On a trip to the Lego store at my local mall I came across a display for the “Lego Mini Monthly Build” program. This program gives a small (<40 pieces), free kit, based on a seasonal theme to fans who arrive at an appointed time. A great idea that flows nicely with other trends in ecommerce/retail:

+ Borrows from other successful industry trends – In this case blind box urban vinyl popularized by Kid Robot. Like Kid Robot, these slick designs are hidden until the last minute, rare, and highly collected.

+ Creates an “Appointment Dynamic” – I don’t want to lump this project in in with the fad du jour of “Gamification”, but it is part of a trend of companies that have turned what were once discreet purchases into an ongoing, regularly scheduled product experience. BirchBox and Foodzie are other examples of this subscription based commerce.

+ Two way communication – Some of the designs are created by the users and Lego actively solicits customers to suggest the next year’s design.

I have no idea if this gooses sales any more than releasing another Star Wars based kit, but it seems like a great way to foster engagement at a relatively low cost and a reminder that “co-creation” can be fostered as much by the calendar as cool technology.

Related articles

• LEGO Gears of War Lancer Assault Rifle (techeblog.com)
• Lego bricks meet iPhone with Life of George augmented reality game (geek.com)
• Lego Introducers Lego Mini Modulars Set (shoppingblog.com)
• How a father-son Lego project turned into our latest app. (jacksonfish.com)

Penny Arcade is a blog/web comic for obsessive video gamers whose senses of humor tend towards the caustic. So when you see an earnest post about kids and technology you know it has to be interesting.

Gabe, one of the authors tells a story about his son’s obsession with the game Minecraft. If you aren’t familiar with the game, Minecraft is basically a multiplayer game of digital LEGOs. You make things and avoid some nebulous bad guys, but it is fundamentally a digital sandbox.

His son plays for hours a day and he is considering putting limits on the play as good parenting manuals would suggest. But he can’t, because the things his son are making are too cool. Not only is he building things in the game, but his son (Age 7) wanted to make a video of himself making things in the game so he built a “tripod” out of Legos, with an ultimate aim of sharing it online. So this 7 year old who has never read the Cognitive Surplus, thought about participatory media, or had any exposure to notions of a post TV landscape spends his time:

1. Playing a game that’s primary goal is building original structures

2. Documenting his creative process via video

3. Fashioning real world objects to meet his needs

4. Sharing his creations via the web.

If little Gabe isn’t an outlier we could be on the brink of a new wave of creativity. Of course, this should be tempered with a bit of reality. One of the smartest guys in tech pointed out that MySpace profiles tricked out with custom HTML/CSS portended the same thing, but ultimately fizzled. I’m still optimistic that this is for real and exciting days are ahead.

Barbie has gone through a lot of changes going from Stewardess to Astronaut. I’m not sure what career this new incarnation would be suited for, but you can now “design” hair extensions for your doll and have them printed out on inkjet printers using a special “hair” paper.

The printer can print images, words, colors, textures, and a variety of other aesthetic stylings based on what is designed .

and boom your semi-classy Barbie now looks trashier! An you can wear them yourself if you are so inclined.

The product seems tacky, but it is neat to see the profusion of customization and how it is working into all sorts of odd niches.

More importantly, I wonder if this says something about customization more generally. Maybe custom isn’t something that can carry a company on its own (except maybe in some edge cases), but it is something that is added to a mature product line. Customization is cool, but perhaps not cool enough to sustain an enterprise independently?

Toyfair, the annual event where all the major toy companies display their products for trade buyers is coming up in February, but it is becoming clear that one major trend for 2011 will be the creation of toy brands based on popular video game/digital media brands. Companies like Sifteo and Smith & Tinker have been leaders in this area, but their products lack widespread brand awareness which makes it tough for them to connect with customers. What makes this latest crop of launches interesting is the fact that they are drafting on web hits like Angry Birds and Moshi Monsters.

Moshi Monsters Toys

Moshi Monsters is a wildly popular “virtual pet” service in the UK and is expanding into physical goods for the first time. Their range includes standard licensed fare like themed backpacks, but also some offerings that have codes that can be redeemed in the virtual world.

Angry Birds Toys

Angry Birds has become a phenomena and probably helped sell as many iPads as Apple’s expensive ad campaigns. Their virtual domination is not enough. Rovio, the parent company of Angry Birds has partnered with Mattel to release a board game version of the popular app. Part “Mousetrap” and part Jenga, the Angry Birds board game will likely be popular on school yards and in the lunch rooms of hundreds of tech startups.

Interestingly, Moshi and Rovio are both European companies. I wonder why US based Ngmoco and Zynga have not yet turned their virtual empires into cash generating tchotchkes.

Mattel Health Toys

Mattel is hedging its bets with branded and original “digitoys”. The “FunGoPlay” brand is Mattel’s attempt to turn the energy surrounding the Wii Fit, EA’s Sports Active, and the Kinect into a toy brand. These sports toys capture data about real world use and can then transfer it to a web service. Parents can now track active play time and kids can keep score in the real world.

I Can Haz Cheezeburger

Cheezeburger Inc isn’t a toy company per se, but their offerings are physical entertainment based off of digital content, in this case books and calendars created with funny crowdsourced images of cats. The company has grown a huge audience and recently raised $30MM from prominent investors.

For the last ten years physical products companies have made web presences for their brands to advertise and build an audience for their wares. It is exciting to see the roles reversed now where popular websites/games are creating physical souvenirs for their audiences.

Related articles

• FunGoPlay launches virtual-world sports, real-world sports gear for kids (venturebeat.com)
• Mattel to release Angry Birds board game this May (geek.com)
• MoshiMonsters To Launches First Toy Range, Aims At $22 Billion US Market (techcrunch.com)

In 2010 FarmVille has gone from Facebook, to iPhone, to canned vegetables, to Slurpees, and now to ice cream. Farmville Vanilla Ice Cream is now available in over 7,000 7-11 freezer chests. Buy the ice cream in the real world and your virtual world benefits via Zynga credits that come with the product.

It is a brilliant idea and one that will provide a good point of differentiation among commodity products. More importantly I wonder if this provides an alternative to ads, subscriptions, and microtransactions for website revenue?  If your site has sufficient reach among a demographic, will CPG companies and retailers pay you for driving customers to them? Could Zynga’s model be the 21st century equivalent of Green Stamps?

Co-branding like this gives you the visibility benefit of brand advertising, but the accountability of Google AdWords, a win for retailers, customers, and tech providers.

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Photo Credit

Benefits

CPG Companies – Offering these virtual goods as a promotion wouldn’t have to pay until a customer bought something. This provides Google Adwords style accountability and pay for performance. It is an update of old cereal box promotions that offered a free record or toy if you collected enough “Proofs of Purchase”

Customers – would get a “free prize” with a high perceived value.

Tech Companies - that powered these promotions would get a high volume of users, lower customer acquisition costs, and a high, predictable ARPU.

Examples:

Virtual Goods – Buy a box of Cocoa puffs and get the Cocoa tree in Farmville. Would General Mills co-brand Count Chocula with Vampire Wars?

Access to Metered Content - Buy a TV at BestBuy rather than Walmart and get 3 months of Hulu Plus for free. Or spend $100 a week at Whole Foods and get a free electronic cookbook.

Increased Status - Spend $100 at Rockler/Home Depot/McMaster and get a bump up to the Pro Level of Instructables for that month.

Requirements

For companies that wanted to offer services in this manner the key requirements would be:

1. Strong Brand – It needs to stand out on retail packaging/ads to help move product
2. Massive Audience – Relative to the product category
3. Clear product upgrade path, ideally with low/no marginal cost
4. Recurring mechanism to keep people brand loyal and repeat customers

For a company that could pull it off you would get the benefit of consumer scale with the massive volume of enterprise sales.

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?

Failure.

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

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

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

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 My3D

Hasbro is taking the iPod touch and making a cheap plastic accessory that turns the electronics device into a stereopticon. A next generation ViewMaster.

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?

I’ve written a few posts about how I don’t think mass customization will go mainstream any time soon. I assumed I’d be proven wrong eventually, but while getting my car serviced in a shop where some kids had control of the TV I found out it has already happened. Mass customization is being advertised on Nickelodeon via TV commercial.

The commercial is for a series of products called StyleLab, a brand of UBISoft that makes fashion design games for the Gameboy. You can design a necklace or a TShirt and have it produced in real life. Fulfillment is handled by ArtBeads.com, which has a fairly large audience with nearly half a million visitors a month.

While this product is being advertised broadly I don’t think it is the “Mosaic” of the space. The graphics are anachronistically bad, the web integration is a flash based nightmare, and the checkout process is horrendous. Still as far as I know this is the first time I’ve seen a consumer focused “Web to World” product offering advertised on TV.

It can also be a big mistake to evaluate kid focused services based on the metrics used for other sites. Club Penguin was a collection of limited flash games that succeeded to the tune of a $350MM acquisition by Disney because they developed a very secure chat client for kids.

One of the cooler aspects of the “game” is that you can preview your creation overlaid on a picture of yourself. The Gameboy’s limited capabilities don’t do this justice, but it is easy to imagine how this could be a more successful product on the iOS platform staffed by a team of competent designers. It is an interesting pioneer product and will be cool to see it executed in a better manner.

When blogging first became a cultural phenomena the media stereotype was a writer making his living in pajamas and caricatured the larger trend of business decentralization. Brilliant academics and Disney VP’s alike could now make a living sharing their ideas, wherever they were. Xoddo (pronounced zoh-doh), founded by independent toy designer Russell Benfanti, is taking advantage of the same trend, but leveraging it to manufacture customized toys.

Russell made a career designing characters for the major brands, but had an idea for a new toy experience, where the customer could design their own plush friend. The Build-A-Bear Workshop pioneered this model, but Xoddo utilizes print on demand technology to increase design choices. Imagine Build-A-Bear fused with KidPix.  Using the web-based Xoddo service you create your character in Mr. Potato Head fashion, starting with a uniform base and choosing between dozens of options for eyes, mouths, and a host of other embellishments. A big part of Xoddo’s appeal is flexibility. A six year old could design a traditional stuffed animal, but a college student could design a plush version of a friend, like the “Emo” Xoddo pictured above (center bottom). When satisfied with a design you can add your Xoddo to the gallery or have it manufactured and delivered to your home for $32.88.

I think Xoddo’s main challenge will be overcoming the lag time between when a customer designs their character and when it’s delivered. Kids have a tendency to be impulsive and having to wait five days could be a deal breaker. A retail presence would help reduce this frustration or creating a virtual world that would allow kids to play with their characters online until the real deal arrived.

The current Xoddo design is also kind of flat. This allows easier customization, but limits depth leading to a “2.5D” feel. Beanie Babies are often thought of as kitschy, but their cut and sew patterns are carefully designed and add character to the animal and the Build-A-Bear Workshop addresses this with artfully crafted base animals and an ala carte accessory selection that helps add personality and dimensionality to the purchase.

Xoddo is a great demonstration of how a single talented designer can take on an industry with his individual skills, some contracted help, custom manufacturing technology, and a home office. Xoddo is currently looking to add to it’s software engineering team, learn more here.

Taking software out of the box and moving distribution online was a hallmark of Web 2.0. It was a great advance, helping good applications find an audience without having to deal with the hassles of distribution and manufacturing. However, this had a downside. It became very easy for crappy software to flood the market creating a new competition for attention.

A new group of companies are tying their web based offerings to tangible goods to combat this problem. Interestingly, these companies all focus on the youth market, creating solutions that allow them to monetize audiences who don’t have access to credit cards and to gain access to the “allowance economy”.

The following examples are aimed at kids, but it is easy to imagine the application of these concepts to more traditional web services. A cardboard box around software is pretty useless, but there are many other product possibilities that can add value to your service, act as a billboard in the real world, and help reduce your customer acquisition cost.

Web Totems

Disney has developed an RFID platform “Clickables“(PDF) that is embedded into toys and provides access to content online. e.g. If you buy a charm bracelet for their “Pixie Hollow” virtual world you get access to special virtual goods. The innovative aspect of this is that if you swipe your bracelet against a friends in real life, you get to share each others virtual goods online. This is a brilliant way to spur virality.

Analog Avatars

WebKinz were the first big hit in this category and are still going strong. Each Webkinz is a stuffed animal that has a unique code associated with it. When you enter that code you can play with a digital version of your stuffed animal. Making the toy a stuffed animal was a stroke of genius because of the emotional bond kids have with them. How many video games would a kid cling to while sleeping? Disney is getting into this area with Cars and Club Penguin branded experiences. Mattel has their BarbieGirls.com offering and UB Funkeys, which is the latest addition to this product category. These plastic figures/USB drives, created in the Kid Robot/urban vinyl style, open up new games or portion of a virtual world.

Play Anywhere

A number of companies have tried to emulate the success of card games like Magic: The Gathering by adding virtual components to the traditional play pattern. WebKinz, NeoPets, Bella Sara, and Chaotic all produce games trying to crack this market. These companies realize kids can only spend a certain amount of time on the computer and combination digital/analog games allow you to play with the cards online or in the schoolyard, extending the reach of the brand.

The Eye of Judgement card series brings this idea to another level by using an augmented reality technology. Each card has a unique symbol that can be read by the PS3′s camera attachment and when it does a monster literally pops out of the card. A very cool technique that brings a new dimension to the game play.

Prepaid Debit Cards

Prepaid virtual goods debit cards were popularized by Nexon in Korea and are used by many US and European based virtual worlds like Habbo, Gaia, Zwinky, and IMVU. This model is so popular that the virtual good/prepaid card product category is now the fastest growing at Target stores. At a base level they are an easy way to process transactions, but they also play into the “dress up” themes prevalent in many of these worlds. An 11 year old girl may not be able to make independent decisions or use a credit card while shopping with a parent, but at Stardoll.com she can choose the exact clothes she wants and model adult shopping behavior by using their own “credit card” to buy them.

Mass Customization

Mass customization is starting to make inroads into the toy market. The Build-a-Bear Workshop is certainly the most famous example, but a few notable companies are enabling kids, with the aid of the web and videogames, to personalize their play experience.

RideMakerz is like a boy focused Build-A-Bear and is launching a new virtual world/custom toy hybrid. Using their service you can build a car online and have it manufactured to your specifications OR you can go to one of their retail locations, build a physical car then play with a cyber version when you get home.

A bit further off in development is using 3D printing services to bring your avatar from a video game to the real world. FigurePrints allows you to do this now and EA has shown prototypes of a similar service that would enable you to have your creation from Spore brought to life.

The Future

The pendulum is already starting to swing back. Start ups are finding it more difficult to get shelf space for their offerings, but this development opens up a world of new possibilities for consumers and opportunities for companies who can tie the two worlds together. The virtual goods market is growing quickly and is highly lucrative (nearly 100% margins). Virtual goods combined with analog artifacts provide a chance for tech focused companies to disrupt the $20B+ toy industry that has been dominated almost entirely by marketers.

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1. Artaic Tiles

Mass High Tech reports on a Boston based comapny called Artaic that is using pick and place robotics to automate the labor intensive process of laying out mosaics. Using their service you can provide an image which is pixelated and the pixelated image is recreated in tile. It is 8X faster than a human, fairly expensive (up to $225/sq.ft.), but looks great in the sample photos and could do wonders to revive an under practiced art.

2. Timbuk2 does carry on luggage

In the “so close, but yet so far away category”, Timbuk2 (manufacturers of fine customized bags) has started manufacturing roll aboard luggage. I love the company, but how can they not offer customized designs? Timbuk2 and checked luggage has chocolate meets peanut butter potential. Imagine how cool it would be to see your bag coming down the claim belt immediately and not have to double check the luggage tags? I’m sure it is more expensive to produce, but customization in this context would add significant value beyond aesthetics. Even some Zazzle-esqe embroidery options would go a long way.

3. Intuitive CAD on the way

The always enjoyable SolidSmack reported on the latest version of AutoDesk‘s adaptive sketch tools. They really are an amazing approximation of what industrial designers do and the folks at AutoDesk have taken a great deal of care building the software so it expands on traditional skills rather than forcing people to learn a whole new paradigm.

The really amazing aspect is that they are developing a 2D to 3D software package where the lines you sketch freehand can form the basis of a 3D surface model. A huge time saver and boon to the creative process.

If customization and personal fabrication are going to reach the mainstream it is going to happen because CAD tools make it easy for lay people to be designers. We aren’t there yet, but this is a great indication of how close we are:

Autodesk Sketching Tech Preview from DEVELOP3D on Vimeo

4.RideMakerz faces off with Pixar

RideMakerz is like a boy focused Build-A-Bear and is launching a new virtual world/custom toy hybrid. Using their service you can build a car online and have it manufactured to your specifications OR you can go to one of their retail locations, build a physical car then play with a cyber version when you get home. Techcrunch has an article on the service and suggests that they will be in direct competition with Pixar’s “World of Cars“. I’ve had a chance to play with the Pixar version and I think the two companies can easily coexist. The Pixar/Cars aesthetic will skew a bit younger. RideMakerz uses real car brands and seems certain to appeal to an older segment of that audience. No matter what, it is cool to see the lines between physical and virtual continuing to blur.

5. Disney ToyMorrow: Toys of the Future

Continuing on the Disney theme, Disney Consumer Products has a team that focuses on the convergence of toys and digital media called “ToyMorrow”. This article in USA Today give a brief glimpse into what they are working on and how their creative process functions.

6. Custom Invitations – heated market

Pingg is a new entrant into the customized invitation market. I mentioned a company called MyPunchBowl in a previous post and their desire to offer a print on demand invitation service in the future. Pingg has already launched one complementing their “SurroundSend” web technology.

Their base designs are good, but seem to fall within a single design aesthetic consisting of a nice photograph/image paired with elegant typography. It is a fantastic start, but I hope they use their investment from Martha Stewart and others to increase the design options.

It seems like weddings would be a great avenue for companies like these. You could tie in registries, a pre-existing demand for web based and physical invites, and a market that isn’t super sensitive to price.

7. Influential Marketing Blog Reviews Flip Mino

Rohit Bhargava author of the Influential Marketing Blog weighs in on the Flip Mino‘s customization strategy. He does a great job breaking it down the smart decision they have made. I think the for factors he mention are key components of any good customization service:

1. Smart Partnership. Recognizing that users of Cafepress are already familiar with customizing their products, they chose to fulfill this feature with the right partner instead of trying to recreate everyone alone.
2. Designer Models. Some people may want their new Flip Camera to have a personality, but not be into uploading their own image or doing a lot of work to get it. For them, Flip has partnered with several designers to offer ready made unique designs that you can choose from.
3. Personalization. Of course, there are a large number of people who DO want to have their own look to their camera, and for them the ability to upload and use their own image is a big deal.
4. Flat pricing. The final element to the strategy is not charging people a huge premium to do this. All the designs cost the same as a regular camera – so people are far more likely to do it.

I also recommend his presentation on the 25 basic types of blogging. It is a great taxonomy of blog posts.

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