Nerf both enjoyed a rise in brand value, growing 6% and 11% to US$143 million and US$231 million respectively as parents focus on keeping children their children physically as well as mentally stimulated. Monopoly’s value fell 16% this year to US$140 million, although the drop in value is at least partly because of growing pressure from competing products such as independent board games.
Growing income levels in China mean parents may be swayed towards more expensive, official toys and away from cheaper counterfeit goods. Overall, the toy industry should look to China for future expansion and growth. As Lego and My Little Pony have shown, what is most important is interaction with customers through digital and entertainment media. It is vital that toy brands embrace this in order to continue playing the game.
Brand Finance is the world’s leading brand valuation consultancy. Bridging the gap between marketing and finance, Brand Finance evaluates the strength of brands and quantifies their financial value to help organisations of all kinds make strategic decisions.
Headquartered in London, Brand Finance has offices in over 20 countries, offering services on all continents. Every year, Brand Finance conducts more than 5,000 brand valuations, supported by original market research, and publishes over 100 reports which rank brands across all sectors and countries.
Brand Finance is a regulated accountancy firm, leading the standardisation of the brand valuation industry. Brand Finance was the first to be certified by independent auditors as compliant with both ISO 10668 and ISO 20671, and has received the official endorsement of the Marketing Accountability Standards Board (MASB) in the United States.
Brand is defined as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos, and designs, intended to identify goods, services, or entities, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits.
Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors. Brand Finance evaluates brand strength in a process compliant with ISO 20671, looking at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance. The data used is derived from Brand Finance’s proprietary market research programme and from publicly available sources.
Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding Brand Rating up to AAA+ in a format similar to a credit rating.
Brand Finance calculates the values of brands in its rankings using the Royalty Relief approach – a brand valuation method compliant with the industry standards set in ISO 10668. It involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ understood as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.
The steps in this process are as follows:
1 Calculate brand strength using a balanced scorecard of metrics assessing Marketing Investment, Stakeholder Equity, and Business Performance. Brand strength is expressed as a Brand Strength Index (BSI) score on a scale of 0 to 100.
2 Determine royalty range for each industry, reflecting the importance of brand to purchasing decisions. In luxury, the maximum percentage is high, while in extractive industry, where goods are often commoditised, it is lower. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database.
3 Calculate royalty rate. The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.
4 Determine brand-specific revenues by estimating a proportion of parent company revenues attributable to a brand.
5 Determine forecast revenues using a function of historic revenues, equity analyst forecasts, and economic growth rates.
6 Apply the royalty rate to the forecast revenues to derive brand revenues.
7 Discount post-tax brand revenues to a net present value which equals the brand value.
Brand Finance has produced this study with an independent and unbiased analysis. The values derived and opinions presented in this study are based on publicly available information and certain assumptions that Brand Finance used where such data was deficient or unclear. Brand Finance accepts no responsibility and will not be liable in the event that the publicly available information relied upon is subsequently found to be inaccurate. The opinions and financial analysis expressed in the study are not to be construed as providing investment or business advice. Brand Finance does not intend the study to be relied upon for any reason and excludes all liability to any body, government, or organisation.
The data presented in this study form part of Brand Finance's proprietary database, are provided for the benefit of the media, and are not to be used in part or in full for any commercial or technical purpose without written permission from Brand Finance.