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Entrepreneurs and startups are always reimagining industries and changing the ways businesses operate. The industries ripest for disruption? Those that haven’t seen any significant technological or content innovation in their recent history.
With innovation tied mostly to new franchises rather than new types of toys, the toy industry is one of those industries ready for a significant upgrade. Sales have been declining in recent years due to the dominance of digital technology in everyday life. Yet the industry remains a powerhouse, with immense potential, evidenced by data from Statista, which shows that the U.S. toy market is worth $21.18 billion.
Related: Everything You Need to Know About Breaking Into the Video Game Industry
A growing movement called toys-to-life is the likely vehicle for disruption in both toys and gaming. Toys-to-life is a new genre of video games that uses physical figurines or action figures to interact within the game. A collection of brands active in this space have made toys and other objects with near-field communication (NFC) technology, which enables their use with console and mobile-gaming experiences.
Kicked off by the Activision and Toys for Bob partnership on Skylanders in 2011, the toys-to-life movement has seen rapid growth, with big names like Nintendo and LEGO jumping in.
Tech brands, then, are recognizing the potential the toy industry has and creating innovative product offerings, which may be exactly what the industry needs to resurrect previously successful franchises and increase revenue.
Jia Shen, CEO of PowerCore, a company that helps develop toys-to-life solutions, is working with toy giant Mattel and Animoca Brands to do exactly that. “We worked closely with Mattel and Animoca Brands to incorporate our toy-to-life digital activation platform into the latest version of He-Man Tappers of Grayskull,” Shen explained. “To kick off the integration, we produced a series of five NFC-enabled He-Man character cards, each featuring one of five fan character favorites.”
1. Making toys more engaging
By creating collectibles that help enhance game play, Mattel, PowerCore and Animoca Brands are making the mobile experience more engaging and giving the physical toys involved a purpose. Many toy veterans have struggled to innovate on a large scale, which is why the opportunity for startups is so great. Lean, creative startups in both the toy and gaming space can partner with more established brands to help them innovate while leveraging their existing distribution network and marketing resources to help grow the franchise.
The reason why toys-to-life has been successful is that it bridges the divide between children’s early toy-collecting years and the increasingly younger age at which they start to play with digital games. This digital divide was a part of the initial decline in the toy market, but by creating collectibles that are a part of game play, the industry has successfully created a transitional product for those that are beginning to make the switch to digital.
2. 3D printing opens toy and gaming doors.
At this year’s Designer Con in Pasadena, whole sessions were devoted to how 3D printing can be used to create new toy designs. McKinsey estimates that the impact 3D printing will have on consumer products like toys could be as high as $100 billion to $300 billion. PowerCore was one of the chief sponsors of DesignerCon and, at that event, created a live scavenger hunt through the PuzzleCore app to demonstrate how gaming can be used to enhance all kinds of events.
Related: The Hidden Opportunity: Toys That Bridge the Gender Gap
3D printing benefits the industry in two ways. The first is that it’s making it easier for entrepreneurs in this space to gain a piece of the market. The second is that 3D printing creates opportunities for consumers to customize their toy experience. Imagine a kid at home, adding custom color or accessories to a template provided by a toy designer or a game, then having it printed and sent to his or her home for immediate use.
Companies can leverage consumers’ creativity to help create buy-in and brand loyalty.
3. Expanding gaming horizons
While toys-to-life is driving innovative changes in gaming, the industry is also experiencing some significant growth in other sectors. Augmented reality mobile games and the advent of easy-to-use virtual reality headsets is changing the way consumers interact with gaming experiences. Both are emerging trends that have yet to be fully realized, so it remains to be seen how they will all interact.
But it is fair to assume that industry leaders will try to leverage each of these movements to drive growth in the coming years.
The toys-to-life market has plenty of room to grow. With long-term revenue projected to rise to $8.8 billion by 2020, new brands have the potential to break into a previously saturated market. Before entering into this competitive industry, however, business owners should consider what partnerships may help them launch their brands into viral hits.
Related: How One Toy Company Gets Open Innovation Right
In this space driven entirely by consumer preference, newcomers will be tasked with creating unique toys, exciting gaming experiences and seamless digital activation, in order to survive. Shen recommends, “The key is seamlessly integrating games into everyday life. In doing som they become a natural lens through which you experience real life.”
Companies that leverage the toys-to-life genre to create games that are intertwined with everyday life stand to experience significant growth in 2017.