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MRR Industry Trends and Statistics

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MRR Industry Trends and Statistics
Posted by vande on Monday, June 20, 2005 4:50 PM
Does anyone have some current information that they could share on model railroading industry statistics? Specifically, I'm looking for annual revenues, either by scale or oversall numbers, how many purchases are made in store verses on the Internet, and any other unique information on projected future demand etc. would also be helpful. Thanks V
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Posted by Anonymous on Tuesday, June 21, 2005 4:50 AM
I don't have any official numbers, but from what I've seen personally over the past several years is that a large percentage of all model railroading sales are being done via the web. As for the industry itself. It's not doing as well as it was in the pre-computer game era. Most young people just aren't interested in the hobby like they use to be...
As for what's to come. That's anyone's guess. The various manufacturers take into account what's most requested by hobbiests and so forth, and what ever is most in demand gets produced.

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Posted by MAbruce on Tuesday, June 21, 2005 6:10 AM
Hard numbers are very difficult to come by. For the most part, this is an industry that is dominated by privately held businesses that tend to keep their cards close to their vest. I’ve seen some figures dealing with circulation of MR, but I’m not so sure that would be the best gauge as all magazines have seen drops in their subscriptions for various reasons.

There have also been figures given on the average age of the person in this hobby. I’ve seen a few, but they all indicate that the customer base is graying rather rapidly. However, since the main age demographic of this country is graying (the baby boomers), one can’t be sure if this is typical of all other market segments as well.

Another positive indicator is the number of manufactures that have entered the arena over the past ten years, current manufacturers that have expanded their offerings, and the variety of products that have been recently put on the market. One would think that this would not occur if the market was not fertile.

Doom and gloom over this hobby seems to have been around as long as the hobby itself. But I will make one conclusion based on numbers. This hobby (as well as a lot of other markets) is currently dominated by the baby boom generation. They will be dwindling in numbers over the next ten years, and the generations behind them just don’t have the numbers to fill in unless there is a significant boon of interest in model trains. I personally don’t see this happening if the MRR industry continues it’s mentality of fairly costly limited run products. The competition for everyone’s spare time is more intense than ever, and price alone could shut this hobby out. I really think that they (the manufactures) need to find a way to get this hobby back into the mainstream or it will eventually dwindle away.
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Posted by CNJ831 on Tuesday, June 21, 2005 7:37 AM
QUOTE: Originally posted by MAbruce
There have also been figures given on the average age of the person in this hobby. I’ve seen a few, but they all indicate that the customer base is graying rather rapidly. However, since the main age demographic of this country is graying (the baby boomers), one can’t be sure if this is typical of all other market segments as well.

But I will make one conclusion based on numbers. This hobby (as well as a lot of other markets) is currently dominated by the baby boom generation. They will be dwindling in numbers over the next ten years, and the generations behind them just don’t have the numbers to fill in unless there is a significant boon of interest in model trains. \



To expand just a bit on this point by MA, in fact the Boomers are the hobby. This is obvious from the hobby's demongraphics starting as early as 1980. The published statistics regarding the "average age of the typical modeler" has advanced almost perfectly in step with that of the Baby Boomer generation for a quarter century now without any deviation whatever.

The great resurgence of interest in Lionel (and its clones) after the company name almost died out by the early 1970's; the virtually unflagging recovery and growth of HO (at least up to the mid 90's) a decade or so following the great slot car debacle of the early 60's; and the current spiking of product prices which, not surprisingly, coincides perfectly with the peak earning years of Boomers, are all no accidents. It has been the Boomers who have driven our hobby for decades and the hobby's fortunes in the future will undoubtedly be tied directly to theirs.

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Posted by IRONROOSTER on Tuesday, June 21, 2005 9:15 AM
QUOTE: Originally posted by vande

Does anyone have some current information that they could share on model railroading industry statistics? Specifically, I'm looking for annual revenues, either by scale or oversall numbers, how many purchases are made in store verses on the Internet, and any other unique information on projected future demand etc. would also be helpful. Thanks V


The answer appears to be no.

This topic has been discussed a few times. At best people have bits and pieces of information. There is a widespread feeling that the number of hobbyists is in a slow decline that will accelerate as the baby boomer generation dies off. The feeling of some is that this is masked because the baby boomers are now in their peak earning years and thus sales don't reflect the declining number of hobbyists.

A survey of the hobby is needed that will include everybody. The assumption can no longer be made that MR magazine readers are inclusive. One issue that would have to be resolved or at least defined for the survey is: Who is a model railroader? for example do we include the toy train enthusiasts?, the garden railway folks?, folks who buy magazines but not models?, etc.

Enjoy
Paul
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Posted by CNJ831 on Tuesday, June 21, 2005 12:09 PM
QUOTE: Originally posted by IRONROOSTER
A survey of the hobby is needed that will include everybody. The assumption can no longer be made that MR magazine readers are inclusive. One issue that would have to be resolved or at least defined for the survey is: Who is a model railroader? for example do we include the toy train enthusiasts?, the garden railway folks?, folks who buy magazines but not models?, etc.


Paul, I agree with you 100%, an all inclusive survey of hobbyists would be enormously elightening and might well indicate trends we've never even considered. But the fact of the matter is that any survey conducted today can not hope to include more than a fraction of those currently in the hobby. The Internet is the domain of those under 60, while almost half of those in the hobby are near or older than this figure and aren't typically on-line. Magazine surveys have their problems according to those who content that hardcopy is being rapidly replaced by Internet sources. LHS are almost universally failing so their customers can not be considered representative and no one has the slightest idea of how big the Internet market really is (nor how you could extract any useful info from it). Currently the HO locomotive market appears driven by a very small faction of hobbyists with deep pockets, so even if manufacturers' records were available they'd likely give a very skewed view of things. And, of course, there's your well taken point about where to draw the line as to who is actually a model railroader (argued here several times in recent years), a point probably impossible to define to the satisfaction of everyone. In short, any future attempts at broad polls or surveys are likely to tell us even less about our selves, or the hobby's status, than did the older ones from a time when the hobby was far more homogeneous.

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Posted by Anonymous on Tuesday, June 21, 2005 12:18 PM
The graying of the baby boomers may be significant with respect to retail sales, but the estate sales from the parents of baby boomers has been flooding the market with model railroad products over the last couple of years.

About 3 months ago, a local business opened a storefront for the sole purpose of liquidating estate goods over Ebay. You can be sure there is a fair amount of model railroading products in their inventory.

It would not surprise me to learn that baby boomers parents have invested far more money in model railroading than the baby boomers themselves.
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Posted by conford on Tuesday, June 21, 2005 5:39 PM
From the information cited below, there are almost a million model railroaders, each spending about $1000 per year on the hobby, adding up to a billion dollar market.

The MRR industry does seem to be pretty secretive, and it is relatively small, but I came across an article from 2000 that contains some interesting data. This was published in Business News New Jersey issue of 12/12/2000. The chart cites the MRIA (Model RR Industry Association) and MR magazine as the sources for the following information: Model Railroad market is $900 million per year. That's almost a billion dollars. Average hobbiest spends $964 per year, and has a household income of $66,530. Now one may wonder how anyone can be a model railroader and spend less than a thousand per year, but that's what they are telling us here. The other interesting this is if you extrapolate the number of hobbiests, you get almost a million model railroaders in the United States. I presume this includes casual model railroaders if ther is such a thing.

Not bad for playing with trains!

Regards
Peter
Modeling Grand Rapids Michigan, C&O, PRR and NYC operations circa 1958.
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Posted by dknelson on Wednesday, June 22, 2005 8:38 AM
A million model railroaders? At one time Model Railroader said that their circulation was probably a decent barometer of how many model railroaders there are (which some would dispute) and I think they peaked at about a quarter million didn't they?
Even if you added the circulations of all model railroad mags together (as if nobody read more than one) I do not think you'd hit half a million
So I am sure there are many casual hobbyists who have tracks and trains and get no magazines at all, but can there really be enough to double the total of mag readers?
Are we counting every child with a Thomas the Tank Engine?

As for the $1000 a year. That sounds high. But having said that, I am afraid to total up my own expenditures. Some things are better kept unknown. Maybe I have spent $1000 on trains this last year. It must have gone somewhere as I haven't got it now ....
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Posted by ereimer on Wednesday, June 22, 2005 9:00 AM
QUOTE: Originally posted by dknelson

A million model railroaders?

As for the $1000 a year.
Dave Nelson


a million model railroaders includes everyone who has a train set or bought a model railroad magazine . yeah i think a million is pushing it , a huge number of those people can't be counted on to buy anything more than a magazine (sounds like me for the last 20 years LOL)

$1000 per year is easy , especially when you're starting to build a layout and buying locos and buildings abd DCC stuff
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Posted by Anonymous on Wednesday, June 22, 2005 10:33 AM
thats an AVERAGE 1000 a year....some spend many times that but still what is amodel railroader? what if you only look at pics or only collect etc? I think its safe to say, as we age, so does the hobby, we were always a splinter market......as of right now......there is a plethora of pruduct and myriad choices....enjoy now
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Posted by jfugate on Wednesday, June 22, 2005 11:04 AM
I can tell you from the sales of my DVD series (covers how I did my layout from dream to reality, using how-to demos), that the market is miniscule compared to things like videos from Hollywood.

My guess is most successful model railroad videos sell between 1,000 - 10,000 copies. But I doubt many sell more than 10,000 copies. When you factor in production costs ($1500 dollars per finished minute of video is typical, $800 per minute is back alley cut-rate), you can see the money isn't going to make anyone rich.

Video production costs
80 minute DVD = $120,000 to produce.

(Moderately successful video)
$30 video x 5000 copies = $150,000

Hard costs to produce DVD (media + packaging)
$1 x 5000 = $5000

Advertising (1/4 page ad in MR each month for first year)
$500 x 12 = $6000

Income
$150,000 - $120,000 - $5000 - $6000 = ($1000)

So at 5,000 copies, you're losing money ... better hope it does better than that. Full page ads in MR cost thousands of dollars, so to get the word out, let's hope you have deep pockets!

And we're talking sales for the life of the video ... so you can spread the income side over 5 years -- meanwhile the MR ad costs just keep stacking up, and digging the hole deeper.

That's why you don't see the market flooded with MR videos. For me, it's a labor of love, I'm not getting rich, I can tell you that.

Joe Fugate Modeling the 1980s SP Siskiyou Line in southern Oregon

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Posted by Anonymous on Wednesday, June 22, 2005 12:03 PM
There are liars, *** liars, and statisticians.

In my opinion, the depth of the model railroad market is overstated.

There exists a possibility that a realatively small number of wealthy individuals skew the statictics. If a person spends $100,000.00 a year on model railroading, how many copies of a single magazine, video, or other small items will this individual purchase?

There also exists the possiblity that some model railroad subscriptions are for doctors's office waiting rooms, barber shops, and other blanket subscriptions. In these instances, there may be no interest in model railroading at all even though there are subscriptions.
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Posted by CNJ831 on Wednesday, June 22, 2005 1:40 PM
These MRIA figures are indeed very difficult to reconcile with other known or approximated numbers regarding the hobby. In a day an age of limited runs, no stock, fire sales, and declining hobbyist numbers, how can one possibly suggest model railroading is a near 1 billion dollar industry? Neither Athearn, Bachmann, Atlas nor the rest are really big companies. Can anyone honestly imagine even the largest selling perhaps 100-200 million dollars worth of trains in a single year? It took Athearn decades to sell just 1 million engines!

The same goes for the number of hobbyists. If we take 1 million at face value, and we know that the total circulation of all the magazines together is in the order of only 300k, then it must be assumed that something like 70% of all model railroaders are out-of-touch, "closet" hobbyists, largely isolated from the rest of the hobby. And while I'm pretty sure the average hobbyist actively building a serious layout spends around a grand on the hobby annually, I'll bet that for everyone like him there are a dozen asrmchair folks that don't lay out a hundred bucks in 12 months. Another problem is that with a million participants, why the desparate WGH program to drum up new interest? To me a billion dollar hobby with such a limited number of players would be riding the crest of a big wave, not scrambling for position. None of this makes sense.

I certainly don't question the Business News New Jersey magazine's article in reporting what they were told but I can't readily accept MRIA's figures either.

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Posted by knewsom on Wednesday, June 22, 2005 1:43 PM
I would guess that for the purpose of a survey, anyone who has purchased an item related to model railroading for themselves would be classified as a model railroader. Regardless of whether they are building a layout, collecting engines, or just building a model structure. I have been involved in model railroading for only a few years, but at the shows that I have been too, I have seen many people my age attending with their children (I am 34 years old) and most of the shows have been very crowded.

In my case, my interest in MRR comes from wanting to build my own little world, and as my son gets older, having something that we can both be interested in and do together (hopefully). As for the average of $1000/year, this does not seem that high to me. I can tell you that I have spent about $500 more than that this year alone, and I am not an extremely wealthy individual. I just choose to spend my discretionary income on MRR as opposed to other things. Since I have been involved in the hobby I have been able to purchase every item (except one) that I have wanted at a reasonable price, including limited run locomotives that I wanted. I will admit that I rarely use a LHS (because I feel the one closest to me with a good selection does not have the friendliest people behind the counter), but it does not appear to me that the industry is dying. I would guess that with the consolidation that is happening is due to outdated business models that do not work in this day and age, and the new offerings that have come to market show that is is not doom and gloom everywhere, it is just changing. Some may say for the better and some may say for the worse.
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Posted by SpaceMouse on Wednesday, June 22, 2005 1:55 PM
54.7% of all statistics are made up.

Chip

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Posted by onetrack64 on Wednesday, June 22, 2005 2:03 PM
Just my two cents.
If you do come up with the hard and fast numbers you are looking for, I believe the model railroading industry itself would beat a path to your door and reward you handsomely for that data. As it stands now, all that is known now is more speculation than anything else.
I tend not to worry about the health of the hobby. I believe that anyone who has any interest at all in trains is a member of the hobby. It doesn't matter if it is a dad looking for his two-year old son's first train set ,(knowing all along he will get to play too)...or if you bought, rebuilt, and run an actual steam locomotive. In my mind, you're a member of the club!!
That copy of MR at the doctor's office may spur someone to make a one time only purchase. So what. As long as that one purchase made that made that person happy or content, good for them! Me on the other hand, this hobby is almost an obsession. My interest encompasses all aspects. Watching and photographing the prototypes so I can replicate them in HO someday (another project for my to-do list).
And my money is spent in all directions. I have a good train shop close by. I manage to attend a few shows a year . But an equal or greater portion goes bye-bye online, mostly on eBay.
Let's not worry too much about the future, and instead enjoy this hobby in way that makes you happy and content
[:)]
What happened to all the color, why is everything in black and white?
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Posted by IRONROOSTER on Wednesday, June 22, 2005 2:34 PM
QUOTE: Originally posted by conford

From the information cited below, there are almost a million model railroaders, each spending about $1000 per year on the hobby, adding up to a billion dollar market.

The MRR industry does seem to be pretty secretive, and it is relatively small, but I came across an article from 2000 that contains some interesting data. This was published in Business News New Jersey issue of 12/12/2000. The chart cites the MRIA (Model RR Industry Association) and MR magazine as the sources for the following information: Model Railroad market is $900 million per year. That's almost a billion dollars. Average hobbiest spends $964 per year, and has a household income of $66,530. Now one may wonder how anyone can be a model railroader and spend less than a thousand per year, but that's what they are telling us here. The other interesting this is if you extrapolate the number of hobbiests, you get almost a million model railroaders in the United States. I presume this includes casual model railroaders if ther is such a thing.

Not bad for playing with trains!

Regards
Peter


The problem I have with this set of figures is that they seemed to be from unrelated surveys or reports.

I suspect the average $964 spent and the average income are from a MR survey; they ask questions like that when they survey a sampling of their readership. This would exclude the toy train guys, the folks who bought a train for their kid at Christmas, etc.

The gross sales figures are probably from data that MRIA collects from , well from who? The manufacturers, the retailers, gov't agencies, etc.? Figures from Toys R Us may well include all of their Thomas the Tank Engine sales, i.e. books, pillows, trains, etc as well as all their BRIO sales and other "trains". Department 56 has a train they sell for their buildings. And so on. The two points here are: How many sales of trains are included that aren't really to hobbyists. And how many sales of train related merchandise are included that aren't really part of model railroading (no matter how loosely you define it).

Maybe I'm overly skeptical, but I want to know what's included in that $900 million dollar market before I assume there a million model railroaders.

Enjoy
Paul

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Posted by jfugate on Wednesday, June 22, 2005 2:52 PM
Paul:

Great insight into what the numbers probably mean. I also wonder about a hobby shop that sells model airplanes, model cars, doll miniatures, and model trains. Now if a customer buys a bottle of paint, what does that count as?

Most hobby shops probably distribute non-specific item sales into one of the buckets somehow, which could inflate the numbers.

Regardless, it's not a precise science, and probably includes as Paul describes, anything that could even remotely be considered model trains.

Joe Fugate Modeling the 1980s SP Siskiyou Line in southern Oregon

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Posted by selector on Wednesday, June 22, 2005 3:02 PM
This is purely conjecture; I have nothing with which to support it, but between only two countries, the USA and Canada, they have a combined population of nearly 260M...we'll say. Let us say that 3/4 of those are legitimate 'consumers', by definition, because a 'toy train' related purchase could be effected either by them, or for them. Let us agree that 1/4 of the population is too young/old to care for, or to buy, trains.

If only one-half of one percent of all consumers ever make a 'toy train'-related purchase in a given year, a not unreasonable expectation in view of the competition for discretionary income, then 975,000 consumers will be involved. What we cannot guess is the 'average' annual expenditure per consumer, unless we accept some definition of 'toy train'-related purchases, and industry and commerce statistics of total sales.

So, although this is speculation, the derivative seems to support some of the thinking here....for what worth we can ascribe to it. It is a small hobby, probably relatively steady in absolute numbers due to population growth, with relatively well-heeled boomers spending more dollars, although aging boomers will eventually reduce those numbers over the next 30 years as they expire.
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Posted by SpaceMouse on Wednesday, June 22, 2005 3:18 PM
QUOTE: Originally posted by selector

This is purely conjecture; I have nothing with which to support it, but between only two countries, the USA and Canada, they have a combined population of nearly 260M...we'll say. Let us say that 3/4 of those are legitimate 'consumers', by definition, because a 'toy train' related purchase could be effected either by them, or for them. Let us agree that 1/4 of the population is too young/old to care for, or to buy, trains.

If only one-half of one percent of all consumers ever make a 'toy train'-related purchase in a given year, a not unreasonable expectation in view of the competition for discretionary income, then 975,000 consumers will be involved. What we cannot guess is the 'average' annual expenditure per consumer, unless we accept some definition of 'toy train'-related purchases, and industry and commerce statistics of total sales.

So, although this is speculation, the derivative seems to support some of the thinking here....for what worth we can ascribe to it. It is a small hobby, probably relatively steady in absolute numbers due to population growth, with relatively well-heeled boomers spending more dollars, although aging boomers will eventually reduce those numbers over the next 30 years as they expire.


I would think that 1 1/2% would be awfully high.

Chip

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Posted by AntonioFP45 on Wednesday, June 22, 2005 6:26 PM
Good statements from Rooster and Joe,

Guys, with all due respect........some of you are indeed "Doom and Gloom". I heard similar comments waaaayyyyyyyyyyy back in the early 80s....."The hobby is dying! Young people want to play Pac-man and run RC cars and planes......."

With DCC, Sound, ultra realistic signaling systemes, beautiful trackwork from Shinohara and Peco, gorgeous highly detailed locomotives out of the box, more scenery options than ever, DPM and Cornerstone kits........

Sorry. I'm not going to pay attention to the doom and gloom "statistics". Ten years from now we'll be hearing them. I hope to have a huge layout in the attic section of my house where I'll be able to run 15 car versions of SCL varnish and New Haven commuter sprinters.

PEACE!

"I like my Pullman Standards & Budds in Stainless Steel flavors, thank you!"

 


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Posted by robengland on Wednesday, June 22, 2005 7:53 PM
The world doesn't end at the shining sea, guys. Maybe they meant there are a million MRs on the planet, in which case it sounds VERY plausible to me, if you count anyone with a working trainset or an armchair interest. A third of them parochial North Americans, a third Europeans (including Brits) and a third the rest of us.
Rob Proud owner of the a website sharing my model railroading experiences, ideas and resources.
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Posted by MAbruce on Thursday, June 23, 2005 6:11 AM
QUOTE: Originally posted by robengland

The world doesn't end at the shining sea, guys. Maybe they meant there are a million MRs on the planet, in which case it sounds VERY plausible to me, if you count anyone with a working trainset or an armchair interest. A third of them parochial North Americans, a third Europeans (including Brits) and a third the rest of us.


Good point. Us Americans tend to be a bit narcissistic when evaluating such things. We often forget that our population percentage of the entire world is actually quite small.

Although I doubt the NJ Business article’s numbers included worldwide data, I think it’s certainly plausible that there are a million worldwide.
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Posted by jfugate on Thursday, June 23, 2005 11:59 AM
Be interesting to know how many copies of MR go outside the US.

Or how many online subscribers they have that are non-US.

Joe Fugate Modeling the 1980s SP Siskiyou Line in southern Oregon

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Posted by Anonymous on Thursday, June 23, 2005 2:02 PM
QUOTE: Originally posted by AntonioFP45

Good statements from Rooster and Joe,

Guys, with all due respect........some of you are indeed "Doom and Gloom". I heard similar comments waaaayyyyyyyyyyy back in the early 80s....."The hobby is dying! Young people want to play Pac-man and run RC cars and planes......."

With DCC, Sound, ultra realistic signaling systemes, beautiful trackwork from Shinohara and Peco, gorgeous highly detailed locomotives out of the box, more scenery options than ever, DPM and Cornerstone kits........

Sorry. I'm not going to pay attention to the doom and gloom "statistics". Ten years from now we'll be hearing them. I hope to have a huge layout in the attic section of my house where I'll be able to run 15 car versions of SCL varnish and New Haven commuter sprinters.

PEACE!




I remember the 60's when some pundits (even on the network news, IIRC) were claiming that the slot car hobby was going to doom model railroading. Because of costs, space, and the differences in people, our hobby is always going to be more of a niche than a mainstream passtime. Get used to it.

One of the big changes that I have noticed is that kit building seems to be less prominent in the hobby than in the past. The built-up structures offered today were much less common than in the 60's. Of course, today we have some much better kits than back then. We still can find Athern Blue Box kits (good for beginners and younger modelers) but now we also have plastic kits with much better detail. Back in the 60's, if you wanted the level of detail on some modern kits, you had to buy a wood-and-metal kit and do a ton of super-detailing. On the whole, we have a better selection of product than in the past.
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Posted by robengland on Monday, June 27, 2005 8:20 PM
Quite a few MR mags go overseas, I saw the number once but I forget. Also a fair percentage of sales by the US manufacturers are overseas, though I'm sure way more than half is still domestic.

But in addition, the Brit and European manufacturers sell to huge domestic markets, the Japanese seem to have a healthy domestic industry, and some other countries seem to have busy cottage industries going - certainly we do in NZ, and so does Australia.

So yeah the talk of a million was probably hype but if the focus is shifted to the world it was probably close to true anyway.

It's such a great hobby it always beats me how there could be ONLY a million.
Rob Proud owner of the a website sharing my model railroading experiences, ideas and resources.
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Posted by conford on Monday, June 27, 2005 10:11 PM
I am pleased to see that there has been some skepticism about how there could be a million model railroaders, and I agree that the estimate was extrapolated from figures that can be called into question. While I don't know how many model railroaders there are, I think the number is surprisingly large. Of course this includes people we would think of as "dabblers", who perhaps have a train set in a box that they intend to set up someday or a 4x8 oval of snap track. Probably does include Lionel and G scale, for that matter. Not everybody buys a new kit or part every week. Let's think broadly about who is in the hobby, so that we can enlarge the number of active model railroaders. And if there really are about a million model railroaders, the NMRA and Model Railroader are really only scratching the surface of the hobby.

Somebody come up with a better set of figures, I'd love to see them!

Regards
Peter
conford
Modeling Grand Rapids Michigan, C&O, PRR and NYC operations circa 1958.

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