The top three toy companies face challenges but opportunities exist to alleviate the uncertainty.
The toy industry experiences constant change over the years. All types of connected devices are bringing forth new challenges for the industry.
According to a study, smart toy revenue is expected to grow by a magnitude of three times, approaching nearly $16 billion over the next five years. What will serve as the driver for these smart toys? Increasingly smartphone connected toys, like Sphero Star Wars BB-8 drone and toys-to-life toys, like Skylanders, Lego Dimensions, and Lightseekers will act as the main drivers, driving the explosive growth of smart toys.
According to reports, the United States is expected to dominate the smart toy market in the years ahead. But China could serve as a disruptor because of rising disposable incomes and video game consoles becoming legalized, which, in turn, may drive smart toy sales. In five years, China is forecast to make up 18 percent of all smart toy distributions, with yearly growth estimated at 42 percent on average.
Cloud computing is at the center of driving innovation for toy creators. So these smart devices can store data in the cloud so that additional tasks can be performed by the product. Also, the advancement of smaller, powerful processors has helped smart toys.
Hasbro, Mattel, and Lego have already begun their work in the connected toys market. Some have even tapped into the smartphone app market.
Because of a mixed bag of financial results and the proliferation of smartphones, connected toys appear to be the next logical avenue to drive growth for Hasbro, Mattel, and Lego.
And with these smart toys, these toy companies will no doubt have to also keep a close eye on privacy concerns. In the past, smart toys have been hacked raising privacy concerns. Companies have to remain vigilant to protect customer information from being compromised while delivering an enhanced play experience with these smart toys. Privacy and data protection will become increasingly important as these smart toys become increasingly more advanced.