The company behind the Funko Pop dolls — Funko Inc. — has issued a chilling warning to its investor: consecutive financial losses are (and this is paraphrasing their own words) casting “substantial doubt about our ability to continue as a going concern for the next 12 months.”
The news comes from the company’s latest financial reports, filed with the Securities and Exchange Commission (SEC, via Dexerto), which indicates a $1 million net loss for the latest quarter.
Granted, a million bucks loss could sound like nothing over a company whose product is so globalized and over 25,000 dolls available everywhere, but this new report follows another one, in which the number is much, much higher ($41 million), with total sales down 14% when compared with the same time period last year.
And that’s not all, since…
Funko Pop is severely indebted — and it could default on those payments
Known for making chibi-looking vinyl dolls of pretty much any part of pop culture — including videogames like Kingdom Hearts and even Mortal Kombat — Funko Pop was once a brand known to fill entire walls on most retail chains, such as Walmart and Target, to name a few.
However, overproduction and the ever waning consumer interest have both been the bane of the brand’s continuity, and now it has to face severe competition from similar products with different prices and sales practices.
That alone would’ve spell trouble for Funko Inc., but according to Dexerto, the company has been taking out loan after loan in order to recoup losses and stay competitive. Thing is, it never managed to recover the prestige from the old days.
The end result is, apparently, what we’re seeing now: with a total debt that amasses over $250 million, these back-to-back losses might mean a huge default on money that is already owed.
Therefore, Funko Inc.’s management is already entertaining the possibility of seeing Funko Pop dying out — or getting acquired by a larger buyer.
Are Funko Pops overpriced?
As physical products based on licensed intellectual properties, it is easy to understand why Funko Pop dolls are expensive: a regular edition can cost anything from $12 to $20 for common releases. That price, on its own, may not sound like much, but do consider the following:
- Those numbers are for common dolls, the ones you can find everywhere
- Funko Inc. rarely — and we mean rarely — launches new models on their own, usually going for the availability of entire collections
The latter point is the one that stands out the most for the majority of consumers. Think of it like this: let’s say a new, run-off-the-mill Avengers Endgame collection comes up. Nothing too fancy: movie comes out, Funko Pops come out at the same time.
Now, for the sake of argument, let’s discard any seasonal pricing (if a movie just came out, it stands to reason the dolls would be pricier, being a new item and all) and focus exclusively on average price.
Now, according to Disney (and, you know, watching the damn movie), Avengers: Endgame had 38 characters. If Funko Inc. were to follow that pattern, we’re talking about 38 new dolls, each one costing $12 a pop.
It is widely known that Funko Pops are not exclusively for children and, nowadays, one could argue the brand speaks louder to collectors, who tend to be adults. Doing the simplest of maths, we’re talking about more than $450 to be spent in a single collection.
Again, we’re assuming a lot, discarding a lot, but you get the idea.
For a lot of places in the United States, $450 is rent money. And there is something to be said when you charge, for your product line, the same price people pay to live with a roof over their heads.
Not only that, but globally speaking (and if we include import taxes and other numbers), a regular Funko Pop figurine can stagger someone’s wallet: in Brazil, where I live, for instance, we do have an official brand presence with localized prices. A regular, Mewtwo (from Pokémon) figurine costs R$ 139 (a little over $26) — and that’s the discounted price, since the original tag was going for R$ 199 ($a little over $37) at the time of this writing.
For reference, Brazil’ minimum wage goes for R$ 1,518 (just shy of $250). So somewhere around 10% and 14%, for one single figurine. Imagine a whole, 38 unit collection like the Avengers example above.
And that’s not considering the brand’s presence in events such as Comic Cons and similar occasions: one thing that stood out for Mikhail when he visited me for Brasil Game Show, was the price on action figures in general — Funko Pop among those: some prices were jacked up to $40 and onwards, and those were not even special editions, just not as easy to find on the regular, online store.
Oh, right: special editions are a thing for Funko Pop, with prices to match the rarity: to this date, the most expensive Funko Pop sold — 2016’s San Diego Comic Con — went out for $ 210,000. That’s buy-your-own-house money in pretty much every country on the planet. Sure, it’s exclusive and, sure, there’s a lot from this market that Funko Inc. doesn’t control (most of these high number sales come from independent sellers, who specialize in rarer, more exclusive stuff).
Still, it’s hard to believe the company doesn’t at least know about these, and does little to curb the action because hey, free publicity.
So what will Funko Inc. do now?
Whatever is left for it to do: “Funko Pop” is but one of Funko Inc.’s many, many brands. For now, the recent statement saw the company come out and say it’ll focus on smaller pillars — Bitty Pops, blind-box collectibles, and its Pop Yourself kiosks, for instance. Those do run a lot cheaper and are not only more affordable, but more flexible in their offerings as well.
In parallel, the company promises to start “exploring strategic alternatives” — including a full on sale.
As Dexerto puts it, this is probably one of the company’s most uncertain times, and future developments will likely be crucial for what’s to come for it — for better or for worse.
