Toy companies are trying to find the future of play

Representatives from 700+ companies gathered at the North American Toy Fair in NYC last week to pitch what they hope is the next must-have toy, with exhibitors all competing for one precious resource: kids’ attention.

And for many of those kids, play has migrated to tablets, gaming subscriptions, and short-form video.

• A major trend on display at Toy Fair was “phygital immersion,” or toys designed to blend physical play with digital storytelling.
• For example: National Geographic’s new VR kit pairs illustrated books with virtual journeys into prehistoric worlds and natural wonders.

As one industry executive put it: “The definition of ‘toy’ has changed.” A doll now competes directly with an iPad app, with only so much spending to go around.

That shift is showing up in earnings

The two biggest US toy makers, Mattel and Hasbro, reported sharply different results just days before Toy Fair kicked off.

Mattel said its full-year net sales dipped 1%, with global doll sales falling 7% in the latest quarter. Overall, the company’s stock has fallen by over 20% in the past 12 months.

Meanwhile, Hasbro posted a 31% fourth-quarter sales jump, and a 14% gain for the year. The toymaker has seen shares rise by ~46% since this time last February.

A digital divide: One major reason for the companies’ diverging fortunes lies in how each one is navigating the toy industry’s current trend towards digital offerings.

• The leading element of Hasbro’s portfolio is its Wizards of the Coast division, which includes the company’s portfolio of digital and video games like Monopoly Go!
• On the flip side, analysts say Mattel is in the early stages of investing in gaming, and lags several years behind Hasbro in that area.

Looking ahead…Toy companies are expected to keep embracing digital products in 2026, as children continue to be introduced to electronics earlier in their development.