You Call These Toys?

As the Christmas-shopping season begins, one question stands out in the minds of the country’s toy manufacturers: Just how many $150 playthings can American parents afford at a time of shivering stock prices and economic uncertainty? It had better be plenty, because the industry is pinning its hopes on a new generation of fast-talking and fast-shooting computer-driven toys with price tags that run from $60 to $225. Store shelves and shop windows are crowded with jabbering dolls, video villains, electronic spaceships and even a child- size camcorder. But there are signs that parents — and grandparents — may balk at shelling out as much for a single toy as for December’s heating bill.

The toy companies may be playing a losing game, and for high stakes. In the past year, many have watched their business stagnate, as past hit toys lost their novelty but few new ones seemed to capture shoppers’ imaginations. Sales this year are expected to grow a meager 3.4%, compared with an average of nearly 6% over the past three years. The price of some toy stocks tumbled more than 40% in October, further than the shares of any other industry. Such leading firms as Mattel, Coleco and Worlds of Wonder all posted larger losses than usual in the normally slow first half of the year.

For Worlds of Wonder, in particular, the next four weeks may determine whether the company survives. The fledgling firm, founded in 1985 in Fremont, Calif., became an industry legend on the strength of two blockbuster toys: Teddy Ruxpin, the personable talking bear that debuted in 1985, and last year’s Lazer Tag ray-gun game. The company, soon known aptly enough as WOW, chalked up earnings of $18.6 million on sales of $327 million during its past fiscal year, making it one of the fastest-growing new manufacturing concerns in history. But in the view of industry analysts, the company expanded too swiftly and spent too much money just as the toy market began to slump. By the third quarter of this year, WOW posted a loss of $43 million. Its stock has plunged from 29 in June 1986 to 2 5/16 last week. WOW officials are meeting this week with creditors, having already been sued by three lenders for not paying bills.

The company’s hopes for a turnaround rest on its latest round of talking toys, including the Mickey Mouse doll and Mother Goose (each $60), as well as dancing Disney figures called Little Boppers ($20). WOW is especially proud of Julie (up to $125), which it claims is the “most sophisticated toy ever to be introduced in America . . . and still a little girl’s best friend.” A voice- recognition system allows Julie to “understand” questions. If a child asks, “Are you hungry?” the doll is programmed to respond with a bright “I’m hungry. Let’s eat!” The doll can also sense changes in temperature and may ask for a sweater if it is taken outside. Julie has encountered some rivals on its way to the toy stores. Mattel offers the precocious Baby Heather ($120), whose age can quickly change from six months to two years if its “grow up” button is pressed. Heather’s blond head has several sensors that pick up sound, so it can turn and face the direction from which someone is speaking. Playmates, of La Mirada, Calif., has come out with Jill, ($150) a trendy twelve-year-old companion and raconteur. Telling a story about a haunted house, Jill might ask, “Should we go in the front door, the back door or crawl in a window?” The child’s choice determines the direction of the story. Extra voice tapes include Jill’s Slumber Party and Jill Goes to the Mall, complete with credit card.

For children whose parents rarely make it home in time to tell bedtime stories, Lewis Galoob offers Dozzzy ($60), a blue-pajamaed doll stuffed with a tape recorder that is activated when a child squeezes its hand. The doll supervises the bedtime ritual: “Did you remember to brush your teeth?” and “Is the light turned out?” As it asks about the child’s day, the questions are punctuated with suggestive yawns. To spare the batteries, a microprocessor tells the doll to turn itself off once the child falls asleep and stops squeezing the toy. The bedtime companion comes in two forms — a baby bear or a baby human — each with bright eyes that double as a night- light and little electric lips that flicker as it speaks.

The most successful new dolls have come, once again, from Coleco. Today’s $125 Cabbage Patch Kids use the voices of real four-year-old girls. They gulp daintily as they sip from their special cups, giggle if they are tickled and complain when they are turned upside down. Eeriest of all, they can sense, by sending and receiving radio waves, when other talking Cabbage Patch Kids are near. When one doll passes within 25 ft. of another, it calls, “Hi, there! Hey, look who’s here! It’s my cousin!” The dolls may then break into a round of Row, Row, Row Your Boat.

Not all the new talking toys are cuddly, cute or even particularly appealing. Galoob’s Mr. Gameshow ($129) features Gus Glitz, a fast-talking, lacquer-haired impresario who stands atop a blinking, bleeping game board and hosts homemade variations on Wheel of Fortune and other word games. With microphone flailing and jaw flapping, Mr. Gameshow dishes out play money and bad jokes with equal largesse: “Nice jacket. Who shot the sofa?”

Among the most advanced — and costly — toys available for Christmas are the newest video games. Though a glut of games flattened the market two years ago, Japan’s Nintendo has revived the market with souped-up graphics and sound that have lured players back to their screens. Nintendo’s deluxe set ($139) includes a control deck that plugs into a television, two hand-held push- button devices, a ten-inch robot that reacts to commands through photosensors behind its eyes and a light-sensing video gun. As the battle rages, players can fire not only at the screen but at the robot as well. Video addicts are apparently hooked. Nintendo expects to triple its U.S. sales this year, to $650 million.

Mattel’s Captain Power adds an interactive dimension to the traditional video game. The toys are linked to a half-hour TV program called Captain Power and the Soldiers of the Future, in which the heroes square off against Lord Dread and his BioDread Empire. The television show is programmed with light signals that can be picked up by the viewers’ hand-held PowerJets. Once the barrage begins, the show’s villains hurl laser blasts at the screen, drawing fire from the player. If the PowerJet suffers enough enemy “hits,” it ejects its pilot onto the floor.

For those children who would rather create TV shows than watch or shoot at them, Fisher-Price has just the thing. The 57-year-old toymaker, known primarily for its reasonably priced, traditional toys, is slipping into the deluxe market with its new PXL 2000 camcorder ($225). The lightweight video camera comes with a 4.5-in. TV monitor and allows a child to record about ten minutes of black-and-white video with sound.

For all the electronic advances and marketing hype, industry watchers still wonder whether the pricey toys will sell. Even as their numbers multiply, the novelty wanes. When Teddy Ruxpin first appeared, it captured the fancy of parents and children alike. But its phenomenal success ensured relentless imitation, so that this Christmas the talking-toy market is saturated. Of all the new dolls, only the Cabbage Patch Kids have made it, so far, onto Toy & Hobby World’s latest list of the Top 20 toys. The Kids — both talking and nontalking together — rank sixth.

Parents question whether the toys, with so much circuitry inside, can survive a thumping trip down the stairs. And even if the gadgetry stays intact, some of the toys may be too complicated for the average child — or parent — to operate. At WOW’s annual meeting in October, a company officer tried to demonstrate Julie but apparently forgot that the doll needed to be programmed with ten “secret words” in the owner’s voice before it could answer questions. “Julie, are you hungry?” he asked. “Can we talk about your friends?” it replied. The audience was not impressed. Mattel’s Baby Heather comes with an internal clock that tells it when to be “hungry” or “sleepy,” but if the clock is not set correctly, Heather may wake up its owner at 4 a.m. wanting to eat.

Finally, the toys may cost too much for what they offer. Many parents, all too familiar with child-size attention spans, are wary of the latest fad. “I think these toys are getting outlandish,” declares Sheila Menzies, 27, a single mother from Burbank, Calif., as she tows her two toddlers through the local Toys ‘R’ Us. “They are too expensive, and they leave nothing to the imagination.”

The uncertain market for untested toys has left retailers confused and cautious. “It’s not one of the best Christmases in the world,” laments Spenser Boise, a Mattel spokesman. “There has been a distinct reluctance on ( the part of the trade to take on inventory. They’re afraid they are going to get stuck with it.” In anticipation of slow sales, many firms have started discounting new toys, even though the Christmas buying season is barely under way.

But experts do not see a disaster for the industry as a whole. Traditional toys have not lost their appeal, however short they may be on microprocessors. There will apparently never be a shortage of buyers for Crayola crayons, LEGO blocks and roller skates. Indeed, Ohio Art says sales of its Etch A Sketch, now in its 28th year, are up 50% this year. Says Gil Wachsman, president of the 128-store Child World chain: “What we’re seeing is people moving toward better quality, and intrinsic to that is better value.” For parents who still have closets full of little-used toys from Christmases past, that is the most important consideration.