Smart Toys Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Smart Toys Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The smart toys market is expected to register a CAGR of 28% over the forecast period 2022 - 2027. The rapid adoption of the Internet of Things has spurred the growth of smart and connected devices for various applications. Smart toys use multiple technologies, such as IoT, Artificial Intelligence, Smart Devices, and many more, to enhance the experience of learning and fun for children.​

Key Highlights

• These toys provide a personalized play experience for children with embedded software that offers speech and image recognition, app integration, RFID functionality, and web searching functions. 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.​
• Adopting STEM (Science, Technology, Engineering, and Math) toys for children's skills enhancement is one of the key factors driving the demand for the smart toys market. Smart toys enhance professional skills such as coding and engineering through smart interaction and behavioral learning. As parents always embrace products that can assist in their children's intellectual development, this will further boost the adoption of smart toys. Companies such as SmartGurlz toy teach girls how to code.​
• Various factors such as direct and two-way communication, real-time tracking of children's activities, and the capability to store personal data, such as child's name, photos, and voice recordings, which help in the personalization of toys, are some of the factors majorly driving the growth of smart toys. Companies such as Fisher-Price offers Smart Toy Bear that can be controlled by the smart toy app on a smartphone. Such innovations are expected to drive the market over the forecast period.​
• The advent of 5G technology is expected to boost the adoption of smart devices and toys over the forecast period. According to the Ericsson Mobility Report, the estimated number of 5G smartphone subscriptions is expected to reach 2,451 million by 2025 compared to 580 million by the end of 2021.​
• The Covid-19 pandemic has resulted in severe lockdowns in various parts of the world. The imposed lockdown has augmented work-from-home practices and shut down schools and other educational institutions as a safety measure.​ According to UNESCO's latest figures, some 1.3 billion learners worldwide could not attend school as of March 23, 2020. Many schools, colleges, and universities are closed across the globe.​Such trends have increased the opportunities for the adoption of smart toys globally, as it promotes remote learning practices and provides enriching and immersive experiences to children.​

Key Market TrendsIncreasing Adoption of Technologies like AR, VR, Smart Homes, and Connected Mobile Devices​ are Driving the Market Growth

• The increasing disposable incomes of consumers worldwide, mainly in developed economies, propels them to adopt advanced smart home devices and technologies. In 2020, Jio announced its plans to offer JioFiber free for 30 days. The broadband plans start at Rs 399 for a month with unlimited data and symmetric internet speed. However, Jio also aims to bring smart home ecosystem solutions to consumers with its JioFiber service. Such trends are expected to boost smart home devices' adoption, further instigating the adoption of smart toys.​
• Also, augmented and virtual reality technologies are helping children build their imagination and enhance their thinking skills through real-world simulations. It also makes the learning process creative and increases their leadership skills. Augmented Reality (AR) games improve the kids' analytical and reasoning skills, further influencing the demand for smart toys.​
• In April 2022, LeapFrog® Enterprises, Inc., the leading innovative educational toys for children company, launched its iconic Scout and Violet plush pals and new creative touch-sensitive technology toys perfect for pretend play that builds young imaginations, and makes learning fun and exciting.
• App-Enabled smart toys are expected to hold a prominent share in the smart toys market due to the increasing deployment of mobile apps globally. For instance, according to a study by Sensor Tower, In 2021, consumer spending on mobile games across Google Play was $37.3 billion, up 16.6% year-over-year.
• Also, the increasing penetration of the internet worldwide has spurred the growth of smartphones and mobile apps, which further aid as a catalyst for smart toys' change. According to DataReportal, in 2022 total of 5.03 billion people worldwide are using the internet today – equivalent to 63.1 percent of the world's total population. Such instances are expected to drive the market over the forecast period.​

Europe to Hold Significant Market Share

• The European region has always remained at the forefront of technology adoption due to the rapid integration of technology in various products and offerings, catering to various end-user industries.​
• Certain factors, such as growing internet penetration, smartphone penetration, and connected devices growth, are majorly impacting smart devices' growth in the region. Also, the usage of the internet on smart devices is increasing substantially. For instance, according to the report by Zippia, As of 2022, approximately there are 4.9 billion active internet users worldwide. That's 62% of the world's total population. Such trends are expected to be a significant catalyst for the adoption of smart devices.​
• However, the increasing concerns over data and privacy issues due to the increase in smart toys' deployment are expected to hinder the market growth. Hence, several regulatory authorities are taking significant measures and steps to mitigate the risks of using these smart toys.​
• For instance, Finland became the first European country to certify safe, smart devices by mandating a new Cybersecurity label that helps consumers buy more reliable products. The Finnish Transport and Communications Agency Traficom launched the Cybersecurity label, which guarantees that the labeled devices have basic information security features. With the label, Traficom aims to raise consumer awareness of information security and the safe use of connected devices, such as smart TVs, smartphones, toys, etc.​
• Hence, similar government and regulatory initiatives, coupled with initiatives by smart toy providers, are expected to aid market growth.​

Competitive Landscape

The global smart toys market is fragmented and highly competitive due to the presence of a large number of players worldwide. The vendors are also increasingly adopting advanced technologies to develop innovative products and expand their portfolios to enhance their global presence. Companies also leverage e-commerce portals and advanced technologies to extend their visibility and gain more consumers. Some of the recent developments in the market are:

• May 2021- The Kinder brand partnered with Gameloft and Oxford University to launch Applaydu. This new app brings Kinder Joy toys to life through augmented reality in a world of discovery and imagination. The application also offers games, stories, and opportunities for creativity and exploration.
• April 2021 - Play Shifu announced they had raised USD 17 million from Inventus Capital India. The company plans to invest in launching eight new products by the end of 2021 and 12 to 30 products to cover over 20 early-learning skills by 2022.

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