A visit to the 103rd annual toy show at the Jacob K. Javits Convention Center this week helped assuage concern about a decline in the creativity and energy of our country’s young people and our inventors. The show featured products that should boost demand for the industry come next Christmas and are likely to prove daunting to parents whose job description includes helping their children read the instruction manual. This year’s show caters especially to smaller vendors, who depend on new creative items to attract shoppers. Judging from the wares on display, this group has plenty to choose from.

It’s a good thing, because toy sales overall have been on the decline. According to the NPD Group, toy sales in 2005 dropped by about 4% to $21.3 billion, down from $22.1 billion in 2004. For years the industry has seen mass merchants like Wal-Mart, Kmart, and Target take market share from specialty retailers, mainly by driving prices lower. Thus, the drop in revenues stems from price pressures as well as a fall-off in demand in some industry segments. Also, children of all ages have embraced video and computer games, leaving less time and money for other forms of entertainment.

Not all toy categories were down last year. As has been the case in recent years, toys inspired by popular television shows and movies, such as Star Wars and Dora the Explorer, did quite well.

Another clear industry winner was building sets, the fastest growing category, which posted a 16% rise in sales.

The Vertical Vengeance Coaster by KNEX, a so-called Big Wow model roller coaster made from the company’s signature building blocks, was among the new products in that sector being introduced at the fair. The sizable, colorful set is designed to sell for $59.99, but is co-marketed with Six Flags Amusement Parks and is packaged with six “$10 off” coupons for attendance at the theme park, so theoretically you could break even buying the toy. This is the kind of building project guaranteed to produce a migraine on Christmas Eve, but is also extremely satisfying once it’s up and running. Small coaster-like cars zoom around the track, are pulled to the top with a motorized chain, and then spin into child-designed configurations at high speeds.

KNEX is a privately owned American company that also produces Lincoln Logs under a license from Hasbro. The founder, whose prior business was producing the plastic piece in the center of pizzas, once spent a wedding reception connecting straws into interesting shapes, then realized that such designs might be fun for children. Not too many years later, the company is the third-largest producer of building toys in the industry.

The no. 1 company in the building set category, of course, is LEGO, the family-owned Danish company. The newest line from this perennial favorite is called Mindstorms NXT, targeted at kids 10 and older. These products are programmable robots, first introduced in 1988, but now taken to the Next (NXT) level. The upgraded version employs a 32-bit microprocessor versus the original 8-bit, and can be used in conjunction with a PC or MAC. It also uses wireless Bluetooth technology. The toys employ three motors and a processor that powers four sensors – sound, touch, light, and ultra-sonic. (In other words, the toys are a lot more sensitive than most adult males.) The child (or, rather, budding computer czar) can program the model to respond and react to these stimuli in a bewildering variety of ways.

One item of the new line is Spike the Scorpion, a multi-legged fellow about a foot long built from Technic pieces. At the LEGO booth, Spike had been programmed to approach an object/person/edge of table, detect the obstacle or void, and then respond by aggressively whacking the barrier with a darting claw-like arm – or, actually, like a scorpion. This is not a toy for the overly-sensitive.

Spike retails for $249, compared to $199 for the old system, and won’t be available until August.That will probably give the LEGO people time to train more of their people in Spike’s operation; it seemed that experienced Spike handlers were in short supply. On the other hand, if the LEGO people can’t build and operate these toys …

A group that did experience a sharp drop is the makers of puzzles and games, where revenues were off 9%. It’s not too hard to see why. One company exhibiting at the show was ThinkFun, a company that’s been making puzzles for 20 years. They were showing a hot new puzzle made of bits of plastic called Gordion’s Knot that is more than 10 times as difficult as any prior product. Games Magazine described it as a 28 on a 1-to-10 scale of difficulty. In other words, it’s basically impossible. This modern-day version of something like the Rubik’s Cube is so complex it comes with an instruction manual. Then there’s a game by R&R Games called “You must be an Idiot.” Really, these are not toys that are likely to make you feel good about yourself.

A very hot item introduced at the show for those too young for video games was something called Moon Sand. This is a product similar to Play-Doh, but granular like sand. It is designed to sit in a plastic basin, so that children unable to play outside can still have a sandbox experience. It is nontoxic, so that it can be eaten (and undoubtedly will be), comes in many colors, and can be molded into shapes, like sand. This company surely must be funded by the Oreck vacuum cleaner people. The basin is small and lightweight, ideal for tipping, while the sand will inevitably also strike children as similar to snow – perfect for throwing.

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