The Influence of Technology in Toys and Games: Corporate Strategies

Strategy Briefing

About This Report

Jul 2015

Growing access to the internet and the proliferation of affordable advanced communication technologies over the past decade has created a generation of digital natives for whom the divide between virtual and real-life play is minimal. This has led to major changes in demand for toys and games, forcing manufacturers to incorporate smart features into their product lines. This briefing focuses on strategies that have worked so far and considers how technology will permeate playtime in the future.

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The Influence of Technology in Toys and Games: Corporate Strategies

Falling prices of computers and smartphones have been driving penetration rates

Smartphones, laptops and tablets are commonplace in developed markets, and falling device prices are making them ever more popular in emerging markets as well.

The prevalence of technology in daily life is changing consumer behaviour

Communication technology is becoming increasingly integral to the daily life of consumers in developed markets. This has changed consumer behaviour dramatically, including playtime. For a generation of digital natives, the line between the physical and virtual worlds is growing ever thinner.

Interest in video games is growing, but free-to-play is limiting revenue growth

With growing penetration of computers and smartphones, interest in video games has been growing, but free-to-play games have captured much of this growth, limiting growth in revenues from video game sales, thus developers are relying instead on in-game purchases.

Increased access to entertainment media has made licensed toys increasingly important

One of the biggest consequences of the increasing influence of technology has been growing access to, and consumption of digital media. Consumers want toys based on the most popular entertainment franchises, making licensed content ever more important.

“Toys-to-life” have benefited the most from changing consumer habits

Toys-to-life products have resonated with children, for whom the lines between virtual and physical play have been blurred. Over the forecast period toys-to-life product lines are expected to continue growing dynamically.

Toys of the future will be part of the “internet of things”

There is expected to be an increasing number of toys that incorporate some interactivity with the virtual world, and the proliferation of technology in emerging markets means that connected toys will be popular globally instead of just in developed markets.

Introduction

Scope
Key findings
Objectives

The Shrinking Gap Between Real Life and Virtual Playtime

THE SHRINKING GAP BETWEEN REAL LIFE AND VIRTUAL PLAYTIME
The emergence of digital natives in developed markets
Effect of the increasing accessibility of technology
Smartphones become the centre of the digital consumer
What about tablets?
Key points

Quantifying the Impact on Demand

QUANTIFYING THE IMPACT ON DEMAND
Free to play games slow video games sales growth
Content and licensing drive demand
Shifting spending priorities slowed growth in developed markets
Impact on Mattel Inc
Key takeaways

Successful Strategies

SUCCESSFUL STRATEGIES
Toys-to-life
Overview of key toys-to-life product lines: SkyLanders
SWOT analysis: SkyLanders
Disney Infinity
SWOT analysis: Disney Infinity
Nintendo amiibo
SWOT analysis: Nintendo amiibo
Licensing and emerging market growth benefit Hasbro Inc
Key strategy shifts in 2015

Proliferation of Technology in Emerging Markets

PROLIFERATION OF TECHNOLOGY IN EMERGING MARKETS
Prices to continue sliding
Global internet subscriber growth to remain dependent on China
Smartphone growth to remain strong in emerging markets

Connected Toys as Part of the Internet of Things

CONNECTED TOYS AS PART OF THE INTERNET OF THINGS
Smart toys
Shifting towards emerging markets
Licensing to continue growing
Transformers due for an expanded toys-to-life line

Report Definitions

Data parameters and report definitions