Zombies, flashers and NASA: the kings of costumes

Story highlights

  • A wild night out leads to multi-million dollar international costume business
  • "Morpshuits" has embraced innovation with animated costumes and invisibility

(CNN)Dublin, 2009: midway through a hedonistic weekend, three young Scots shared a light bulb moment.

Their inspiration came wrapped in a full-body, spandex "fetish suit." Another reveler had ordered the costume from Japan and became a star attraction, with large crowds following him around the Irish city asking where they could buy one.
Brothers Ali and Fraser Smeaton, and fellow Edinburgh University graduate Gregor Lawson, resolved to test the demand for such novelty outfits.
    Each contributed £1,000 ($1,546) to establish a website and order 200 single-color suits from China, which they branded "Morphsuits." While continuing with day jobs in marketing and accountancy, the trio launched AFG Media out of Fraser's small Edinburgh apartment.

    Building the market

    "We made two really good decisions," says Fraser. "A successful business needs a bit of luck and some good decisions."
    The first was to print the website address on each costume, so that extrovert wearers doubled as mobile adverts and potential buyers could easily see where to get their own.
    The other was to use Facebook to build the market, recognizing that the product was highly visual and well suited to a medium for sharing and discussion. Cash from every sale was plowed into Facebook ads to maintain the buzz and extend awareness.
    "It's important to understand the consumer and what they want," says Fraser. "On social media people want to show they are having an amazing time, to show that their social life is better than other people's with impactful pictures. The suit massively contributes -- it increases their social capital and we understood that."
    The tactics swiftly paid dividends as AFG turnover passed £1 million ($1.55m) after the first year. The team began to expand their costume repertoire, and in 2010, abandoned their day jobs to pursue the business full time.
    The following year, Morphsuits were rolled out internationally, launching first in the United States and then in Australia, Canada, France and the Netherlands. The same model of using Facebook ads and an emphasis on pleasure was applied in each case.
    "We're all about partying," says Fraser. "It was about understanding which countries had a similar approach to partying -- developed Western countries. We are not in Japan because we have no idea about the occasions there."

    Staying ahead

    In 2012, the company secured £4.2 ($6.5m) million in government funding, which allowed it to scale up production and expand its range of costumes.
    The founders maintained a focus on social engagement with design competitions, best photo awards and caption contests. They post often and reply quickly on their Facebook page, and maintain a colorful blog stuffed with costume ideas and pop culture.
    The company also upped the ante with eye-catching stunts such as a diamond-encrusted costume worth over £1 million ($1.55m), and an invisibility suit for April Fool's Day, as it sought to stay ahead of competitors.
    "After three months we had a competitive advantage as the 'Hoover' of the category," says Fraser. "When companies started to copy us we had to keep innovating, from plain colors to patterns, and beyond."
    AFG secured licenses to produce costumes for Star Wars and Marvel Comics characters, which gave them protected intellectual property (IP) rights.
    The entrepreneurs also acquired a start-up run by former NASA engineer Mark Rober, who had helped land the Mars Rover. He gave Halloween costumes a digital edge by fitting spaces for devices to play grisly animations.
    Today the company sells over 300 different costumes -- from saucy flesh-suits to grotesque monsters and animated Christmas sweaters -- in 25 countries, with annual turnover exceeding £10 million ($15.5m). Morphsuits have been pictured everywhere from the top of Mount Everest to the Gobi desert, on sports stars and celebrities.

    Capturing a moment

    Fraser believes his business benefited from being in the right industry at the right time, citing the few barriers to entry for producing costumes, and the low initial investment.
    He adds that the growth of Halloween as a global event, part of growing American cultural influence abroad, was a timely advantage. The National Retail Fund estimates the event is worth $7 billion a year in the United States alone.
    Another factor may also be the rise of the "experience economy" -- a movement toward spending on experiences rather than static goods.
    Morphsuit-wearers often become more popular.
    The party retail goods sector is now valued at over $10 billion worldwide, which trend analyst and author of Stuffocation James Wallman sees as an indication of the growing value of experience.
    "Social media reflects and supports this shift, because it enables us to use experiences to express our identities and status to others," says Wallman. "Fueled by social media, the costume party has taken off."
    "Costume parties are the sort of experiences that are perfect in today's social media-connected world because they give good photo...In today's new media world, there's no story if you don't have a picture to share. Who wants to see a pic of friends enjoying a "normal" party? But a party where people are in Darth Vader, devil or Bananaman outfits ... now those are pics worth sharing."
    The rise of Morphsuits has not been turbulence-free. Fraser recalls the early days of adapting to the new business, when containers full of merchandise went missing and customer service was haphazard.
    But as demand keeps growing, and spin-off companies bring fresh rewards, the entrepreneurs have reasons to be grateful for a lost weekend in Dublin that keeps on giving.