In a world where the concept of applying Internet connectivity has been considered for almost all physical objects, it is unsurprising that the toy industry is increasingly involved in the development and sale of connected, ‘smart toys’.
Today’s traditional toy industry is, and has been for many years, facing heavy competition for children’s attention. From the mid 1980s onwards, the acceleration in popularity of video games and associated games consoles has created an entire sub-segment of the toy industry, with smartphones and tablets representing a natural evolution of this phenomenon.
Google Smart Toy Patent #US20150138333
Connectivity Enables Ecosystems
For the vendor, the smart toy enables the development of a wide ecosystem of products surrounding an initial piece of intellectual property.
- This is illustrated by the expansion of the Skylanders video game franchise, which has not only successfully iterated on its console releases, but also expanded the number of toys able to integrate with the game (for example, by recently adding connectable vehicles to the existing crop of figurines).
- Thus a single product (the video game) has been able to generate exponentially higher revenues via the toy ecosystem than if the game were simply sold as a standalone product.
Smart Toy sales are expected to be driven by the tremendous popularity of the ‘toys to life’ segment, with LEGO having entered this space in September 2015. Juniper’s latest research, Smart Toys: Hardware, Apps & Technologies 2015-2020
, expects that total revenues from smart toy hardware sales and app content purchases are forecast to reach $2.8 billion in 2015.