## CNN Newsstand Fortune

### Furby Toys Dominate Holiday Gift Market

Aired December 23, 1998 - 10:00 p.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

ANNOUNCER: NEWSSTAND: Tonight CNN & FORTUNE.

STEPHEN FRAZIER, HOST: When they were nobody, who knew Hootie & the Blowfish would go platinum with...

HOOTIE & THE BLOWFISH: Hold my hand.

FRAZIER: These guys did, and they can call the next big thing, too.

WINSLOW (PH) FARRELL, PRICEWATERHOUSECOOOPERS: They're acting something like what real human beings would do.

FRAZIER: The virtual fad followers who help American business figure out how hits happen.

FARRELL: Oh, this is too cool.

FRAZIER: The toy on every child's gift list. So is it any wonder that...

UNIDENTIFIED CONSUMER #1: I didn't get one. They're all gone.

FRAZIER: A toy even Santa had never heard of only 12 months ago.

DAVE HAMPTON, FURBY INVENTOR: The best ideas are the split- second ideas.

FRAZIER: From idea to assembly line to your home in record time.

ROGER SCHIFFMAN (PH), TIGER ELECTRONICS: Everyone will make money with it.

FRAZIER: The story behind fabricating Furby.

[...Snipped out unrelated non-Furby stories..if you want the full broadcast go here..]

You'll need even more luck to find a Furby, this year's must-have toy. They're furry, little things that talk and interact with their owners but which are in much shorter supply than people might like. What's really amazing is that Furbys were just barely on the drawing board this time last year.

Here's Joie Chen on how they were brought to life so quickly, a toy story that almost didn't happen.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FURBY FANS: Furby. Furby. Furby. Furby. Furby. Furby.

JOIE CHEN, CNN CORRESPONDENT (voice-over): Here's a man with a toy story...

DAVE HAMPTON, FURBY INVENTOR: Hi.

CHEN: ... worth millions.

HAMPTON: Once upon a time, not so long ago...

CHEN: Just a year ago, in fact...

HAMPTON: ... in a far off place...

CHEN: ... Deep in the heart of a California forest lived toy inventor Dave Hampton. Hampton's concept in the spring of 1997: a creature that seemed to come from nature and retailed under $35.

HAMPTON: Furby to me looks like an owl.

CHEN (on camera): A wise owl?

HAMPTON: Yes, a -- yes. In fact, exactly that. A wise owl.

CHEN (voice-over): Hampton is now a freelance toy inventor, having had earlier success with Mattel. He sat with us to explain how Furby came to be.

HAMPTON: The best ideas are the split-second ideas where you feel really like, "Yes, this is great."

CHEN: But Hampton had a problem.

CHRIS BYRNE, "PLAYTHINGS" MAGAZINE: The toy industry is a fashion business. So when you see something that's going to hit, you've got to get it out there really fast, or else, A, somebody else is going to knock you off or do something similar or, B, the trend's going to pass you by.

CHEN: To get Furby out fast, Hampton needed some deep pockets.

HAMPTON: I needed -- absolutely needed a company.

CHEN: The first step, a secret meeting. Hampton and his Furby meet with a toy maker Roger Schiffman (ph) of Tiger Electronics.

(on camera): What did it look like?

SCHIFFMAN (PH): Oh, my God. I just instantly saw that this is a life. It had all kinds of wires hanging out of it, and they were moving the eyes and the ears and the mouth of it to simulate what it would do in final form. So they actually made a very good presentation.

CHEN (voice-over): Days later, Dave Hampton's Furby prototype is in front of Tiger executives.

(on camera): Dave comes in and says, "I have..."

JEFF JONES, VICE PRESIDENT, MARKETING: Furby.

CHEN: Furby.

(voice-over): Stewart Sims and Jeff Jones were named project managers. Their mission: to get Hampton's idea from prototype to completion in less than one year. It's a huge challenge. Most toys take two years to get to market.

JONES: Tiger is expected to do these sorts of things. We -- we've pulled off some big ones in the past.

CHEN: Last year, Tiger shipped 50 million GigaPets in just six months. But Furby is a different animal.

STEWART SIMS, SENIOR VICE PRESIDENT, MARKETING: It isn't a Beanie Baby hooked to a GigaPet. It's an entirely new kind of product, and it's much more complex than anybody thinks.

CHEN: The first deadline was quickly approaching. February 8th, the start of the industry's all important toy fair.

UNIDENTIFIED TOY MAKER: This is Gus Guts.

CHEN: Toymakers show off their Christmas goodies, aiming for fat orders from retailers. Tiger had to have a working Furby, but...

JONES: Furby was in major jeopardy at that point. We actually didn't have a mechanism that was working. It was not the calmest, most serene moment of my life or my career.

CHEN: But they squeaked through with one working model, and they scored big. Wal-Mart ordered a third of their production run on the spot. Now Tiger had just six months left to make a million Furbys.

SIMS: Frankly, without Hasbro's help, we would not have made it.

CHEN: A desperate Furby finds a hero in February. Hasbro, the number two toy maker in the world, announces it's buying Tiger Electronics for $335 million. The deal brings the anxious Tiger...

SIMS: .... manpower and technology and expertise.

UNIDENTIFIED MECHANICAL DESIGNER: My primary job was to create the face.

CHEN: Mechanical design shifts to Hasbro's model shop where computers put Furby's 66 parts into 3D. Next, plastic parts are cut for the model maker.

BOB FELICE, MODEL MAKER: I've taken this thing apart, I would say, at least a thousand times. Everything has to be in sync so, when he wakes up, and he says, "Cock-a-doodle-doo," you want his mouth, eyes, and ears to show that expression. I've been here like until 2:00 in the morning and find out that I have a part wrong, call one of my associates up, would come down, redraw the thing, put it in the machine, cut it, and like six hours later, I would have a brand new part ready to try.

CHEN: Furby's motor runs the same speed as electric shaver.

FELICE: And you can see the electronic board mounted in here.

CHEN: There are seven sensors in Furby that deliver 64 different responses. Furby speaks about 200 words, about 1,000 phrases. Furby is programmed to speak English, but in the beginning, his language is Furbish, a mix of Japanese, Chinese, Thai, and Hebrew, all languages inventor Hampton speaks.

HAMPTON: I wanted children's imagination to be able to take off, and that's partly why the -- another language, Furbish.

CHEN: Dressed up, painted, and now stuffed with bulky computer parts, Furby has grown decidedly dumpy. It was June, and Furby had to slim down for a date with the ad man.

PAUL POSNICK, POSNICK & KOLKER AD AGENCY: Joe, why don't you be Furby. Take -- much easier on film than it is in the story board.

CHEN: The Posnick & Kolker ad agency creates a multi-million- dollar campaign for a toy they see as a sure hit.

KOLKER: It knocks you on your ass, I mean, honest to God. You sit there, and if it blows you way, you've got yourself a product.

CHEN: But they were caught in the time crunch, too.

POSNICK: The product was still being developed at the same time that we're doing this. It's not like you...

KOLKER: In casting, we had a little girl holding a box, and I'm describing what she's holding, and she said -- I said, "No, it's really a soft, pretty, little toy."

UNIDENTIFIED MECHANICAL DESIGNER: This is the front arm, and this is the side. CHEN: So while the ads are in production, inventor Hampton finalizes the electronics, and the mechanics are being fine tuned, and then Tiger breaks again with industry tradition putting four, not one, factories on line at once in China. The first Furbys roll over the conveyor belt September 30th, a nine-month gestation, and the buzz has begun to get around. September's "Wired" magazine runs a huge feature.

UNIDENTIFIED NEWS CORRESPONDENT: Are these for your kids, or are they for you?

UNIDENTIFIED CONSUMER #5: Nephew.

UNIDENTIFIED CONSUMER #6: Me.

CHEN: Local TV, newspapers, and magazines jump on board, all before the national ads have run once. October 14th, the first Furby arrives on the red carpet of the world's largest toy store. Kids and their parents already know it will be a sellout.

UNIDENTIFIED TOY STORE EMPLOYEE: So I'm just letting you know this is the line for the Furby.

CHEN: Tiger will turn out two million Furbys by Christmas, double the original order, but...

SCHIFFMAN (PH): I don't think it is enough.

UNIDENTIFIED TIGER CUSTOMER SERVICE REPRESENTATIVE: Hi. How can I help you?

CHEN: Tiger doesn't sell directly to consumers, but the calls keep coming in. We pick up when Josephine Nelson of Itasca, Illinois, calls in.

JOSEPHINE NELSON, ITASCA, ILLINOIS: Hi.

CHEN (on camera): Hi. This is Joie Chen at CNN NEWSSTAND. How are you?

NELSON: Well, I'm a desperate mother with swollen feet. I can't find the darn thing.

CHEN (voice-over): And it's the only thing her 9-year-old Katie has on your Christmas list.

NELSON: She must have wrote down Furby 32 times.

CHEN (on camera): Oh, no.

NELSON: That's all she wants. She doesn't want anything else except this Furby.

HAMPTON: And he likes having his back rubbed. Furby's gone a long ways. OK. Who would like to feed Furby? Wow! Everybody wants to... That's what is so unbelievable about all of this.

CHEN: Does Furby have a future?

HAMPTON: I personally believe that Furby has a future. We'll see if I'm proved right or wrong, but, initially, I pictured Furby as a lot of different creatures or animals in a world, so to speak, a whole environment, not just Furby necessarily.

CHEN (voice-over): And not just this Christmas. Furby, the next generation, is on its way.

(END VIDEOTAPE)

FRAZIER: Here are the projections: $60 million dollars in holiday sales of Furbys themselves. Then in January, more than a quarter of a million special edition Furby Hi-C juice boxes arrive in stores. And in the spring, expect a Furby Happy Meal at McDonald's.

[...Snipped out unrelated non-Furby stories..if you want the full broadcast go here..]

TO PURCHASE A VIDEOTAPE OF THIS PIECE, PLEASE CALL 800-CNN-NEWS

The above is copied in portion from the CNN transcript. Reason for not just linking it is because they arn't likly to keep the report forever and I think it's a wonderful report so I made a copy to preserve it here. I have the videotape of it, it's better then the transcript :) Furby, Furbish, and all related is ®, TM,& ©Tiger Electronics, LTD. USA
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