By the mid 1950’s … prepackaged “H0 train sets” accounted for 50% of the “ready-to-run” train sales at hobby shops and threatened to take even more. A contemporary market survey revealed buyers to be favoring “H0” because it appeared to be more realistic, and appealed to their concepts of “crafts” and “modeling”. Tinplate, on the other hand, seemed toy-like to these shoppers, and was therefore no longer acceptable. At Lionel the reaction to such talk went something like this: “Our business is toy trains, and there will always be a market for them. We became involved with scale models before the war, and nearly lost our shirt in that venture. We have no intention of making that mistake a second time!” Sound familiar? In 1955 the idea of far-reaching changes to satisfy a real or imagined quest for realism was unthinkable.more on the launch of the line here), and they obviously dropped it after the war.
My brother has a small collection of pre-war Lionel O gauge and it always blows my mind a bit when I visit him to see what they were making right before the scale line was introduced. The post-war O gauge line is more scale in character but not as cutting edge as the scale line was before the war. It is interesting to ponder what they could have done if they had a better handle on where the market was heading and angled the OO line toward the market that HO train sets were cornering.