Mattel And Hasbro ‘Terrified’ As Kids Turn To High-Tech Toys

Mattel and Hasbro are “terrified” of the growing popularity of high-tech toys with kids.

That’s according to Sean McGowan, managing director of equity research at Needham Company, who told the Financial Times:

“The top two guys, Mattel and Hasbro, they are terrified. They should be terrified, but the official party line is they’re not terrified.”

Beneath Christmas trees everywhere this year, more kids have unwrapped high-tech gifts such as iPads, Kindles, and portable game consoles than ever before. Meanwhile, demand for more traditional toys such as dolls, board games, or action figures is down.

Consequently, analysts are lowering their forecasts for fourth-quarter toy sales, currently estimated at $1.41bn for Hasbro and $2.29bn for Mattel. Those predictions are being lowered after sales from the first three quarters of 2012 were down on last year.

Concerns about the appeal of traditional toys are backed up by the very toys sold by Mattel and Hasbro: Mattel’s top-selling product in 2012 is a plastic cellphone case rather than a traditional toy. The Financial Times writes:

“[…] the amount of time children are spending with technology devices has skyrocketed [because they can] watch free content online and play free video games for hours on end.”

The increasing number of younger children playing with tablet computers and game consoles may have allegedly left Mattel and Hasbro terrified, but the companies still had some popular toys this Christmas. Hasbro’s Furby toy, a cuddly electronic critter, has made a successful comeback, with the newest version (complete with LCD eyes) selling 20 per cent above expectations this holiday season.

However, chief marketing officer for Hasbro John Frascotti recognized the need to move with the times when he told the Daily Mail:

“Clearly young people have an aptitude for and expectation with digital platforms that we need to recognize.”

The trend for more high-tech toys is not stopping at kids. Even family pets are being treated to more technological gifts.

Did you buy gifts for kids this Christmas, and were they of the traditional or high-tech variety?

[Image via Shutterstock]