Japan's Collectors' Toy Market: An Analysis of Precision Manufacturing Technology and IP Business Models
Introduction
A Market Beyond "Toys"
In the autumn of 2019, hundreds queued outside a gallery in Harajuku, Tokyo, from before dawn. They had not come for a toy shop sale, nor for the release of a new game. Their target was a limited-edition BE@RBRICK from Medicom Toy—a bear-shaped block toy selling for just a few thousand yen.
Yet this "toy costing a few thousand yen" would leap to several hundred thousand yen at auction within days. Limited-edition models created in collaboration with Nike or Dior would see prices soar even higher. Those standing in line were motivated neither by gifts for children nor by nostalgia, but explicitly by "investment".
This is the reality of the collectors' toy market.
Related to this phenomenon is the expansion of a consumer demographic called "Kidult"—a portmanteau of "Kid" and "Adult". The term refers to a culture in which adults purchase toys, games, character merchandise, and anime originally intended for children for their own enjoyment. These consumers are not simply looking back with nostalgia. They possess substantial purchasing power, a discerning eye for quality, and no hesitation in investing in their hobbies—they represent a new type of consumer.
Collectors' toys are precisely this: high-quality figure and toy products aimed at the Kidult demographic, targeting adult consumers aged twelve and above. The price range spans 20 to 500 dollars. When traditional children's toys sell for 5 to 30 dollars, the contrast is stark. This price differential signifies not merely a difference in quality. The purchasing motivation itself differs fundamentally. Not for play, but for display, collection, and at times for holding as assets—collectors' toys represent a peculiar market where adult passion and investment intersect.
The "Quiet Revolution" in the Global Toy Market
The global toy market is a colossal industry exceeding 100 billion dollars annually. Reigning supreme are Western giants such as Mattel, Hasbro, and LEGO. Through mass production technology and powerful marketing, they have dominated children's playgrounds.
Japanese firms have fought on this battlefield as well. In the field of character intellectual property such as Pokémon and Hello Kitty, they command an overwhelming presence, yet in traditional toy manufacturing, they have struggled to match Western companies in scale and efficiency. Mass production, low costs, global expansion—on this terrain, Japan has consistently been forced onto the defensive.
Yet in a corner of the market, a "revolution" occurred without anyone noticing.
"Collectors' toys"—a market that does not target children. In this specialised field, Japanese firms have established an entirely different approach from the Western giants, built upon proprietary technology and business models. Not through volume but through quality, not through cheapness but through precision, not as toys but as "works"—Japanese companies have quietly established positions on high ground that no one else has attacked.
The Numbers That Tell the Story of "Another Market"
As of 2023, Japan's domestic collectors' toy market has reached approximately 250 billion yen in scale. Japanese products command roughly 40 per cent of the global market in the high-price segment. With annual growth rates maintaining 8 to 12 per cent, whilst lacking in spectacle, this is a steadily expanding and stable growth market.
Examining the roster of major players reveals the peculiarity of this market. Good Smile Company (annual revenue approximately 25 billion yen), Bandai Spirits' high-price lines (annual revenue approximately 30 billion yen), Kaiyodo (annual revenue approximately 7 billion yen), Medicom Toy (annual revenue approximately 15 billion yen)—these company names would never be called "major players" in the conventional toy market.
Yet through precision manufacturing technology, optimisation of IP licensing models, and construction of global distribution networks, they have secured market positions that, whilst niche, are extremely profitable. The hundreds queuing at Harajuku galleries, limited editions selling out within minutes, auctions climbing to several hundred thousand yen—these phenomena are not mere fervour, but the result of meticulously constructed business models.
Chapter 1: The True Nature of "Toys" That Adults Go Mad For
Four Worlds, Four Passions
The collectors' toy market divides broadly into four segments. Each possesses its own distinct culture and fan base, operating according to different value systems.
Action Figures—The Paradox of Precision Articulation
Figma, S.H.Figuarts, MAFEX. These action figures, priced in the 50 to 150 dollar range, are characterised by multi-joint articulation and abundant interchangeable parts. In this segment, which commands a market size of approximately 80 billion yen within Japan alone, an intriguing reversal has occurred.
There was a period when Marvel heroes and Kamen Rider articulated figures from the S.H.Figuarts series achieved fanatical popularity in America and Hong Kong, with orders from overseas flooding in beyond those from Japan's official website. It was the moment when Japanese products once created as "toys for children" were re-evaluated as "precision craftsmanship for the world's adults". Japanese manufacturers had, without realising it themselves, carved open a global adult collector market.
Statues—Sculptors as "Artists"
The statue segment, centred on scale figures at 1/7 and 1/8 scale, is supported by consumers who value precision sculpting and high-quality paintwork, with prices ranging from 100 to 500 dollars. In this segment, which commands the largest market size at approximately 100 billion yen within Japan, there are moments when products transcend "merchandise" to become "works".
In cases where particular sculptors such as ALTER or prototype artist Shunya Yamashita attract fanatical followings, their sculpting itself is treated as "art". It is not uncommon for a single piece signed by the prototype artist themselves, or limited to an exhibition, to exceed 200,000 yen at auction. Such phenomena underpin the perception that "collectors' toys equal creator brands". Those who acquire these figures do not simply purchase beloved characters; they possess a consciousness of owning the "work" of a particular sculptor.
Deformed Figures—Products That Give Shape to Empathy
The deformed figure segment, represented by Nendoroid and BE@RBRICK, forms a market of approximately 50 billion yen in the 30 to 100 dollar price range. Whilst characterised by deformed designs and collectability, what lies behind them is deep attachment to characters.
Since Good Smile Company released the first Nendoroid in 2006, by 2019 the range had surpassed 1,000 varieties. The limited commemorative model "Nendoroid Hatsune Miku 10th Anniversary Ver.", planned for that milestone, sold out within minutes of pre-orders opening. Within the company, they are affectionately called "products that give shape to empathy". What is embedded in these small deformed figures is love for characters and the bonds of the community that shares it.
Art Toys—Toys as Investment Objects
The art toy segment, which encompasses soft vinyl and designer toys, possesses a wide price range from 50 to over 1,000 dollars, creating scarcity through limited production. Whilst the market size is relatively small at approximately 20 billion yen, it is a segment with high unit prices and high profit margins.
The BE@RBRICK phenomenon introduced at the outset epitomises precisely the characteristics of this segment. Those who queued at the Harajuku gallery had not come to purchase toys; they had come to acquire assets. Collectors' toys whose value as art works has been recognised have now completely transcended the traditional category of "toys".
Japan in the World—Overwhelming Presence and New Challenges
As of 2023, the global collectors' toy market is estimated at approximately 7.8 billion dollars, expanding at an annual growth rate of 12 per cent. Within this market, Japan's position is overwhelming.
The Japanese market, at 2.3 billion dollars, possesses the largest market size, with Japanese products achieving a share of 80 per cent. However, with a growth rate of 5 per cent, lower than other regions, it presents the characteristics of a mature market. It is a situation where stability and stagnation coexist, precisely because the market is already established.
The North American market holds a scale of 1.5 billion dollars, with Japanese products claiming a 30 per cent share. With a growth rate of 12 per cent, it continues healthy expansion and is positioned as an important overseas market.
Most noteworthy is the Chinese market. With a market size of 2.0 billion dollars, it boasts the highest growth rate at 20 per cent. Whilst Japanese products remain at a 25 per cent share, the consumer demographic that values quality is expanding, suggesting substantial room for future growth.
The South-East Asian market, at a scale of 800 million dollars, shows a comparatively high share of 40 per cent for Japanese products. Expanding at a growth rate of 15 per cent, it is viewed as a promising emerging market.
The European market stands at 700 million dollars, with other regions at 500 million dollars, both retaining room for growth. Overall, Japanese products occupy approximately 38 per cent of the global share in the high-price segment, having established positioning that exploits superiority in quality.
The Battle with Competitors—The Borderline Between Technology and Culture
Western firms wield mass production and low prices as their weapons. Hasbro's Marvel Legends series, in the 20 to 30 dollar price range, emphasises mass production; Mattel's DC Multiverse develops products applying children's toy technology. NECA possesses strengths in film-based licences, operating in the 25 to 40 dollar price range. Yet these companies face the challenge of being inferior to Japanese products in precision and paint quality. Whilst they prevail in volume, they cannot catch up in quality—such is the present state.
Chinese firms have grown rapidly in recent years. Companies such as Damtoys, Hong Kong's Hot Toys, and PLEX have risen, with strengths in low costs and mass production capacity. Technical capabilities have improved, with some products achieving quality approaching that of Japanese products. However, the difficulty in obtaining licences for major character intellectual property and the lack of proprietary design capabilities constrain growth. Whilst technology catches up, the cultural foundation has not.
The Four Weapons Japanese Firms Possess
Japanese firms hold four principal competitive advantages.
Firstly, they possess world-class capabilities in precision moulding technology, particularly in die and mould technology. This is not merely technical prowess, but an "obsession with precision" cultivated through years of craftsman-like accumulation.
Secondly, they maintain advanced painting techniques such as gradation and weathering. This technology becomes the key to elevating figures from "products" to "works".
Thirdly, they enjoy preferential access to major character intellectual property from Japanese anime, games, and manga. This is an irreplaceable strength brought about by geographical and cultural proximity.
Fourthly, through close relationships with fan communities built over many years, product development that accurately captures market needs becomes possible. It is precisely because the distance between creators and fans is close that they can "give shape to empathy".
Through these advantages, Japanese firms have established robust positions in the high-price market segment, achieving differentiation that competing companies cannot easily imitate. The queues in Harajuku, the fanatical orders from overseas, the auction prices of 200,000 yen—all are the result of this superiority.
Chapter 2: Technological Superiority – The World of 1/100mm
1. Precision Moulding Technology
Background of Mould Technology
Japan's mould and die industry commands approximately 40 per cent of the global market share in the field of precision moulds. Its production hubs are concentrated in Shizuoka, Osaka, and Aichi prefectures. The precision achieved by Japanese moulds—±0.01mm—represents the highest standard in the world. This level of technological capability forms the foundation of Japan's competitiveness in the manufacturing of collectors' toys.
Distinct Features of Figure Moulds
Moulds for figures require a set of specialised technologies distinct from those used in general industrial products.
First among these is undercut processing technology. To replicate the intricate forms of hair strands or garment folds, advanced methods such as slide moulds and rotating-core moulds are employed. These techniques are considered difficult to realise for Western manufacturers and constitute a major source of Japan's competitive advantage.
Second is multi-colour moulding technology. By injection moulding two or three colours in a single process, manufacturers achieve both cost reduction and enhanced precision. In the case of Nendoroid figures, for instance, skin and hair colours are moulded together, reducing the need for subsequent painting whilst maintaining high quality.
Third is micro-detail reproduction technology. This allows the replication of surface irregularities at the 0.1mm scale, capturing fine elements such as facial expressions, fabric folds, and weapon details with remarkable fidelity. In combination with 3D conversion from sculpted prototypes, this technology enables the faithful transformation of a sculptor's artistic intention into commercial form.
Cost Structure of Mould Production
The cost of mould fabrication varies greatly with product size. For small figures (approximately 10 cm), investment costs range from 30,000 to 50,000 dollars; for medium-sized figures (around 20 cm), between 80,000 and 150,000 dollars; and for large figures (30 cm or more), between 200,000 and 400,000 dollars. These costs are typically amortised over production runs of 5,000 to 10,000 units. Whilst this high initial investment serves as a substantial barrier to entry, maintaining profitability through mass production remains a critical managerial challenge.
Material Technology
Different materials are used in collectors' toys according to their intended functions.
ABS resin is noted for its hardness and durability, making it ideal for movable parts. Priced at roughly 2 to 3 dollars per kilogramme, it is an economical and commonly used material for mass production.
PVC, valued for its flexibility and mouldability, is well suited for statues and fixed figures. With a cost of 1.5 to 2.5 dollars per kilogramme, it allows for the expression of highly precise sculptural detail.
Soft vinyl (soft PVC) is a traditional Japanese material known for its distinctive tactile quality and durability. Although relatively expensive at 3 to 5 dollars per kilogramme, it remains a material of choice for art toys and collectors' editions.
Environmental compliance has also become a key consideration. Manufacturers are increasingly adopting non-phthalate materials that meet EU regulations and, in some cases, introducing recycled PVC in certain product lines.
2. Painting Techniques – The Artistry of Japanese Takumi
Hand-Painted vs Machine-Painted
The painting process is divided between hand-painting and machine painting, determined by product price range and production scale.
Hand-painting is employed for high-end statues and limited editions priced above 200 dollars. Good Smile Company retains approximately 50 specialised artisans, whilst Kaiyodo employs around 30; in outsourcing bases across China and Vietnam, nearly 500 craftsmen are engaged in this work. Japanese artisans' labour costs stand at 30 to 50 dollars per hour, in contrast to 8 to 15 dollars per hour for skilled Chinese painters. Although the gap in quality has gradually narrowed, the subtle expressiveness characteristic of Japanese craftsmen continues to confer a notable edge.
Machine painting—using pad printing and spraying—is applied to mass-produced products such as Nendoroid and Figma. Equipment investment is substantial, ranging from 500,000 to 2 million dollars, yet it ensures uniformity, enables large-scale production, and reduces overall cost. However, it remains limited in rendering complex gradation effects, making the complementary use of hand-painting essential.
Japan's Distinctive Painting Techniques
Japan's collectors' toy industry has established four uniquely Japanese painting techniques.
First is gradation painting. Through multi-layer airbrushing, it reproduces skin shading, hair highlights, and metallic lustre. The process progresses through successive stages—three to five base coats, the addition of shadows, application of highlights, and final clear-coating—and requires two to four hours per figure even for a skilled artisan.
Second is weathering, or "distress" painting. For robots, tanks, and warrior characters, this technique conveys a sense of use and realism through methods such as dry brushing, washing, and chipping. It is a product of Japan's Gunpla culture, widely disseminated through modelling magazines that share these technical methods.
Third is metallic coating. A spectrum of metallic finishes—gold-plated, silver-plated, brass, copper, and titanium effects—can be achieved. Realistic metallic texture is realised through mastery of pigment blending ratios, surface preparation, and clear-coat thickness adjustment.
Fourth is colouring of clear parts. Applied to effect components such as fire, water, or energy beams, this technique combines pigmentation of transparent resin, reverse-side painting, and gradation-clear methods to achieve both translucency and vivid colour.
Quality Control
Strict quality management standards are in place, with acceptable tolerances of ±5 per cent for paint inconsistency, ±3 per cent for colour deviation between batches, and rigorous adhesion tests to prevent paint peeling. Visual inspection ensures that foreign particles larger than 0.5mm are eliminated.
The defect rate varies significantly depending on the production locale and management system: 2 to 5 per cent for domestically produced Japanese items, 5 to 10 per cent for products manufactured in China under Japanese company oversight, and 15 to 25 per cent for productions managed by local Chinese firms. These disparities in quality are a crucial factor justifying the premium pricing of Japanese-made products.
3. Movable Mechanism Design – The Art of "Move and Enjoy"
Evolution of Articulated Joints
The technology underpinning articulated figures has advanced considerably over the past three decades.
The first generation, from the 1990s, employed ball joints, which offered high degrees of freedom but suffered from looseness over time. The second generation, in the 2000s, introduced ratchet mechanisms, which improved grip but limited range of motion. The third generation, from the 2010s onwards, saw the development of hybrid mechanisms that balanced flexibility with stability. The fourth generation, in the 2020s, further enhanced grip strength and ease of part exchange through the integration of small magnets.
Comparison of Range of Motion
Japanese products offer a 20 to 40 per cent broader range of motion compared to their Western counterparts. For instance, in neck up-and-down movement, Japanese figures achieve 40 to 45 degrees versus 30 degrees in Western models; shoulder forward-backward movement spans 120 to 130 degrees versus 90 degrees; and hip joints rotate 90 to 100 degrees compared to 70 degrees.
This extensive articulation is supported by designs that preserve aesthetic integrity without compromise, alongside durability tested through over 10,000 cycles of movement. The combination of functional performance and visual appeal remains a defining characteristic of Japanese figures.
Exchangeable Parts System
A hallmark of Japanese collectors' toys is a rich array of exchangeable parts. Face parts usually number between three and eight, covering expressions such as neutral, smiling, angry, and surprised; hand parts range from five to twelve types including fists, open hands, and weapon grips; effect parts include representations of fire, wind, water, and beams; costume parts encompass capes, jackets, hats, amongst others.
The design philosophy reconciles seemingly contradictory demands: parts must be easily removable yet firmly fixed during display. Furthermore, parts share compatibility within the same series, enhancing collectability. This system has spawned a novel form of user interaction—"parts swapping play" on social media—which invigorates the user community and broadens engagement.
Chapter 3: Business Model Analysis – The Revenue Structure of IP Licensing
Fundamentals of the IP Licensing Business
IP Licensing Acquisition Process
In the collectors' toy business, IP licensing acquisition forms the pivotal starting point for product development.
The first stage involves negotiations with IP holders. Major IP holders include animation studios such as Kyoto Animation and ufotable, manga publishers including Shueisha, Kodansha, and KADOKAWA, game companies like Nintendo, Capcom, and Square Enix, as well as film companies such as Toho, Toei, Disney, and Marvel. Each of these IP holders maintains distinct criteria and approval processes for commercialisation, requiring specialised knowledge and a proven track record for successful negotiation.
The second stage is the clarification of rights scope. This involves explicitly defining the merchandising rights' territorial extent (domestic Japan only, Asia, global), duration (typically one to three years), and exclusivity status (exclusive versus non-exclusive). Broader rights entail stricter contractual terms and greater initial investment.
The third stage encompasses detailed contract negotiations. Minimum guarantees usually range from 10,000 to 500,000 dollars, with royalties commonly set between 5 and 15 per cent of sales. Furthermore, the process mandates sample submissions and approvals by the IP holder, typically involving two to four rounds of revisions before final consent. This rigorous review underscores the importance placed on preserving the character's universe and brand image.
Licence Fee Market Rates
Licence fees vary significantly depending on the category of intellectual property.
For popular anime such as Kimetsu no Yaiba (Demon Slayer), initial guarantees range from 200,000 to 500,000 dollars, with royalties between 10 and 15 per cent. Exclusivity contracts are difficult to obtain, given the intense competition amongst companies and the advantageous terms held by IP holders.
Mid-tier anime titles command initial guarantees from 50,000 to 150,000 dollars and royalties of 8 to 12 per cent, with exclusivity contracts attainable. Though market size is limited, demand within this segment is reliable.
Niche anime projects have comparatively low initial guarantees of 10,000 to 50,000 dollars and royalties in the 5 to 10 per cent range, making exclusivity easier to secure. Although riskier, successful titles can achieve high profitability.
Hollywood films require substantial upfront fees between 300,000 and 1,000,000 dollars, with royalties at 12 to 18 per cent, and exclusivity is highly difficult to acquire. Global distribution expectations demand significant financial resources.
IP from Marvel and DC Comics represents the highest tier, with initial guarantees ranging from 500,000 to 2,000,000 dollars and royalties between 15 and 20 per cent. Exclusivity contracts are virtually unattainable due to worldwide popularity and fierce competition amongst multiple licensees.
Popular game titles generally stipulate initial guarantees of 100,000 to 300,000 dollars and royalties of 10 to 15 per cent, with exclusivity negotiated on a case-by-case basis. Maintaining strong relationships with game companies is a critical factor.
For original characters, both initial guarantees and royalties are zero, and full exclusivity is possible. This advantage acts as a major motivation for developing proprietary IP.
Revenue Simulation
Case Study: Figma of a Mid-Tier Anime Character
This case study examines the revenue structure of a licensed product using an IP.
The initial investment amounts to a total of 215,000 dollars, consisting of an 80,000 dollar licence minimum guarantee, 120,000 dollars for mould fabrication, and 15,000 dollars for sample production. This upfront cost is a fixed expense that must be borne regardless of sales performance and constitutes the prerequisite for product commercialisation.
The sales plan sets the retail price at 65 dollars and the initial production volume at 10,000 units. The wholesale price is 50 per cent of the retail price, or 32.5 dollars, generating total revenue of 325,000 dollars.
Looking at the cost structure, manufacturing costs are 12 dollars per unit, totalling 120,000 dollars; royalties, at 10 per cent of sales, amount to 32,500 dollars; marketing expenses are 30,000 dollars; logistics costs total 20,000 dollars; and administrative expenses run to 25,000 dollars. Thus, total costs reach 442,500 dollars.
Profit analysis reveals a loss of 117,500 dollars in the initial production run of 10,000 units. This is due to the high initial investment coupled with a lack of scale merit in small-lot production. However, from the second production run of 5,000 units onwards, mould and licence upfront costs are eliminated, resulting in a profit of 66,250 dollars. By selling a total of 15,000 units, the cumulative profit reaches approximately 15,000 dollars, yielding a modest profit margin of around 3 per cent.
Reasons for Low Profit Margins and Rationale for Continuation
The low profit margin stems from the high costs of licensing fees and mould fabrication, compounded by small-lot production. So, why do companies persist in this business?
Firstly, there is the effect of brand building. Handling popular IPs raises corporate visibility and positively influences sales of other products. Secondly, the strategy of serialisation allows expansion by utilising the same moulds to produce variants in different colours or alternative characters, thereby broadening the product lineup whilst containing additional investment. Thirdly, the collectible nature of the products encourages repeat purchases; customers who buy one figure often tend to purchase others within the same series. Fourthly, appreciation due to premiumisation occurs. Limited editions can trade in secondary markets at two to five times the retail price, contributing significantly to brand value enhancement.
These forms of long-term value creation justify the acceptance of short-term low profitability.
The Supremacy of Original Intellectual Property
The Merits of In-house Intellectual Property
Developing original Intellectual Property in-house affords three significant advantages.
Firstly, the elimination of royalties enables a 20 to 30 per cent enhancement in the profit margin. Whilst licensed Intellectual Property typically necessitates a royalty payment of 5 to 15 per cent of sales, this cost is not incurred with in-house Intellectual Property.
Secondly, the potential for secondary development is expanded. Successful Intellectual Property that commenced as a figure may be diversified into animated content, video games, or licensing to third parties, thereby diversifying the sources of income. The Intellectual Property itself constitutes an asset, generating multiple revenue channels.
Thirdly, it becomes a long-term brand asset. As in-house Intellectual Property is under the complete control of the company, long-term value creation is feasible, and it constitutes a crucial factor in the valuation of the enterprise during mergers and acquisitions.
Case Studies of Success
Kaiyodo: "Revoltech"
In the early 2000s, Kaiyodo confronted the challenge of deteriorating profitability due to the increasingly exorbitant cost of licensing fees. To surmount this predicament, the company developed a proprietary joint mechanism, giving birth to the brand "Revoltech".
Revoltech is a versatile joint system compatible with various Intellectual Properties, and the technology itself became the key point of differentiation. By proposing to Intellectual Property holders, "Would you not consider commercialisation using Revoltech?", the company established a superior position in licensing negotiations. Cumulative sales from 2005 to 2023 have exceeded 5 million units, positioning it as Kaiyodo's flagship product.
Good Smile Company: "Nendoroid"
In 2006, Good Smile Company entered the deformed figure market and launched the "Nendoroid" brand. The market expanded rapidly, driven by a strategy encompassing a uniform format (10 cm in height, three-head proportion), component interchangeability, and broad Intellectual Property deployment.
Cumulative sales from 2006 to 2023 have surpassed 20 million units, making it a core product that accounts for 40 per cent of the company's turnover. It is sold in more than 70 countries globally, having achieved a level of recognition sufficient for the name "Nendoroid" to be registered in the English dictionary.
Examining the profit structure, for a retail price of 50 dollars, the manufacturing cost is 8 dollars (owing to the cost reduction effects of mass production), and the royalty is 2.50 dollars (10 per cent, when using licensed Intellectual Property), resulting in a profit of 14.50 dollars. The profit margin stands at 58 per cent (when using licensed Intellectual Property), and reaches 68 per cent for in-house Intellectual Property. This demonstrates a strikingly high level of profitability when compared with products that utilise licensed Intellectual Property (which typically command a profit margin of 3 per cent).
The success of Nendoroid is a paradigm case demonstrating the paramount importance of developing in-house Intellectual Property. Following brand establishment, the company achieved sustained growth by placing itself in a superior position during licensing negotiations through the Nendoroidisation of various Intellectual Properties.
Chapter 4: The Global Deployment Strategy—Three Theatres of Operation, Three Narratives
The North American Market: The Testimony of the Pre-Dawn Queue
In the summer of 2023, a distinctive spectacle unfolded at the Anime Expo in Los Angeles. On the night preceding the venue's opening, a queue comprising several hundred individuals formed outside the main hall. Their objective was the limited-edition Nendoroid, the "America Limited Edition Hatsune Miku Snow Parade Ver.", available exclusively at the Good Smile Company booth. The item was completely sold out within one hour of the doors opening. Social media channels were subsequently inundated with remarks such as, "I made friends in the AX waiting line."
This illustrates the reality of the North American market, which is presently valued at 1.5 billion dollars and sustains an annual growth rate of 12 per cent. Japanese enterprises command a 30 per cent market share, with the demand for collectors' toys demonstrating a steady trajectory of growth, commensurate with the widespread adoption of anime and manga culture.
The Instrument of Influence
The presence of the digital influencer constitutes the most critical element within the North American theatre. The YouTube reviewer "shartimusPrime", for instance, has sustained reviews of S.H.Figuarts and MAFEX for more than a decade, commanding an audience exceeding 500,000 subscribers. Should he declare in a video that "This joint structure is god-level", the corresponding item is invariably sold out on Amazon by the following day. Influencers are now exerting influence even upon the development process, evidenced by manufacturers making studio visits to solicit their counsel.
On Instagram, the hashtag "#toyphotography" has garnered in excess of 10 million posts, with user-generated content serving as an organic transmission vector for the products' appeal. Corporations commission reviews for remuneration ranging from 500 to 5,000 dollars per video, a practice that predominantly drives online sales, which account for 50 per cent of the total market.
A more intriguing development is the classification of figures as "investment assets" amongst certain financiers in New York. Select models of limited-edition Funko Pop! and BE@RBRICK have demonstrated an annual asset value appreciation exceeding 15 per cent, signifying the emergence of collectors who prefer to "hold the tangible asset rather than the Non-Fungible Token" for investment purposes.
The Commitment of Pre-Order
What has become predominantly institutionalised in the North American market is the pre-order system, which commences reservations between six and twelve months prior to the official release. The volume of production is determined by the number of pre-orders, thereby minimising inventory exposure. Certainty of demand is secured by offering a discount of 10 to 15 per cent to those who place early reservations. This constitutes a mutually beneficial model, yielding enhanced accuracy in demand forecasting for manufacturers and a mitigated inventory burden for retailers.
Challenges do, however, persist. International shipping from Japan commands a high cost, typically between 20 and 50 dollars per item, whilst counterfeit products of Chinese origin are actively encroaching upon the legitimate market at the significantly reduced price point of 10 to 20 dollars. Countermeasures are being progressed, including the rigorous enforcement of trademark registration, interdiction at customs, and the implementation of genuine product authentication systems, such as QR codes. Nonetheless, the mitigation of imitation goods remains a continual operational challenge, necessitating a comprehensive response that strategically integrates legal recourse with the sustained enhancement of brand equity.
The Chinese Market: 2,000 Units Vanished in Two Minutes
In 2022, an incident unfolded during a BiliBili live stream. When Good Smile Company offered the China-exclusive "Shinobu Kocho Silver Lotus Flower ver." for sale, an audience of 150,000 individuals converged, and the limited allocation of 2,000 units was entirely sold out in a mere two minutes. The comment section was overwhelmed with exclamations of "I secured one!" and pleas for a "Next restock", whilst a "Purchase-in-progress thread" by disappointed fans trended on Weibo.
This exemplifies the Chinese market, which, at 2 billion dollars, is the world's most rapidly expanding, with an annual growth rate of 20 per cent. Consumption propensity is particularly acute amongst the younger demographic (18 to 30 years), with an exponential increase in expenditure on collectors' toys concomitant with a rise in disposable income.
A Market with Three Facets
The Chinese market is segmented into three strata. An estimated 50 million Japanese anime aficionados expend 100 to 500 dollars monthly, prioritising quality over price. The estimated 20 million fans of domestic anime and games (such as Genshin Impact and Honkai: Star Rail) are devotees of Chinese intellectual property, yet they generally favour the quality of Japanese-manufactured figures.
The third group is an estimated 10 million investors and resellers. Their primary objective is to acquire limited-edition items and subsequently resell them at two to ten times the retail price, a practice that precipitates the phenomenon of sell-outs immediately upon the commencement of pre-orders for popular products. Although this presents a problem for general fans who are unable to purchase items, the vitality of the market is, in part, sustained by the existence of this demographic.
The Monarchs of Key Opinion Leaders
In the Chinese market, Key Opinion Leader (KOL) marketing is of paramount importance. Figure review videos produced by BiliBili UP-hosts register between 100,000 and 5 million views, with corporations offering remuneration of 1,000 to 10,000 dollars per video. On Taobao Live, audiences ranging from 100,000 to 1 million viewers watch product demonstrations in real-time and execute immediate purchases. A single live stream may occasionally generate sales of 100,000 to 1 million dollars.
The crucial determinant of success is the deployment of China-exclusive products. By introducing traditional Chinese attire versions, designs limited to the Chinese New Year or Mid-Autumn Festival, and Chinese mythology motifs, a perception is established that the market is "valued in China", thereby fostering brand loyalty.
The Uncertainty of Regulation
Challenges, however, also persist. In 2021, the Chinese authorities announced a "Regulation on the Commercialisation of Idol Worship", which temporarily resulted in the removal of advertisements for anime character figures. Nevertheless, manufacturers redeployed their products later that winter, substituting mythical motifs such as "dragon children". It has been reported that this display of adaptability served as a catalyst for new forms of creativity.
The volume of counterfeit goods is estimated to be five to ten times that of genuine products, and their quality is improving annually, rendering differentiation increasingly difficult. Countermeasures are being progressed, including the introduction of genuine product authentication (QR codes) and the direct guidance of consumers to the official Tmall store. Yet, compounded by the complexity of payment and logistics (requiring Alipay or WeChat Pay), the Chinese market remains a theatre of operation where opportunities and challenges coexist.
The South-East Asian Market: The Future Commencing in "Mini Harajuku"
Every weekend in Bangkok's Siam district, a "figure spot-sale flea market" is convened, where young people congregate with their self-made display cases. This features not only second-hand Japanese figures but also numerous custom modifications, signifying a unique culture formed by a generation that matured consuming Japanese anime. This spectacle, locally dubbed "Mini Harajuku", is emblematic of the South-East Asian market, which is presently valued at 800 million dollars and is expanding at an annual rate of 15 per cent.
The Potential of Diversity
The distinguishing characteristic of the South-East Asian market is its inter-country diversity. Thailand (with a market size of 300 million dollars) exhibits an extremely high affinity for Japanese culture and possesses a substantial demographic of anime and manga enthusiasts. Indonesia (200 million dollars) presents a vast latent market with a population of 270 million, yet it faces challenges regarding purchasing power, with an average monthly income of 300 to 500 dollars. The Philippines (150 million dollars) is an English-speaking market with one of the world's highest rates of social media utilisation. Singapore (100 million dollars) is characterised by high-income earners and an ingrained collector culture, facilitating sales at prices equivalent to those in Japan.
The Filipino YouTuber "JhayceToyBox" reviews figma and S.H.Figuarts, and his channel is demonstrably driving an increase in the purchase of Japanese-made figures. His video sets feature self-constructed diorama backgrounds, eliciting an empathetic response to the concept of "recreating a dream world within a confined space".
In Singapore, affluent collectors collaboratively manage a "High-End Statue Exhibition Salon", where between 200 and 500 statues contributed by their owners are publicly exhibited for a fee. A novel trend has thus emerged, whereby figures are mutually utilised as "exhibition assets".
The Strategy of Tiered Pricing
The implementation of a tiered pricing strategy is crucial in the South-East Asian market. A wide range of customers is accommodated by offering products at parity with Japanese prices (50 to 200 dollars) to the premium segment, Chinese-manufactured items (30 to 80 dollars) to the middle segment, and Prize Figures (10 to 25 dollars) to the entry-level segment. Through an annual average of 20 to 30 anime events, community building and brand experience are facilitated via pop-up stores, limited-edition sales, and collaborations with cosplayers.
The three markets are each characterised by distinct cultures and challenges. The common denominator, however, is the fundamental truth that collectors' toys have transcended their status as mere commodities, becoming a culture that unites individuals, as evidenced by the fans queuing before dawn, the limited-edition products that vanish in two minutes, and the young people who convene on weekends.
Chapter 5: The Manufacturing Process and Quality Control
The Manufacturing Flow
1. Planning and Design (3 to 6 months)
The initial stage of the manufacturing process is planning and design, which typically spans three to six months. This phase commences with the selection of Intellectual Property and licensing negotiations, followed by character selection, pose consideration, price determination, and the identification of the target demographic. These elements are interconnected, necessitating a meticulous assessment of market viability and profitability.
The commissioning of the prototype artist is a critical step that determines the product's quality. The remuneration for a prototype artist ranges widely from 3,000 to 15,000 dollars per figure, fluctuating according to the artist's renown and the complexity of the work. Notable prototype artists include Maki Asai, known for Nendoroid, Kaoru Sakaki, who handles high-end statues, and Takayuki Takeya, who excels in creature design. Their technical expertise and brand equity directly influence the market appraisal of the final product.
There are two primary approaches to sculpting: digital and analogue. Digital sculpting, executed using software such as ZBrush and Blender, offers the advantages of easy modification and simple data sharing. Conversely, clay sculpting excels in organic expression and remains the prevailing method for high-end items. The two are not mutually exclusive, being deployed according to the specific characteristics of the product.
2. Prototyping and Mould Manufacturing (3 to 6 months)
The second stage is prototyping and mould manufacturing, also requiring three to six months. Following the creation of 3D data or a digital scan, a prototype is produced via 3D printing. This prototype necessitates approval from the Intellectual Property holder, which is typically attained after two to four rounds of modification. Intellectual Property holders maintain stringent criteria regarding the expression of the character and the fidelity to the original work's worldview, necessitating meticulous scrutiny of every minute detail.
Upon approval, the commission for mould manufacturing is placed with mould makers in areas such as Shizuoka or Osaka. Mould manufacturing requires two to four months and is performed by highly skilled mould makers. However, the average age of mould makers is advancing to 55, signifying a serious challenge regarding the shortage of successors. This issue of skills transference is a critical concern that impacts the overall sustainability of Japan's collectors' toy industry.
Upon the completion of the mould, test shots are executed to confirm the precision of the moulding. Concurrently, a painting sample is created for the final confirmation of colouration and painting techniques. Should any issues be identified at this stage, modifications to the mould or alterations to the painting specifications will be implemented.
3. Mass Production (2 to 4 months)
The third stage is mass production, which requires two to four months. The location of production is selected according to the product's price range and quality requirements.
Domestic production in Japan is utilised for high-end and limited-edition items. Although labour costs are high, quality control is rigorous, ensuring the highest standard of finish.
Chinese production is the predominant method for mass-market products. Nevertheless, it is imperative that production is conducted under the supervision of Japanese corporations, as quality standards are difficult to meet with unsupervised local production.
Production in Vietnam and Thailand is also adopted for certain products with the objective of cost reduction. These regions are attracting attention as future production hubs, owing to labour costs that are lower than those in China.
The quality control system is of extreme importance. Regular audits are conducted by Japanese engineers, painting samples are approved in advance, and all products are subjected to comprehensive inspection for defects. The target defect rate is set at less than 5 per cent, and continuous improvement activities are implemented to maintain this standard.
The Intrinsic Strengths of Japan's Collectors' Toy Industry
The Source of Strength
The competitive advantage of Japan's collectors' toy industry is predicated upon three intrinsic strengths.
Firstly, the monozukuri philosophy underpinning the technical capability. The precision that tolerates no more than a 0.01mm deviation, the application of ten or more layers of gradation painting, and the durability to withstand 10,000 articulation tests are not merely technical specifications. They are manifestations of the Japanese artisan culture that strives for perfection, embodying the integrity of "not cutting corners even in unseen areas". Fans perceive this commitment and conclude that it justifies the payment of a price premium.
Secondly, trust is established through respect in the relationship with Intellectual Property. Japanese corporations prioritise a profound comprehension of the character and meticulous research of the original work, pursuing the inevitability of "this pose for this character" through close consultation with the director or author. This product creation, imbued with an affection for the character rather than a mere three-dimensional rendition, secures the trust of Intellectual Property holders, fostering a virtuous cycle of securing licences for popular Intellectual Property.
Thirdly, co-creation with the fan community. Through direct dialogue at events such as Wonder Festival, the commercialisation of requests made on social media, and the strategic design of limited availability and collectability, fans participate in product development not merely as consumers but as "members of the community". This dynamic facilitates the formation of a fervent fan base and enduring brand loyalty.
Market Outlook
The global market is expanding at an annual rate of 12 per cent, with young fan demographics in emerging markets such as China, India, and the Middle East demanding Japanese quality. Demand is demonstrably increasing in tandem with the expansion of the market size.
However, Japanese corporations cannot, in isolation, fully satisfy this demand. Constraints exist in terms of financial resources, production capacity, marketing capability, and distribution networks.
Conversely, whilst overseas corporations possess capital, global marketing prowess, and extensive distribution networks, they lack the technical capability, Intellectual Property relationships, and the profound connection with the fan community that Japanese corporations command.
A greater market opportunity can be captured by integrating the strengths of both parties. A partnership transcends a mere capital relationship, representing an opportunity for value creation predicated upon the mutual utilisation of core strengths.
Opportunities for Partnership
Japan's collectors' toy industry offers three distinct opportunities for collaboration with overseas corporations.
Firstly, Original Equipment Manufacturer (OEM) production. By leveraging Japanese technical capability for product development, utilising existing moulds and production lines, and providing an established quality assurance system, overseas corporations are enabled to introduce high-quality products to the market. For Japanese corporations, this leads to the efficient utilisation of production capacity and the assurance of stable revenue.
Secondly, licensing agreements. The intellectual property of Japanese corporations may be leveraged in overseas markets through the licensing of original Intellectual Property such as Nendoroid or Revoltech, or through the technical licensing of mould-making or painting techniques. This constitutes a method for expanding revenue beyond the constraints of physical production capacity.
Thirdly, capital alliances and Mergers and Acquisitions (M&A). Investment in Japanese corporations provides an avenue for the acquisition of technology, the acceleration of global expansion, and the integration of supply chains, thereby generating synergy for both parties. Japanese corporations gain access to financial resources and market access, whilst overseas corporations acquire technical capability and brand equity.
These opportunities for partnership constitute crucial options for Japan's collectors' toy industry to advance to the subsequent phase of growth. Strategic collaboration with overseas corporations is now indispensable to maximise the benefit of the expanding global market opportunity.
Glossary
Scale Figure: A figure that is a three-dimensional representation of a character at a specific scale (e.g., 1/7, 1/8).
Action Figure: A figure with movable joints that permits posing.
Nendoroid: Good Smile Company's series of deformed figures.
Garage Kit: A small-volume production, assembly-required figure kit.
Prize Figure: Figures intended as prizes in arcades, representing the low-price segment.
Same-Day Licence: Intellectual Property usage permission granted for a single day at Wonder Festival.
Revoltech: A proprietary joint mechanism developed by Kaiyodo.
Soft Vinyl (Sofubi): Figures manufactured from soft polyvinyl chloride, a traditional Japanese toy material.