Smart Toys Making a Big Play This Holiday Season

By Steve Anderson November 10, 2015

The holiday shopping season has started up for many already, and with Hanukkah, Christmas and Kwanzaa only a few weeks out, toy purchases are already front-of-mind. A new report from Juniper Research shows that one breed of toy is likely to have a big year this year: smart toys.

The Juniper Research study illustrates a market where smart toys will clear $2.8 billion in revenues this year, including both hardware and app content. One of the biggest drivers in that market will be the “toys to life” segment, popularized by the Nintendo Amiibo line and Activision's Skylanders series. This segment allows toymakers to not only offer toys, but connect these directly to mobile and console devices as well, allowing for extra value and thus an increased chance of making sales. Lego's recent plan to join in with the Lego Dimensions series has only spurred development further.

Toy consumers, however, are proving price-sensitive, with the Juniper Research report noting that “Price is one of the biggest hurdles for consumers.” Given that smart toys carry premium prices, though some relief on that front is expected, smart toys are largely a major-markets-only affair, with the United States, United Kingdom and Japan taking the lead. Companies will also need to focus on security, so as to prevent the toys from becoming a network access point for hackers, and the revenue potential of offering content via apps for the toys.

Perhaps the first such smart toy vendor in this vein was Activision's Skylanders line. Based in part on the Spyro the Dragon series of games, Skylanders has offered several new versions to follow from Skylanders Swap Force to Skylanders Trap Team, leading up to the most recent, a racing game called Skylanders SuperChargers. Though the characters aren't immediately recognizable, there are a variety of experiences to be had in the series and that's driven a lot of its popularity. Prices on the Skylanders series vary wildly depending on the series desired—the Xbox One version of Skylanders SuperChargers runs $69.99 on Amazon—and used versions are available for those who want to save some cash.

Skylanders Smart Toys

Nintendo's Amiibo series steps in next, with a string of characters immediately recognizable to just about anyone who's played a Nintendo console in the last 30 years. Amiibo characters are small statuettes on bases that can connect to Nintendo consoles, including the 2DS, the 3DS and the Wii U. Able to work with a variety of different games—some of which are specific to that title or franchise—the statuettes offer a new challenge to older games by unlocking new content while still looking sharp as statuettes. Some characters are available in card form for easier portability. Prices here also range, though a bit more narrowly than the Skylanders series, sticking around the $10 - $30 range.

Lego Dimensions is the latest addition to the series, boasting characters from a wide array of licenses boiled down in Lego form. Included in the roster are Batman, Doc Brown from the Back to the Future film series, and Doctor Who, showing just how far this series can range. Featuring a familiar voice cast as part of the games—Christopher Lloyd voices Doc Brown, for example—the game is designed to have almost a cinematic feel, putting a wide array of different characters in pursuit of a meta-goal to stop a Lego universe villain from seizing control of the entire multiverse of different Lego characters. Given that this is Lego, however, the figures and installations in question can actually be used offline as well, as part of normal Lego play, at least to some extent. Prices here also range depending on the system desired—on Amazon the price for the Xbox One version is almost $15 higher than even the PS4 variant—and several “level packs” are available to add more characters and gameplay.

There's one point that smart toy makers could—and should—keep in mind when it comes to marketing smart toys into a price-sensitive environment: the value proposition. Toy makers have a unique opportunity to note that, yes, the initial costs are high, and unusually so for a toy. Smart toys may have a high entry point, but smart toys also have an unusual longevity. Several such toys are already on the market and drawing interest from consumers and vendors alike.

Smart toys could be a huge draw this season, but toymakers will have to have a clear marketing plan in place to get the most out of this high-dollar but potentially high-value series. Overcoming price objections will be the biggest step, but if the value can be clearly established, consumers may well buy in on toys that last a lot longer than the ordinary.




Edited by Kyle Piscioniere

Contributing Writer

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