Connected Toys Market - Growth, Trends, COVID-19 Impact, and Forecasts (2023 - 2028)

Connected Toys Market Analysis

The connected toys market was valued at USD 7.62 billion in 2020 and is expected to register a CAGR of 24.3% over the forecast period (2021 - 2026). In the current market scenario, connected toys are expected to gain traction rapidly. For instance, these toys provide more personalized play experience for children with the help of embedded software that can offer speech and image recognition, app integration, RFID functionality, and web searching functions, among others.

• Connected toys are multipurpose gadgets in most cases as parents program them for learning exercises and event tracker for the security of their children. For instance, CogniToys’ Dino, utilizes Wi-Fi to stay connected and IBM Watson’s natural language processing technology to tailor its responses as per the child’s age group and skill level. The adoption of connected toys is expected to witness increased demand over the forecast period as parents always embrace products that can assist their children with developing their intellectual level.
• The adoption of STEM (Science, Technology, Engineering, and Math) toys for children’s skills enhancement is one of the key factors driving the demand for the connected toys market. These connected toys are being used to enhance professional skills, such as coding and engineering. For instance, Dot Creativity Kit is an offering from the Wonder Workshop that consists of a trio of chatty robots to encourage children to get into coding. Dash (for 6+-year-olds) and Cue ( for 11+ years old) are few other connected toys.
• Around half of the highest-paying jobs in America demand some coding knowledge. Developing STEM skills among the youngest learners is an economic imperative in the United States. Thus, students starting early in STEM subjects can build strong foundations and begin to enhance the nation’s low scores in these areas. According to the National Conference of State Legislatures (NCSL), 66% of the fourth graders are not proficient in science, and 60% were not trained in mathematics. Thus, toy companies are increasingly investing in making their products a good means of interactive learning.
• Toy giants, such as Lego Group, offer coding-related toys, and several start-ups are also focusing on this new category of connected toys. In May 2019, LEGO Group announced the launch of its new LEGO Star Wars BOOST Droid Commander, an addition to its Star Wars range. The new toy set offers all the creativity and coding fun of LEGO BOOST.
• Though connected toys create valuable benefits for both parents and children, these toys pose certain privacy and security risks. As the kids are vulnerable customers since they do not understand how these toys work and the risks imposed by them, regulations play a critical role in achieving safe products to overcome such security concerns. Moreover, with the outbreak of COVID-19, there are disruptions in the supply chain, causing supply and demand variations.

Connected Toys Industry Segments

Connected toys primarily consist of a microphone and speaker, and an app to process the data. These toys offer a more personalized experience for children through embedded software that includes speech recognition software. Also, these toys can help parents keep track of the whereabouts of their children.

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Connected Toys Market Trends

This section covers the major market trends shaping the Connected Toys Market according to our research experts:

Smartphone Connected Toys are Expected to Witness Significant Growth

• Connected toys, also considered as smart toys, come are available in various shapes and designs. Still, all having one common element is connectivity allowing the children to interact with the toy through a smart device or smartphone. Many manufacturers have been producing toy units that can fly using nothing more than an app and a Wi-Fi or Bluetooth connection.
• With the rapid technological advancements, children’s toys are already computerized and connected to the internet and will continue to witness many more upgrades in the near future. Moreover, an increase in the number of internet users, coupled with the increased adoption of various hand-held devices like smartphones and tablets, is driving the market across the globe.
• Various factors such as direct communication, real-time tracking of children’s activities, and personal data storage that includes a child’s name, photos, and voice recordings, which helps personalize the toys, are some of the reasons driving the app-based connected toys. For instance, in February 2019, Hasbro announced the launch of Star Wars Lightsaber Academy, an app-and-lightsaber-toy combo. The app-enabled by Bluetooth uses motion tracking to record and analyze the action of children. The information arrived at in such fashion is used to issue audio feedback to facilitate real-time training and performance scores.
• As artificial intelligence and robotics have become more affordable than the past years, the technology has been incorporated into a wide range of children’s toys. This not only offers a new interactive experience to the children but also extends the life of toys with multiple features. Such innovations are expected to drive the market over the forecast period.

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