How aggressively cute toys for adults became a $686 million business


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When 37-year-old Jack recently brought a woman back to his house after a date, she was taken aback by his spare room. Stacked in neat boxes from the floor to the ceiling, exactly 1,080 plastic figurines fill the rec room in Jack’s California home. Over the past four years, the grape farmer — who is identified here by a pseudonym — has spent more than $9,000 on the toys.

Each of Jack’s toys has a pair of large, vacant black eyes, a square head, and a disproportionately small body. They are Pop Vinyl figurines, created by the 20-year-old company Funko Inc., based in Washington state, and launched in 2011. Known to fans simply as “Funko Pops,” each toy is based on a pop culture character, and according to the official Funko App, there are now 8,366 different figures. Alongside the expected superheroes, you can buy Funko Pops of Prince Harry and Meghan Markle, the Pillsbury Doughboy, Tupac Shakur, Abraham Lincoln, Cece from New Girl, a shark from Sharknado, and the son of the creator of Vans shoes, Steve Van Doren. Everyone, the official Funko motto goes, is a fan of something.


A segment of “Jack’s” collection of 1,080 Funko Pops.

“We take pride in the fact that we can Popify about anything,” says Sean Wilkinson, Funko’s creative director, who has been with the company since its inception. “There’s nothing we won’t do at this point.”

Funko Pops are now available from 25,000 retail brands worldwide, from Walmart to Amazon to Hot Topic and even, somewhat bizarrely, Foot Locker. In 2018, the company’s net sales increased 33 percent to $686.1 million, with figurines accounting for 82 percent of all sales. After the company released its Q2 earnings report in early August, declaring that sales up are 38 percent compared to this time last year, CEO Brian Mariotti called his company “recession proof.”

It’s likely you’ve now encountered a Funko Pop — be it on a coworker’s desk, wrapped under a Christmas tree, or waiting, blank-eyed, in your date’s home. Why exactly are the figurines so phenomenally popular, and how did the company come to dominate the pop culture merchandising market?

“When I walk into my room full of Pops, I like to look around and just be blasted by nostalgia,” Jack says of his collection. “I like that you can have characters from an old Mexican TV show, and you can have a Care Bear, and you can have John Wick and Elvira, and they all look right together. They’re kind of uniform — you can have all these different genres together in one concise collection.”

Collectors like Jack make up 36 percent of Funko’s customers, while 31 percent are “occasional buyers.” Wilkinson says Funko Pops appeal to both markets because of the “science of cute” behind the figurines’ design.

“There’s literally a certain height of eyes a certain width apart, and the head being two-thirds the size of the body, it’s a set ratio,” he explains. “Like baby animals with big eyes that are kind of far apart. I think it’s sort of born in us to be attracted to these things.” Wilkinson says because of these strategic design decisions, there are many “reluctant” Pop collectors. “A lot of people didn’t want to like these … and they’d buy one, they’d buy two, and suddenly they’re hooked.”

Yet it’s also undeniable that many people find Funko Pops ugly or unnerving — in the past two months, a YouTube video titled “I HATE FUNKO POP VINYLS” has accumulated more than a million views. “The Dory one looks like the physical manifestation of human sin,” reads the top comment on the video, with more than 1,500 likes. (For what it’s worth, Wilkinson acknowledges that designing fish Funkos is hard — “anything with eyes on the side of its head is always a bit of a challenge.”)


Funko Pops are often regarded as cute, but one internet commenter referred to the figurine of Dory from Finding Nemo as looking like the “physical manifestation of human sin.”
Funko

Surprisingly, avid collector Jack is among those who find Pops “creepy-looking,” and even describes some designs as “very off-putting,” citing an original Goofy Pop with drooping eyelids over pupil-less eyes. “There are some that are very ugly and creepy, so I wouldn’t call them cute,” he says, “I just find them very interesting.” Jack says the main appeal of the toys is that you can purchase characters that aren’t normally seen in a collectible form. “Like Travis Bickle from Taxi Driver, when’s the last time you saw a collectible for him? Or Vincent Vega from Pulp Fiction. When you see something like that, something you absolutely love, and it’s only $10, why not pick it up?”

Funko now has more than 1,000 licensed properties, from the Avengers to the Golden Girls, Fortnite to Flash Gordon, Stranger Things to The Office. “Evergreen and classic” properties like Harry Potter, Star Wars, and Disney make up nearly half of all Funko Pop sales, but the company is seemingly constantly procuring new, unexpected licenses, from drag queens to food mascots to NASCAR drivers.

“Our brand identity is to be able to say that we have something for literally everybody,” says Dolly Ahluwalia, Funko’s VP of licensing and business development. Ahluwalia says the company constantly looks out for new licenses by searching fan forums and listening to Funko collectors (the company calls them “fanatics”) about what they want to see next. Old franchises, she says, are a huge hit.

“We’re in a world right now where there is a lot of nostalgia at play — people have a lot of affinity for brands and shows from the ’80s and ’90s,” she says. Yet hunting down licenses for obscure properties can be challenging. “Sometimes those licenses aren’t even open for licensing any more, the studio’s given up the rights, or we can’t track down the talent,” she explains. Nonetheless, the hunt usually pays off. Ahluwalia says the license for Pokémon “took a long time to procure” but “ended up being huge” for the company. “It was a long process to get Pokémon to allow their characters to be stylized like Pop, but we are super excited about the line,” she says, adding that despite limited distribution, Pokémon is now Pop’s 11th most popular property.

Still, the job has gotten markedly easier for Ahluwalia and her team in recent years — where they once had to educate potential partners about Funko Pops, now brands come to them in the hopes of being Popified. “Once upon a time, we really had to educate our partners on who we were and how we were different from other traditional toy companies, or collectible companies,” Ahluwalia says. “But now most people in the industry are very familiar with our product and our stylization. So we have our own swim lane.”

How exactly did the brand achieve this notoriety? Ahluwalia says Funko’s approach is similar to that of the fast-fashion world — products are frequently licensed, designed, and released in a matter of months, with some available in just 70 days. When Game of Thrones’ final season aired earlier this year, the company worked directly with HBO after each episode to get new Pop Funko concepts out for presale. “We react and get the product in motion even much earlier than we can actually get the physical plastics out on the shelves,” Ahluwalia explains.

A May 2019 investor presentation from the company boasts that a Pop can be designed and submitted to a licensor in 24 hours, molded into a prototype in 45 days, and “sourced from Asian facilities while maintaining quality control” in just 15 days. Funko also prides itself on its low production costs — each new figure costs between $5,000 and $7,500 to develop.

Perhaps the greatest trick Funko ever pulled is releasing multiple iterations of the same character, whether in different costumes or poses, or painted with glitter or chrome. On the Funko website, there are currently 29 distinct figurines of TV host Conan O’Brien — you can get the comedian dressed as Jon Snow, an Armenian folk dancer, or Pennywise the clown, or even just painted entirely orange.

“It’s demand, really — we’ve probably made 50 Iron Mans, but that’s because Iron Man is so hot,” says Wilkinson, the creative director. For Funko, releasing new versions of already heavily Popified characters can be a challenge. “The next Avengers comes along and we’ve got to come up with three more Iron Mans,” Wilkinson says, explaining the company will study movie scenes closely to come up with new poses, costumes, and scenarios for figurines.

“People want more Batman; it blows my mind how many versions we’ve done, but they continue to sell well. And so, you know, sales comes to us and says, ‘Sean, what other Batman can we do? Have we forgotten one? Is there something we haven’t thought of?’”

Jack says he doesn’t feel the need to collect every Funko Pop ever made, instead focusing on franchises he’s a fan of. Occasionally, he’ll even pass on Pops based on shows that he likes — he doesn’t want to collect The Office figurines because they’re “plain,” simply depicting men in suits. As more and more characters become Funko Pops, Wilkinson admits that some might not pass the company’s “sandbox test,” the idea that a figurine would be instantly recognizable if pulled from the sand in 10 years’ time. The near-indistinguishable Modern Family range inspired some backlash last year — commenters on Reddit’s Funko fan page called the toys “bland af,” “the newest generic human collection,” and “sad.”

Is it possible, then, that Funko will run out of things to Pop? At present, the company’s profits continue to climb, from $98 million gross profit in 2015 (when Funko had just 205 active properties) to $258 million in 2018. History has shown us that collectibles tend to decline in popularity, and it is possible that Funko Pops could go the way of the Beanie Baby. Yet at present, there are more than enough fans keeping the company in business.

Like Jack, 18-year-old Tristan from Canada has more than 1,000 Funko Pops, and estimates he has spent between $15,000 and $17,000 on the toys (his most expensive purchase was a $110 Jollibee, the mascot of a Filipino fast-food brand). “It’s fun to collect them; they’re everywhere, they’re also neat to look at,” he explains, “Every one has its own kind of features and — not personalities, because that sounds weird, but stuff about them that makes them all unique. They’re simplistic, but they’re detailed at the same time.”

Both Jack and Tristan run YouTube channels dedicated to their hobby, and advertising revenue earned via the site helps them afford more toys. A few years ago, Tristan had to wait until birthdays and Christmas to get new Funko Pops, but now his collection grows by the day. “Whenever I can, I’ll pick up a new one,” he says.

To encourage collectors, Funko uses many tried-and-tested market tricks, like releasing toys exclusive to certain locations (Mr. Rogers is exclusive to Barnes & Noble) and producing limited-edition runs (only 480 holographic Darth Mauls were released at San Diego Comic-Con in 2012). Yet the company doesn’t just rely on people like Jack and Tristan. A third of all customers are only occasional buyers, and the customer base appears to be a diverse set of people with a diverse range of fandoms. In 2018, no single property made up more than 6 percent of purchases; Pops related to new theatrical releases encompassed 20 percent of sales, TV show-related Pops accounted for 16 percent, and gaming Pops made up 17 percent. There is a roughly equal gender split in customers (51 percent women to 49 percent men), and last year, international sales grew 57 percent.

Interestingly, Funko’s average customer is 35 years old — two years younger than Jack, who says his date recovered from seeing his spare room. “The rest of the night went very well and we went on several more dates,” he said. Although it ultimately didn’t work out with her, Jack says his “crazy room of Funko Pops” didn’t have “too much influence on it either way.”

For Wilkinson, the past few years have been a whirlwind. “I feel like I discover a new thing we’re making or a new company we’re buying almost every other week,” he says. Ten years ago, Funko — which had grown a loyal customer base for its bobblehead range — was feeling the heat of a declining fad. Now it is one of the world’s most recognizable pop culture merchandisers. “It’s just bigger and more,” Wilkinson says. “I continue to be wowed by how fanatical people are about the stuff and how much they appreciate what we’re doing.”

A few weeks before we speak, Wilkinson attended Comic-Con and was blown away to see fans “almost in tears” because of how much they love Funko Pops. “I don’t know that a whole lot of people — maybe doctors and firemen — get that feeling of appreciation for what you do,” he says. “It’s really rewarding. I pinch myself regularly and get tingly, even after all this time. I haven’t gotten any more jaded. It’s been a great ride.”

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