Throughout most of the 1970s, Mego was THE name in action figures. Mego had mostly been known for toys that cost under a dollar, but they saw an opportunity in 1971. 12" GI Joe's flag was flying at half mast due to negative sentiment over the Vietnam war, while Barbie wasn't exactly scoring points for Women's Lib. Mego created a slightly smaller 8" figure with good articulation and poseability, and the line was a massive hit for nearly 10 years.
Key to being able to offer such a varied lineup of figures is they all shared the same body, only the vinyl heads and costumes were different. They also reused a lot of outfits and accessories between lines to save on costs. The reduced size of the figure brought overall material costs down, and by aligning themselves with established pop-culture properties a lot of their marketing was already done for them. Mego's 8" figure became the standard size action figure for most of the 70s.
Mego's first score was with an original character; Action Jackson. He was a generic hero type with cheaply made accessories and vehicles. Unusually, he was available in three different styles: caucasian (fuzzy bearded and clean-shaven) and African-American. This one line offered kids an adventurer, dangerous occupation aspirational playsets, and a sort of low-rent Evil Kenevil.
Greater success came later with Mego's many TV and movie licenses. Mego was right there at the birth of extensive media tie-in merchandising (that title may have to go to the massive Six Million Dollar Man toy line), though they sure made some strange choices. They are probably best remembered for their line of comic book superhero figures, but they also licensed properties like "Our Gang" and "The Waltons" (imagine the excitement of finding a John Boy figure under the tree on Christmas morning...)
The comic book offerings were unusual in that Mego was able to license both DC and Marvel characters together. The also marketed the toy in other countries. South Africa got a figure to accompany the adventures of radio hero Jet Jungle (a figure so rare, the few known examples trade hands for thousands of dollars). The UK got most of the hero line though Palitoy, and Denys Fischer brought us the unconventional TV heroics of Tom Baker's Doctor Who.
Another sci-fi saga was a huge hit for Mego; "Star Trek". When the figures came out in 1974, the show had already been off the air for a number of years. Mego got the license to the dead series for a song. You can see why a line like Trek would be interesting to a thrifty company like Mego. The uniforms are all the same, the accessories are the same. Mego's timing was perfect. Trek's unexpected success in reruns and the roll out of a new animated series made Mego's Trek offerings popular. Back then, that early breed of Trekkers were ready to snap up anything with the "Star Trek" name on it. "Planet of the Apes" was another hit line, especially after the movies were re-run on television and the Apes returned a weekly TV series.
In 1974 and 75, Mego's 8" figures were on the list of top 10 best selling toys in the US. Some estimates put their production at 12 million figures per year. With so many hot TV & movie licenses, and such a simple development cycle to creating new characters, what went wrong?
In 1976 Mego was invested in bringing Takara's Micromen line (called Micronauts in the US) to these shores. They were offered the license to a sci-fi movie that was slated to come out the next year called "Star Wars". Mego's David Abrams was reluctant to license every "flash in the pan" B-movie. Instead Kenner got the license, and enjoyed unprecedented sales on movie tie-in toys. Mego tried to play catch up afterwards, licensing "Moonraker", "Star Trek: The Motion Picture", "The Black Hole", "Buck Rogers", but none of these properties could keep up with the unending demand for Star Wars and Mego shut their doors in 1982.
Since then there have been modern-day reissues, and there is continued interest in collecting the old 8" guard. An unexpected market is in low-budget and hobbyist stop motion animators (prominently the guys making "Robot Chicken") use the cheap articulated bodies to create cartoons. There's also a collecting magazine called ToyFare that uses the posed figures for oddball photo comics about collecting action figures. It's a bit too meta for me... Fortunately with so many years of Mego production, the 40 year old 8" figures can be a relatively cheap pop-culture collectible.