Last year, Funko hit a major milestone as the company hit $1 billion in annual sales. Now, the Washington-based purveyor of products for every fandom is setting its sights on doubling that organically by 2026.
This week, Funko held its first-ever investor event in New York City where it outlined plans to double its business by growing its collectibles assortment, expanding into new categories, growing its direct-to-consumer (DTC) platform, and tapping into new international markets.
At the event, Funko CEO Andrew Perlmutter, Chief Creative Officer Brian Mariotti, Chief Revenue Officer Andy Oddie, and Chief Financial Officer Jennifer Fall Jung (all pictured top) detailed the plan to reach more than 223 million addressable (pop culture-engaged) consumers in the U.S. through innovation across all of its brands, including Pop!, Vinyl Gold, Popsies, Soda, Mondo, Loungefly, Funko Games, and Pop! Digital.
Introducing Kids to Funko
There’s no doubt that Funko has done a stellar job in building its collectibles business over the past decade, and the numbers don’t lie: Funko doubled its sales from $500 million in 2017 to $1 billion in 2021. But kids are a key factor in unlocking the next generation of fans, through innovations in new products and new categories.
The launch of last year’s Marvel Battleworld and this fall’s Disney Kingdomania took steps to add collectibility to gaming. Now, Funko Games is adding Pop! Puzzles to its mix with an introductory offering featuring 500-piece puzzles inspired by Teenage Mutant Ninja Turtles, Avatar: The Last Airbender, and the holiday classic Elf.
One license that’s done a surprising amount of business for Funko and has become evergreen is Scott Cawthon’s Five Nights at Freddy’s. The survival horror video game series connects with a vast age range of fans, including younger kids. And, its constant popularity has led to a long-running presence at retail beyond Funko’s core Pop! offerings, particularly in action figures, plushies, and games. That success sparked the launch of Funko Snaps!, a new product line that is hitting retail this fall backed by Funko’s second-ever TV commercial.
“I will say that we have had tremendous success in the toy aisle with the Five Nights at Freddy’s brand. And we have not really innovated in that brand that much over the last couple of years,” Funko CEO Andrew Perlmutter tells The Toy Book. “We’ve really been stuck to the two lines that have worked the best which are action figures and plush.”
To deepen its relationship in the toy department using the Five Nights at Freddy’s brand, Funko went to Walmart to discuss some options.
“We said, ‘You know, guys, this line grows year over year over year, and we’re not getting any more space. How do we grow this to make a more of a brand statement in stores?’ And so in that conversation, we developed a couple of different concepts of which Snaps! was the one that they wanted to go with the most,” Perlmutter says.
The line, which includes action figures and playsets with mix-and-match parts is rolling out now and has already attracted big retail interest beyond Walmart. It’s hitting Amazon, GameStop, funko.com, and others in the weeks ahead. But Perlmutter says that the company is constantly looking for new ways to bridge the cross-generational gap.
“There are other opportunities, other ways [to grow the business]. Last year, for example, there was Turbo Man from the movie Jingle All the Way. We made an actual toy and it was our No. 1 selling item at Walmart last year — better than any Pop!, better than any Five Nights at Freddy’s,” Perlmutter explains, noting that Funko is taking “opportunities to continue to grow and introduce the brand to younger people.”
Plugging New Acquisitions Into the “Funko Flywheel”
Over the past few years, strategic acquisitions have become an important part of Funko’s expansion. The company notes that its Loungefly business has seen 12x growth since acquiring the maker of fashion apparel and accessories in 2017. When Funko acquires a company, it can immediately connect it with more than 1,100 licenses, and then they drop it into its distribution machine and its DTC platform while tapping into the existing Funko audience.
Acquisitions are carefully planned to bring expertise in new product categories in-house. This led to the creation of Funko Games and recently brought high-end posters, vinyl records, and premium action figures and statures into the Funko assortment through the purchase of Mondo.
New Products, New Initiatives
Funko is getting into the confectionery business with the introduction of Pop! Candy. The sweet new line of collectibles includes Pop! styled, clear figures that come filled with colorful candy and will hit stores next year.
The company is also jumping into the miniature collectibles craze with Bitty Pop! and Bitty Soda, micro-sized figures that are even smaller than the tiny Pop! figures found in Funko’s advent calendars and on Pop! keychains.
Looking ahead, Funko will hit the road with a Fun on the Run Tour to connect with families in 25 cities; will expand its live event calendar to include Brazil Comic Con; will increase digital offerings in the NFT space; and will debut a new brand campaign called “Follow Your Fun.”
Additionally, the company is opening a retail experience in partnership with Snoop Dogg, and it’s bringing its successful Pop! Yourself product offering online. The custom figure program has been the No. 1 item at Funko’s flagship retail stores over the past two years. When the program goes live online, fans will be able to create a custom figure of themselves or a loved one that will ship out in a custom box within 48 hours.
Additional reporting by The Toy Book Senior Editor Madeleine Buckley. Executive quotes edited for clarity and length.
