Video could've used some visuals and examples but nonetheless a good launching point for this ongoing debate.
A few things from me:
- Excellent point on licensing, and the RDJ fee explains why HT is making a boatload of IM/Stark figures. Not sure if licensing costs as a whole are going up dramatically though, could've used some numbers or examples to illustrate that. From the little exposure I have to the licensing world, I haven't seen dramatic increases in licensing fees over the last 5 years, but maybe for Marvel specifically there's been a huge jump, perhaps after Disney took over (more negotiating power).
- Motuxmen touched on tooling, further expanding that point, tooling costs are per figure line, and we've seen a pretty large increase in HT's assortment over the last 5 years (not counting the IM3 variants). Price increases help to reduce the break-even unit sales per figure line.
- Cost of living increases typically average 2-4% a year, a very minor increase factor; would be better to look at cost of raw materials for HT over this period, I'm not a manufacturing or plastics expert but just looking at all hardline toys across the industry, I don't see a massive spike in toy prices across all manufacturers, so I presume it hasn't been dramatically more expensive for toy makers since 5 years ago.
- I think Anthony was using HK rent as an example but rent increases are not a valid reason - as consumers we can live with price increases as a result of COGS increases (i.e. raw materials, tooling, licensing) but passing through fixed expense increases is not a particularly acceptable practice from our POV; afterall, HT has the option of relocating to get away from high rent or downsizing their Secret Toys showroom.
- Anybody who believes that HT's operating income margins as a % of revenue hasn't increased in the last 5 years needs to put the pipe down. Some of this price increase is cost pass-through sure, but HT is most certainly extracting more $s from consumers. I have no problem with this, companies need to show growth, and as long as consumers continue to pay whatever prices HT is charging, they have every right to keep jacking up the price until consumers start saying no with their wallets.