Despite Long-Term Slump in Toy Market... Sonokong Performed Well Last Year

Sales up 16.2% and operating loss down 41%... Game division drives performance
Structural downturn in toy market leads to 55.9 billion KRW sales drop over 4 years... Optimistic outlook premature

Son Goku logo.
Photo by Asia Economy DB

[Asia Economy Reporter Lee Junhyung] Despite the domestic toy market slump and COVID-19, the performance of toy company Sonokong improved last year. Although toy sales struggled, the game distribution business showed strong growth. However, it is premature to expect continued performance improvement this year.

According to the toy industry on the 12th, Sonokong's sales last year rose 16.2% year-on-year to 85.3 billion KRW. After steadily declining since 2016, sales slightly rebounded last year. Operating loss was 1.2 billion KRW, down 41% from the previous year.

Sales from the game distribution sector, including Nintendo, drove the performance. The game business, entered in the mid-2000s to secure future growth engines, played a savior role. A Sonokong official said, "It is true that the game sector contributed to the improved performance," but added, "Due to confidentiality obligations under license agreements, it is difficult to disclose separate sales statistics for the game sector."

It is still too early to be optimistic that the improved performance last year will continue this year. Sonokong recorded its highest sales of 125.1 billion KRW in 2015 since its founding, but has shown a steady decline since 2016. Sonokong's sales decreased by 55.9 billion KRW over four years, from 129.3 billion KRW in 2016 to 73.4 billion KRW in 2019.

Following the success of 'Hello Carbot' launched in 2014, and 'Turning Mecard' released in 2015, the toy industry could not avoid structural stagnation due to low birth rates. According to Statistics Korea, the number of toy companies dropped about 83% from 461 in 2005 to 80 in 2019. During the same period, the number of employees in toy companies decreased by over 1,000, from 2,881 to 1,724.

Moreover, Sonokong's operating profit and loss have fluctuated annually between deficits and surpluses, showing volatility. There is significant uncertainty regarding performance. Operating profit fell 421% year-on-year in 2017 but increased 108% in 2018. In 2019, operating profit again dropped 324% compared to the previous year.

Variables such as the prolonged COVID-19 pandemic remain. A Sonokong official said, "Most toy sales channels are offline, centered on large supermarkets," adding, "Offline sales channels decreased last year, affected by COVID-19."

Meanwhile, Sonokong's business areas mainly consist of toy sales and game distribution. While Sonokong initially engaged in both game production and distribution when starting the game business, it now focuses solely on game distribution through its subsidiary Sonokong IB.

This content was produced with the assistance of AI translation services.