EVERETT, Wash. — Toy maker Funko had a meteoric rise after being founded in a Snohomish home in 1998.
Now, it's a global phenomenon.
But the company has seen a slow decline in recent years raising questions about its future.
Its products are wildly popular around the world, but the company may be reaching a turning point.
It’s an empire built on plastic and pop culture.
Funko’s collectibles called “Pops” touch every facet of entertainment and put Everett, Wash., on the global consumer map.
"They really tapped a nerve in people who want to collect and take that pop culture and put it into their home," said University of Washington marketing professor Jeff Shulman.
He says Funko’s business model is built on the “scarcity” of its collectibles, and that makes it difficult for a business to grow.
"That’s hard to overcome because whatever you do to grow can diminish some of that value," said Shulman.
According to the company, Funko lost $75.7 million dollars between the second quarter of last year and the second quarter of 2023. It cut 258 jobs in 2022 and this year announced plans to eliminate 180 more.
The company recently closed an Everett warehouse, moving it to Arizona.
Interim CEO Michael Lunsford told investors, “We are implementing a strategic plan to reduce the number of product lines and complexity in our business. Putting our fans and brand first, running the business like a lean startup and investing in areas where we can grow profitably, will guide and inform every decision we make.”
All of those moves have some pondering a worrisome question: Could Pops become the next Beanie Babies?
Beanie Babies, massively popular dolls from the 1990s, are now exiled to the margins of the internet.
But Professor Shulman believes Funko’s die-hard customer base will keep the company from meeting the same fate.
"As rocky as it has been, and worrisome as the recent trends are, I think the future could be pretty bright if they get creative," said Shulman.
Exactly what that looks like is unclear.
Shulman thinks Funko could branch out into games or digital products.
He believes a huge company built on tiny toys will likely have to change.
"That next growth, that next $100 million, isn’t going to come from new Pops or new licensing deals. It’s going to come from a new way of doing business."
KING 5 reached out to Funko representatives for comment on this story and they refused.