Action Man on the attack

... and he's got Po and Tinky Winky at his side. Richard Phillips reports from the toy front line

IF you thought Action Man had faded into obscurity, think again.

The macho doll, popular way back in the sixties, has made a comeback as unlikely as John Travolta's leap from obscurity to low-life star in Pulp Fiction after a previous career as a romantic lead.

Action Man, too, has been reinvented. Gone, in the main, are the trappings of militarism that older generations remember him by. The new-look version has been re-incarnated as a politically-correct fighter against urban crime, especially the drugs world.

Action Man's renewed popularity isn't confined to the UK; its maker Hasbro claims it is the most popular boy's toy in Scandinavia, while it sells well in France and Italy.

It is the overseas drive, however, that starkly illustrates one of the great dilemmas facing today's toy makers.

As a British stalwart, Action Man's popularity overseas had been limited. But for most toy makers today, if a brand is to make it, it must do so on a global footing.

And in the global markets, where toy makers fight for a claim to parents' wallets in Hong Kong, Paris, or Berlin, the real rivals are not other toy makers.

"I don't see myself competing against Mattel," says Bryan Ellis, group managing director for Hasbro UK, the British arm of the American toy giant, Hasbro. Rather, he sees the company up against the likes of Sony, Nike, Adidas and Nintendo. Money parents spend on gifts for their children could just as well go on a Sony Walkman at Christmas, or the latest trainers from Nike.

And Mr Ellis, who can lay claim to the revival in Action Man's fortunes, is also uncertain about the sort of business he is in.

"I haven't decided if it's children's entertainment, or children's leisure time that we are competing for, rather than being just simply a children's toy manufacturer."

His comment is reflected in the changing displays at Toys 'R' Us. Less than half of the toy store now is filled by traditional toys. The rest is displays of computer games, videos, and sports goods and clothing. Pre-recorded videos, for example, take about a third of all entertainment spending on children, with Disney taking a large chunk of that amount.

While many toy makers are licking their lips in the run-up to Christmas, things look less rosy further out.

Chris Burgin, chief executive of Bluebird Toys, the UK's largest independent toy manufacturer, paints a bleak picture of the industry as it gears up for its busiest time of the year. "Traditional toys are under huge pressure, and are a declining business, in the long term," he says.

Polly Pocket was the foundation of Bluebird Toys' success; it swept the world and continues to draw the interest of kids everywhere.

The company generates annual sales of over pounds 60m. However, Polly Pocket has stumbled recently, with Mattel, its distributor in the US, deciding to pull out of selling the brand over there.

Overseas sales are vital for a business like Bluebird Toys. Mr Burgin explains that the development costs are too high, in most cases, to justify a toy which sells in Britain alone. "Tooling up costs for a toy that only shifts 100,000 units means each one may cost pounds 2 before you get it into the shops. But if you can sell a million units, then your development cost comes down to 25p or so - a very different proposition."

So there is little sense in building up and developing a mass market brand if it lacks global appeal.

For the toy market, which is notoriously prone to fads, fashion and the fickle taste of the school playground grapevine, ensuring a toy will sell overseas is almost essential.

The tamagotchi is a prime example. Its Japanese makers actually stimulated demand for the cyberpet by getting teenagers in Japan on to its books, to talk up the merits of the toy to friends and peers - real grapevine marketing.

The hit of the summer in the UK, however, the cyberpet is now friendless - few trendy kids would be seen with one.

Bluebird has watched the impact of electronics closely, and has come up with its own range of electronic products. It has concentrated on electronic organisers - diaries and address books - for children. To be able to sell at normal retail prices, most of the products use technology that is out of date. Its "Secret Diary" was launched in 1995, and this year is expected to shift 200,000 units, selling at upwards of pounds 20.

Mr Burgin says the key is to build brands that are sustainable for the long term. He points to Polly Pocket as an example; the brand is developing a following he hopes can stand the test of time - like Action Man or Barbie.

Despite the long-term sellers, this year's Christmas hit looks to be in the bag already. Yep, parents of toddlers know only too well what is in demand; Teletubbies seem to have won hands down.

As well as being set for the number-one slot in the singles charts - with the catchily named "Teletubbies say Eh-Oh" - licensees are expected to sell 1 million Teletubby soft toys for Christmas. BBC Worldwide, the marketing arm of the Corporation, has come up with a series of deals for the products, and has high hopes that their shelf lives will stretch out for years. But other commentators believe that the market for the Teletubbies is already close to saturation point, and certainly will be after Christmas.

There are now up to 40 licensees for Teletubby-linked products, from soft toys, to books (four), videos (two), a single - just the one so far - along with one audio cassette, and any number of soft toys, T-shirts, and nursery-age products.

While Teletubbies seem relatively harmless, some mourn a lost era, before the day of the global hard sell and the relentless quest for the next one-hit wonder. A time when Christmas presents for children had a certain timeless quality, and Airfix models were the ultimate in sophistication. If those days ever did exist, they're gone now.

(Incidentally, does anyone know where I can get a Po doll? My local toy shop is sold out.)