Recently, brandtrends.ai participated in a pivotal conference dedicated to shaping the future of the toy market. Drawing from the insights and discussions shared during the event, this article summarizes the most significant learnings and explores how these trends will impact the licensing industry in 2025.

The toy industry is on the cusp of significant transformation as it enters 2024. Six key changes are shaping the market: meeting changing consumer needs, evolving shopping patterns and retail composition, changing regulations and compliance, evolving societal patterns, growing demand for cognitive development and creativity, and a resurgence of retro trends. These shifts are not only redefining how toys are consumed but also how they are licensed, with substantial implications for 2025 and beyond.

1. Consumer Experience and Access

Franchise-Based Toys Dominate the Market

Licensing and franchise-based toys continue to hold a commanding presence in the toy market. Major franchises like Disney, Marvel, and LEGO are driving sales across multiple platforms, including physical stores, digital games, and merchandise. Consumers are increasingly drawn to toys that are part of larger entertainment ecosystems, offering deeper connections to beloved characters and stories. This dominance is expected to intensify, providing fertile ground for licensing opportunities that capitalize on popular narratives and characters.

Personalization and Customization

Personalization is gaining traction as consumers seek unique toys tailored to their preferences. Customizable products allow children to put their own spin on toys, fostering creativity and ownership. While still a niche, this trend reflects a growing demand for individual expression. For licensors, this opens up avenues to offer customizable licensed products, enhancing consumer engagement and creating new revenue streams.

Subscription-Based Toy Services

Subscription boxes are emerging as a popular way for families to access toys regularly. These services offer curated selections that change with each delivery, creating excitement and introducing children to new products. Designed to suit a child’s age and interests, they ease the burden on parents while adding fun and variety. Licensing can play a significant role here by providing exclusive content for subscription services, thereby driving brand loyalty and recurring revenue.

Social Media’s Influence on Toy Sales

Platforms like YouTube, Instagram, and TikTok have become major influencers on toy trends. Influencers, unboxing videos, and viral challenges directly impact toy sales. Children and parents alike look to social media for what’s hot, making a digital presence a necessity for brands. Licensing agreements that leverage social media influencers or create shareable content can amplify brand visibility and consumer engagement.

The Rise of E-Commerce and Brick-and-Mortar Resilience

E-commerce has become a dominant force in toy shopping, offering convenience and variety. However, brick-and-mortar stores are adapting by creating immersive, experiential shopping environments. The future of toy retail likely involves a balanced coexistence of both models. For the licensing industry, this means crafting strategies that cater to both online and offline experiences, ensuring that licensed products are accessible and appealing across all channels.

2. Technology and Innovation

Competing for Children’s Time

The biggest competition for the toy industry is the amount of time children spend on activities other than playing with toys. The rise of digital entertainment—mobile phones, tablets, and gaming consoles—occupies a significant portion of children’s time. Licensing can help bridge this gap by integrating popular franchises into digital platforms, creating hybrid play experiences that combine physical toys with digital interaction.

Mobile Phones as Entertainment Hubs

Mobile phones have become indispensable for children, especially among 10 to 14-year-olds. They offer a diverse array of entertainment options, from streaming videos to social media interactions. This trend highlights the need for curated, child-friendly content. Licensed mobile games and apps featuring popular characters can capture children’s attention while providing safe and controlled environments for engagement.

Growing Interest in Virtual Reality

Children’s interest in virtual reality (VR) is growing rapidly. VR offers immersive experiences that traditional media cannot match, making it highly engaging for kids. Educational VR apps can make learning more interactive, aligning with the increasing demand for STEM-based toys. Licensing opportunities abound in developing VR content that features beloved characters and educational themes, appealing to both children and parents.

Integration of Augmented Reality and Virtual Reality

AR and VR technologies are transforming play by combining physical and digital experiences. From AR coloring books to VR adventure games, these technologies offer new dimensions of imaginative play and learning. Licensed AR and VR products can provide interactive and educational experiences, enhancing the value of physical toys and expanding the reach of licensing agreements into emerging tech spaces.

3. Sustainability and Longevity

Eco-Friendly and Sustainable Toys

Sustainability is a major focus, with around 45% of parents considering environmental impact when purchasing toys. Toymakers are increasingly using recycled and biodegradable materials, aiming for durability over disposability. Companies like Mattel have pledged to use 100% recycled or bio-based materials by 2030. Licensed products that emphasize sustainability can meet consumer demand and enhance brand reputation.

Durability and Repairability

Parents seek toys that last longer and can be repaired instead of replaced. While still in its infancy, this trend aligns with global pushes for sustainability and waste reduction. Licensing durable and repairable toys not only meets consumer demand but also reinforces a commitment to environmental responsibility.

4. Nostalgia and Collectibility

The Rise of “Kidults”

Nostalgia plays a significant role, with adults rediscovering toys from their childhood. “Kidults”—adults interested in acquiring toys—represent a massive opportunity, with 67% of adults aged 18 to 65 potentially interested in such products. This trend is expected to accelerate, especially with re-releases of iconic toys and partnerships with major franchises. Licensing can tap into this market by offering collectibles and retro-themed products that appeal to both adults and children.

Collectibility Among Children

More than half of children have a collection, a greater proportion than in previous years. Collectible toys continue to grow in popularity, driven by both nostalgia and the appeal of limited-edition items. Licensing exclusive collectible products can drive sales and foster long-term brand loyalty among younger consumers.

5. Education and Development

Emphasis on Educational Value

Educational toys focused on STEM are increasingly prioritized by parents. These toys promote critical thinking and problem-solving, helping children develop important skills from an early age. Licensing agreements that incorporate educational content can enhance the value proposition of toys, appealing to parents seeking both entertainment and developmental benefits for their children.

Inclusivity and Representation

Toymakers are creating products that challenge traditional gender norms and promote inclusivity. This trend reflects societal shifts towards diversity and equality. Licensing diverse and inclusive characters can broaden market appeal and resonate with consumers seeking representation.

Conclusion

The toy industry’s evolving landscape presents numerous opportunities for the licensing sector in 2025. Strategies to capitalize on these trends include:

– Creating Exclusive Franchise-Based Products: Develop exclusive items for e-commerce and subscription models, targeting both children and collectors with limited-edition and collectible products.

– Offering Customizable Features: Integrate customizable elements in tech-enhanced toys, allowing personalization of characters and storylines to enhance engagement.

– Launching Inclusive Subscription Services: Provide subscription boxes featuring gender-neutral and diverse toys, breaking traditional stereotypes and promoting inclusivity.

– Developing Hybrid Physical-Digital Toys: Combine physical toys with digital experiences that promote STEM learning and wellness, incorporating technologies like AI, VR, and AR.

– Designing Eco-Friendly and Durable Products: Appeal to sustainability-conscious consumers with eco-friendly, long-lasting, and repairable toys, introducing programs for repairs and upgrades.

By aligning with these trends, the licensing industry can not only adapt to the changing market but also drive innovation and growth. The focus on technology integration, sustainability, personalization, and inclusivity positions licensors to meet consumer demands and shape the future of play.