Over the holidays I have been looking at a few back issues and was reading an article on Lionel for 1955 in the January, 1989 issue of The Train Collectors Quarterly. The focus is on their advertising but in the section of conclusions the author Max Knoecklein presents an interesting theory about why Lionel was not able to adjust to a more scale oriented market after the war. The theory involves their experience with scale trains in the pre-war period, which would include of course the OO gauge line. He noted

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.

It is hard to imagine that Lionel made much money on the OO line. It was first advertised in the October, 1938 issue of the magazine published by Lionel The Model Builder, and then in the November issues of The Model Railroader and The Model Craftsman. The principal quotes would be

The biggest little train ever made, 14 ½ inches of “OO” Gauge scale model perfection, duplicating every detail of its big “O” Gauge brother and ingeniously constructed so it will circle a track only 27 in. in diameter.
… driven by worm-gear motor, it’s a veritable power plant on wheels, as smooth in its performance as any engine ever made. “OO” Gauge scale model freight cars. True-to-scale, Bakelite-mounted, easily assembled “OO” track. Switches, Crossovers. In fact, everything you need to be a “OO” Gauge railroader.

Everything! Certainly by the holiday season of 1938 they got outfits on the shelves to fit their new “OO tinplate” niche. This last image is from the back cover of the November/December 1938 issue of The Model Builder and shows again their hope that they would appeal to people who lived in city apartments.

They obviously dropped OO and the scale market 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.