There have been a bunch of startup toy companies that are trying to combine physical and digital goods to create a break out business. All of them are using really exciting next generation (for toys at least) technologies as the backbone of their companies. All the founders are really smart. Not run of the mill smart, MIT Ph.D smart, ex Disney VP smart, and “Genius Level Hacker” smart. The toy market is worth over $30B and is being attacked by video games so what has the outcome been?
Smith & Tinker
Smith & Tinker was a high profile tech toy company that raised $30MM from all-star investors. They made an awesome hand held electronics device, invented a full universe of characters, and advertised it heavily on the Cartoon Network. Even with a great product and pedigree the product failed and the company is “pivoting” into Facebook/iOS games.
Sifteo‘s flagship product “Sifteo Cubits” has yet to launch, but I have a bad feeling about it. Again the product is REALLY cool, the founders are REALLY smart, but a six pack of these little HCI miracles is going to run $150 and from the demos it really looks like you need more than 6 to have a good time. Will parents buy this kit or spend an extra $50 and buy junior an iPod touch with Angry Birds and hundreds of other fun apps available for pennies? Sifteo is awesome and may prevail, but I wouldn’t count on it based purely on price. Founder David Merrill hints that this is just one application of the platform so I hope to see more good things in the future.
Orbotix is cast from the same mold as Sifteo. Brilliant demo, brilliant founders, but its still a $99 cat toy. This is another technology that seems to have bigger applications, but is being shoe horned into the price sensitive toy market because its not clear what the bigger application is.
Nukotoys seems to have learned some of the lessons of Smith & Tinker. They are developing fairly simple hardware that can scan trading cards which in turn impacts a computer based video game. This makes the entry cost into the system fairly low and provides an ongoing collectible stream that could generate revenue for years. My big concern with this is that they are spending a good deal of cash on licenses and have been in development for ~2 years. Nothing wrong with either statement, but it seems like in this world a more agile approach might make sense.
It is easy to arm chair quarterback, but I wonder if it would be smarter to start lower tech. A huge portion of iPod touches are owned by kids, could you just build of that platform instead?
Hasbro is taking a long time to get a simple product to market so they aren’t doing things perfectly, but instead of betting years of your life and millions in VC money developing proprietary technology, why not build half a dozen simple iPhone toys and see what works?
You won’t be able to do huge traditional launches with TV commercials, but Angry Birds has shown that a popular game can beget a toy line quickly. The guys who made the Glif have shown that you can make simple plastic parts quickly and inexpensively. Instead of trying to outsmart the market what about listening to it?