Toymakers Rattled As Children Swap Toys For Tablets This Christmas

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Mattel, the world’s largest toymaker by revenues, may be renowned for producing Barbie dolls and Hot Wheels, but this year, their number-one selling product has actually been a simple plastic cellphone case, reported the Financial Times on Sunday, with more and more children today now increasingly exposed to technology devices, forsaking playtime with traditional toys.

According to FT, many children, some as young as three-years-old, will be receiving tablets or personal electronic devices for Christmas this year, while fourth-quarter sales forecasts for toymakers such as Mattel and competitor Hasbro have been lowered, after sales in the first three quarters of the year declined compared to the year before.

Industry analysts also predicted that as parents upgrade their own devices to newer releases over Christmas, many would be more than willing to pass their old ones on to their children.

“Everyone I know who has a kid under 10 has a tablet in the house. And that tablet is the babysitter,” said Dylan Collins, an investor in Fight My Monster, an online gaming company, to FT.

“The top two guys, Mattel and Hasbro, they are terrified,” added Sean McGowan, managing director of equity research at Needham & Company, an investment banking firm.

“They should be terrified, but the official party line is they’re not terrified,” McGowan said.

Although toymakers have long been aware of creeping digitization of playtime, they “may have been slow to realize that personal technology might pose an existential threat to more analog toys,” wrote Salon.com news editor, Alex Halperin.

“In our technology saturated age, children are developing an entirely different relationship to the physical world. This has implications that extend far beyond Christmas toy sales figures to obesity and maybe even evolution,” Halperin added.

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Hasbro, on its part, is now trying to adapt to the trend by reinventing its toy, including the popular 1990s plush toy, Furby. The new interactive version comes with a free mobile app that kids can use to feed Furby, and translate the things it says in “Furbish” to English.

“Clearly, young people have an aptitude for and expectation with digital platforms that we need to recognise,” said John Frascotti, chief marketing officer for Hasbro.

But McGowan believes that the traditional toy companies may struggle to compete in the future, against tech companies that continually make engaging entertainment.

Mattel almost went bankrupt in the 1980s from its attempt to move into video games, cited McGowan, who noted that Hasbro, which makes popular board games like Monopoly and Scrabble, were also facing competition from similar games produced by Zynga, the social gaming company built on Facebook.

Check out this Infographic, which explores how Christmas Gifts have evolved over the last few decades:


Image source: MoneySupermarket;