Hasbro, Mattel and Lego are battling hard to maintain significance as the toy industry faces more and more challenges.
As the toy industry undergoes emphatic change, the proliferation of connected devices is putting particular strain on the market.
For Hasbro, Mattel and Lego, the three leaders in the industry, times are particularly uncertain. However, opportunities have emerged.
Smart toy sales to skyrocket
According to a new study from Juniper Research, smart toy sales will grow threefold in the coming years, predicted to exceed $15.5bn by 2022.
“Smart toys are expected to be driven by the increasing popularity of smartphone-based connected toys, such as Sphero’s BB-8 and the appeal of ‘toys for life’ toys, such as the Lego Dimensions range,” reads the report.
Toys to Life are action figures that interact with a video game via a reader device.
Superpowers dominate the market
The US will dominate the smart toy market in the coming years, with Juniper’s confidence based on the historical high sales of the segments mentioned above.
However, China is set to disrupt this trend, with increasing disposable income and the legalisation of video game consoles for sales driving smart toy uptake. China will account for 18pc of the global smart toy shipments by 2022, representing an average annual growth of 42pc, according to the research.
What has really helped toymakers to innovate is cloud computing. This has allowed the creation of devices that record data in the cloud, freeing up space on that actual product to perform more and more tasks.
The relentless proliferation of newer, stronger and smaller processors to help power these smart toys has helped, too.
Hasbro experienced growth while Mattel saw losses in their respective Q1 2017 financial statements, with Lego’s global growth held back by flat US consumer sales.
“All three of these companies have, to some extent, started working in the connected toys segment, as well as venturing into the smartphone app market,” said Juniper.
“Therefore, with mixed financial results and increasing use of smartphones, the further exploration of connected toys by the major players seems an inevitable and logical step.”
As with all commercialisation aspects of children’s lives, privacy is a major concern.
In late 2015, for example, a hack on toymaker VTech meant that millions of parents saw their personal data accessed, with hundreds of thousands of kids potentially compromised, too.
Juniper suggests that privacy issues are a prominent concern of parents, academics and, increasingly, regulators.
“As smart toys develop more advanced connected features, they will increasingly be subject to both toy safety and privacy/data protection regulations such as the forthcoming European Union’s GDPR,” it said.
Lego’s activities in recent years have shown just how wide a net it is stretching around the toy and games space.
For example, earlier this year it supported a new ‘professor of play’ position in the University of Cambridge.