Pop Mart: Trapped by Its Own Characters

Apr 30

The Ivey Business Review is a student publication conceived, designed and managed by Honors Business Administration students at the Ivey Business School.

Popmart: The Business Behind the Box

Pop Mart International Group Limited (Pop Mart) is a leading Chinese toy and entertainment company best known for its collectible designer blind boxes, in which the specific toy remains unknown until the package is opened. The firm utilizes an intellectual property (IP) business model, where revenue is generated by developing and commercializing character franchises, such as The Monsters, Molly, and Skullpanda, that are monetized through serialized blind box collections designed to drive repeat purchases.

A Booming Industry?

Pop Mart operates within the collectible toys industry: a character-based consumer product market encompassing designer figurines, limited-edition plush toys, licensed merchandise, and scarcity-driven collectibles. Key players include Pop Mart, Ty Inc., Bandai, Hasbro, Mattel, and Funko, all of whom derive revenue from emotionally resonant, character-driven IP.

Globally, the collectible toys market generated approximately 12.5 billion USD in revenue in 2023 and is expected to expand to 20.3 billion USD by 2032, reflecting a steady compounded annual growth rate (CAGR) of about 5.7 percent. Within this market, Pop Mart operates specifically in the blind box segment, which is growing faster than industry averages at a projected CAGR of 11.93 percent from 2026 to 2035.

Consumer Psychology Behind Collecting

Consumer demand in the blind box toy segment is heavily influenced by IP, with purchasing behaviour often driven by attachment to specific characters rather than loyalty to the brand itself. Pop Mart’s core consumer base is dominated by Gen Z buyers between the ages of 18–40, who account for nearly 40 percent of blind box sales and are particularly drawn to products that combine entertainment, aesthetics, and identity expression. For many of these consumers, collectibles function less as traditional toys and more as lifestyle accessories or personal artifacts that reflect personality and emotional connection.

A prominent example is Labubu, Pop Mart’s flagship character from The Monsters series, whose distinctive “ugly-cute” design and whimsical backstory have helped it become a global cultural phenomenon. The character’s themes of fantasy and escapism allow fans to form emotional connections, reinforcing purchasing behaviour tied to specific IPs.

The blind box format further amplifies this IP-driven behaviour. Since the contents of each purchase remain unknown until the box is opened, consumers frequently make repeated purchases in pursuit of specific figures or to complete an entire series tied to a particular IP. This mechanism transforms buying into a game-like experience that heightens excitement, anticipation, and emotional investment. As a result, consumers often follow particular artists or characters across releases, meaning the success of individual IPs can significantly influence purchasing patterns.

Additionally, social media plays a significant role in increasing consumer demand for Pop Mart’s products. Platforms such as TikTok, Instagram, and Xiaohongshu increase visibility through unboxing videos, collection displays, and influencer endorsements. The rise of Labubu itself was significantly fueled by social media exposure, including appearances by celebrities such as Rihanna and K-pop star Lisa. These online communities reinforce the social status associated with rare figures and encourage peer-driven participation in collecting culture, making the popularity of specific IPs a key driver of consumer behaviour.

The Hidden Fragility Beneath the Growth

Despite the industry’s strong performance, its growth masks a structural vulnerability rooted in its IP-driven and trend-sensitive nature. Rapidly shifting consumer preferences and short product life cycles weaken repeat purchase incentives once consumers complete a series or obtain desired figures. As a result, revenue tends to spike during peak IP popularity but declines once novelty fades, making performance difficult to sustain. Consequently, firms must continuously generate new hit IPs to offset declining collections, creating a revenue model that is difficult to stabilize.

A historical example is Ty Inc.’s Beanie Babies. At its peak in 1998, sales reached approximately $1.34 billion, but the phenomenon collapsed in the early 2000s. Sales fell by as much as 90 percent, and by 2004, the company reported a $34 million loss. Among the contributing factors was a shift in societal trends, as consumers moved on to the newest toy craze, while Beanie Babies failed to adapt.

Popmart’s Cycle of Peaks and Declines

Pop Mart’s performance mirrors both the industry’s growth and its structural vulnerability. In 2024, the company delivered strong results, with revenue more than doubling year-over-year to 13 billion RMB and net profit increasing by 185.9 percent. However, both its recent success and historical trajectory reveal a recurring dependence on individual IPs.

During its early development stage, Pop Mart relied heavily on the Japanese collectible doll Sonny Angel, which accounted for nearly half its total revenue by 2015. When the licensing agreement ended, the company abruptly lost its primary revenue driver, impacting performance significantly. This prompted a shift toward developing proprietary IP.

The release of the Molly Zodiac series in 2016 marked Pop Mart’s first major internally controlled success; however, this success wasn’t replicated until April 2024, with the emergence of the breakout character Labubu. During the period in between, the company introduced multiple new characters, yet none matched Molly’s scale of impact. This highlights the non-linear nature of character-driven industries, where a small number of IPs capture a disproportionate share of consumer attention and spending.

Recent financial performance further illustrates this concentration. Revenue rose from approximately 4.56 billion RMB in the first half of 2024 to 13.88 billion RMB in the first half of 2025, representing a 204.4 percent year-over-year increase. This growth was largely driven by Labubu, as The Monsters IP accounted for 34.7 percent of total revenue in H1 2025. No other IP contributed at a comparable level, indicating that performance remains highly concentrated.

This pattern suggests that Pop Mart’s growth is consistently driven by single, trend-sensitive IP cycles. Once Labubu’s popularity inevitably declines, the company risks returning to slower growth unless it can reliably generate new breakout franchises continuously.

Designing Consistency, Not Luck

To position itself for sustained growth, Pop Mart should introduce an annual Fan Creator Drop: a yearly, regional, fan-submitted design and voting contest across Mainland China, Southeast Asia, North America, and Europe. This initiative establishes a reliable pipeline for IP generation while strengthening platform-level engagement, allowing Pop Mart to build a more stable revenue base rather than relying on unpredictable hit characters. It also aligns with the company’s vision of fostering community-driven consumption.

Participatory Validation in Practice: The LEGO Model

Fan-based voting contests have been long-standing across industries – in sports, tv shows, or even political elections – as a mechanism for transforming passive audiences into active stakeholders. When consumers are given decision-making power, they develop a stronger sense of ownership, increasing engagement and loyalty. In character-driven industries, this shifts attachment from individual products to the broader brand platform.

A relevant precedent is LEGO Ideas, launched in 2008. The platform has attracted over one million users, with submissions requiring 10,000 supporters to qualify for review. Since its inception, more than 70 community-designed sets have been commercialized, several of which sold out shortly after release. Following its introduction, LEGO’s revenue grew 45 percent between 2007 and 2009, net profit margin increased from 12.8 percent to 18.9 percent, and operating margin rose by 6.8 percent.

Although LEGO Ideas was only one component of a broader transformation, it institutionalized participatory validation within LEGO’s innovation pipeline, aligning product development with demonstrated consumer demand. While LEGO does not disclose exact revenue from the Ideas segment, these products operate in premium collector price ranges and have become recurring contributors to its multi-billion-dollar revenue base. More importantly, the platform has built a large, engaged community that interacts with the brand continuously beyond any single product cycle.

For Pop Mart, the relevance lies not in replicating LEGO’s product format, but in adopting the structural logic of participatory validation. By integrating community input into the development of new character lines, the initiative could attract hundreds of thousands of users annually while strengthening brand attachment beyond individual breakout IPs.

Fan Creator Drop Operating Model

Pop Mart’s annual Fan Creator Drop would invite consumers to submit an original six-character line design rather than a single figure, preserving narrative consistency with the blind box model. To maintain brand integrity, clear submission standards for originality, format, and aesthetic boundaries would be established. These structured creative constraints ensure community participation enhances, rather than dilutes, Pop Mart’s brand identity.

Inspired by LEGO Ideas’ review process, the voting mechanism would unfold in two stages to balance community input with quality control. First, submissions are publicly displayed within respective regional categories and must surpass a defined engagement threshold (e.g., minimum votes or interactions) to advance, serving as an initial demand filter. Second, shortlisted entries enter a time-bound voting window of two to four weeks, where urgency intensifies engagement. During this phase, Pop Mart can leverage influencers and community ambassadors, offering early access or preview boxes to amplify visibility and participation.

Regional segmentation accounts for differences in aesthetic preferences and consumer trends across markets. By localizing voting, Pop Mart reduces cross-market distortion, increases resonance, and distributes breakout potential geographically. Over time, this diversification can smooth revenue volatility rather than concentrating growth in a single global franchise.

The initiative would occur once per year to preserve scarcity and brand prestige. Limited, event-based releases heighten perceived value and concentrate engagement more effectively than continuous launches, while an annual cadence builds anticipation without causing fatigue.

Creators would be incentivized through both recognition and tangible rewards, including full production of their designs, public attribution, and compensation. Given Pop Mart’s positioning as an art-driven brand, the platform can also serve as a career-building opportunity for emerging designers, encouraging high-quality submissions.

Building Stability Behind the Brand

Pop Mart operates in an environment shaped by rapidly shifting, IP-driven consumer preferences, where purchasing behavior is influenced by emotional attachment, social media momentum, and trend cycles rather than enduring brand loyalty. In this context, products that generate engagement before launch are more likely to convert at release.

Psychological ownership theory suggests that when consumers feel a sense of possession over a product, they exhibit higher willingness to pay, stronger loyalty, and greater satisfaction. Early involvement fosters this ownership by building emotional connection prior to commercialization. By embedding co-creation into its IP development pipeline, Pop Mart can introduce structured demand validation before launch, generating emotional investment and pre-commitment rather than relying solely on post-release hype. This shifts engagement from individual breakout characters toward the Pop Mart platform as a whole.

The initiative also creates recurring brand visibility within the platform. Submissions and voting generate user-driven content and organic sharing, reducing reliance on paid marketing while expanding reach. Voting mechanics drive repeated visits to Pop Mart’s digital platforms, increasing app downloads, account creation, and exposure to the broader IP portfolio. This traffic spillover can stimulate cross-IP discovery and incremental purchases beyond the contest itself.

Beyond marketing, the Fan Creator Drop generates real-time data on regional taste patterns, aesthetic trends, and engagement intensity. These insights can inform broader product development and portfolio strategy, increasing the likelihood of future breakout successes. Over time, institutionalizing this process shifts Pop Mart from a hit-dependent IP distributor toward a participatory platform with diversified creative input and more stable revenue dynamics.

The Challenge of Interest Without Intent

Although the Fan Creator Drop can strengthen brand-level engagement and reduce reliance on single-IP trends, high participation in submissions or voting does not necessarily translate into purchase intent. Consumers may enjoy influencing outcomes without committing to buy, limiting financial impact.

To mitigate this, Pop Mart can incorporate optional “notify me” features or soft pre-order sign-ups during the voting phase. These light pre-commitment mechanisms leverage anticipation and behavioral follow-through effects, increasing the likelihood that participants convert into purchasers while building attachment before the product ships.

Escaping the Character Trap

Ultimately, Pop Mart’s growth remains closely tied to the rise and decline of individual breakout IPs. While this model can produce exceptional performance, it exposes the company to recurring cycles of concentration and volatility.

Institutionalizing an annual Fan Creator Drop embeds demand validation and consumer participation directly into the IP pipeline, shifting engagement from isolated characters toward the Pop Mart platform itself. In an industry defined by trend sensitivity and non-linear creative outcomes, strengthening the system behind IP creation offers a more durable path to sustained growth.

Editor(s): Jessica Liang & Jonathan Wang

Researcher(s): Stephanie Wong