The toy industry is witnessing a fascinating divergence: traditional trendy toy companies continue focusing on IP creation, while a new wave of AI-powered toy startups emerges, combining emotional value with technological interaction.
Defining the New Generation of AI Toys
What exactly are AI toys? While the industry hasn't settled on a single definition, most current products combine traditional toy aesthetics with intelligent AI cores. These cores typically integrate microphones, speakers, connectivity modules, and main control chips that connect to cloud-based large language models for human interaction.
Current AI toys mainly fall into three categories:
- Interactive companions featuring plush or collectible figures with embedded AI technology
- Action figures with sensors, precision motors, and advanced algorithms that respond to AI commands
- Modular attachments that can be added to existing toys to give them AI capabilities
The market has also naturally divided between "talking" toys that focus on verbal interaction and "non-talking" toys that express personality through movements, sounds, and visual effects.
The Startup Landscape Heats Up
The success of products like Labubu has inspired numerous entrepreneurs to explore how AI can bring toys to life. The accessibility of AI technology and established manufacturing ecosystems have lowered entry barriers, leading to a surge in startup activity.
Industry tracking indicates that since 2024, over 27 AI toy startups have secured funding, with at least six raising more than 100 million yuan. Major investment firms and tech companies' venture arms have participated in these funding rounds.
Several prominent products have already entered the market:
- BubblePal, a toy pendant that has sold approximately 250,000 units
- Fuzozo, an AI plush pendant that recorded around 5,000 pre-orders across all channels
- Limited edition AI toys that have generated significant secondary market demand
This activity has captured the attention of manufacturing hubs like Huaqiangbei, where factories stand ready to scale production once market demand is confirmed.
Design Philosophy: Technology Meets Emotion
Successful AI toy creators recognize that technology alone isn't enough. The most compelling products combine technological capability with emotional resonance.
Mochi, an upcoming AI plush toy, exemplifies this approach. Instead of focusing solely on conversational ability, its creators prioritized creating a "five-year-old border collie" level of intelligence that emphasizes companionship over utility.
The design team spent significant effort on:
- Creating expressive eye movements that convey emotion
- Developing natural interaction patterns
- Selecting materials that trigger positive emotional responses
This emphasis on emotional connection reflects lessons learned from traditional trendy toy companies. The remarkable success of plush versions of existing IPs demonstrates consumers' strong response to tactile, comforting materials.
Navigating Market Challenges
As the market develops, several challenges have emerged:
Consumer Education
Many consumers initially encounter AI toys through simple voice box products added to existing plush toys. However, these often have short usage cycles, typically under two weeks, as they lack the depth to maintain engagement.
Pricing Models
Companies are experimenting with new pricing structures that move beyond one-time purchases. Some incorporate subscription models for ongoing functionality, which has generated both interest and consumer resistance when not communicated effectively.
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IP Development
The core of trendy toys remains strong intellectual property. Startups that prioritize technology over compelling character design struggle to achieve lasting success. Some companies are testing IP concepts through social media channels before committing to full production.
Manufacturing Ecosystem Response
The supply chain has rapidly adapted to support AI toy development. Manufacturers now offer comprehensive solutions including:
- Chip and connectivity technology
- Cloud integration with large language models
- Voice interaction open-source kits
- Complete customization services for established IPs
This manufacturing readiness creates both opportunity and challenge for startups. While production barriers have lowered, the ease of replication means companies must move quickly to establish market presence and consumer loyalty.
The Traditional Players' Position
Notably, established trendy toy companies like Pop Mart have maintained a cautious approach toward AI integration. The company's leadership has consistently emphasized that the value of trendy toys lies in their lack of practical utility—they serve emotional and spiritual needs rather than functional ones.
Industry observers note that adding AI functionality could potentially undermine the premium positioning of established brands, transforming them from creators of "artwork with emotional value" to electronics manufacturers.
Frequently Asked Questions
What are the main types of AI toys available?
The market currently features three main categories: interactive companions with AI cores, action figures with movement capabilities, and modular attachments that add AI functionality to existing toys. Each type offers different interaction experiences from conversational to movement-based engagement.
How do AI toys handle privacy and data security?
Reputable manufacturers implement encryption and secure data handling practices, particularly for toys that connect to cloud services. Consumers should review privacy policies and understand what data is collected and how it's used before purchase.
What is the typical price range for AI toys?
Current AI toys range from approximately $50 for basic models to several thousand dollars for premium products with advanced features. Some incorporate subscription models for ongoing services beyond the initial purchase price.
How long do AI toys usually remain engaging?
Usage patterns vary significantly by product quality and design. Well-designed toys with evolving capabilities can maintain engagement for months, while simpler voice-box styles may lose appeal within weeks. The best products incorporate elements that grow with the user over time.
Can AI toys recognize multiple users?
Advanced models can distinguish between different users through voice recognition or companion apps. This allows for personalized interactions and experiences tailored to individual family members or frequent users.
Do AI toys require constant internet connection?
Many AI toys require internet connectivity to access cloud-based processing for complex interactions. Some incorporate limited offline functionality for basic features, but full capability typically depends on internet access.
The intersection of AI and trendy toys represents more than technological innovation—it's about creating new forms of emotional connection. As the industry evolves, the most successful products will likely be those that balance technological capability with genuine emotional resonance, creating companions rather than merely clever devices.