CONNECTED TOYS MARKET (2025 - 2030)

Connected Toys Market was valued at USD 12.29 billion in 2024 and is projected to grow at a compound annual growth rate (CAGR) of 17% from 2025 to 2030. By 2030, the market is expected to reach USD 31.53 billion.

The Connected Toys Market can be characterized as the sub-category of smart, internet-enabled toys that combines such technologies as artificial intelligence (AI), Bluetooth, Wi-Fi, augmented reality (AR), and sensors in order to form an interactive experience that goes beyond standard toys. Connected toys fill the gap between entertainment, education, and digital interaction, and unlike typical playthings, they provide children and even adults with an opportunity to learn, to be creative, and to engage in social interactions in an immersive way. These products include AI-based robots and voice-assisted dolls, educational kits, and AR-powered gaming sets, which promote the process of cognitive growth and also bring fun. An increase in demand is observed because of the increasing preference of parents towards learning in STEM subjects, increasing levels of digital literacy amongst the children, and increasing penetration of smart devices across the world. Moreover, the market is undergoing an increase with the development of IoT and 5G connections, increasing real-time responsiveness and customization in play. North America has the dominant slot today based on the high consumer expenditure in technological toys, but the Asia-Pacific market is growing rapidly owing to the rising middle-income and the rise in digital penetration. With the changing features of safety, data privacy, and parental controls, the connected toys market will redefine modern play time to a combination of technology and imagination.

Key Market Insights:

Advances in AI and edge computing are enabling toys to perform on-device personalization with up to 40% reduction in latency compared to cloud-only systems, enhancing real-time learning and safer child interactions.

The global AR/VR user base surpassed 170 million active users in 2023, and children’s interactive gaming accounts for a rising share of this usage. This accelerates demand for toys that merge physical play with AR overlays and companion apps.

Consumer surveys indicate that 72% of parents are concerned about the way connected devices (including toys) collect and use children’s data, making digital trust and parental controls critical purchase factors. Deloitte+1

Nielsen reports that kids aged 2–11 increased streaming/TV consumption by 16.3%, while teens aged 12–17 increased by 24.1% in measured periods, fuelling higher engagement for toys linked to digital media ecosystems.

The global number of connected IoT devices reached 16.7 billion in 2023, with projections to cross 19.1 billion by 2025. Greater China alone accounts for over 5 billion devices, positioning Asia-Pacific as the fastest-growing hub for connected toys adoption.

Market Drivers:

Rising Integration of Artificial Intelligence and IoT is Driving Growth in the Connected Toys Market.

The interconnected toys sector is becoming highly driven by the incorporation of artificial intelligence (AI) and the Internet of Things (IoT) to turn dull play into an immersive, interactive one. Smart toys currently have voice recognition, adaptive learning, and real-time feedback, which allows the children to engage in personalized play that adapts to their learning curve. The use of AI-enabled natural language processing, as well as the IoT connectivity, enables toys to react in an intelligent manner and enables the connection between mechanized toys and applications, streaming platforms, and even smart homes. Such synergy leads to a smooth digital ecosystem in which the playtime can be entertaining and educational. As consumers look for toys that allow them to express themselves with the use of talents and creativity, the idea of AI-controlled connected toys is quickly gaining traction to become an essential part of the new world of learning and entertainment.

Growing Consumer Preference for Educational and Immersive Play Experiences is Accelerating Connected Toys Adoption.

Connected toys that are not only entertaining, but also educational, creative, and provide skills have attracted increased attention from parents and educators. These toys tend to combine STEM-oriented learning with language development and problem-solving tasks, establishing a balance between play and intellectual development. AR and VR also contribute to the engagement and add on to physical and digital play integrated into immersive experiences that are both stimulating to the imagination and learning. There is a survey that shows that most parents take into consideration the value of digital education as one of the main criteria when buying toys for their children. Connected toys have become influential instruments that satisfy the changing expectations of digital natives who are seeking interactive experiences and are in line with modern technology, underpinned by the demand to replace their established behaviour of interacting with various products and services.

Market Restraints and Challenges:

The associated toys market has remarkable limits and obstacles, which are mainly associated with the issues of data privacy and prohibitive price tags. Since these toys are able to capture sensitive data like voice records, behavioural patterns, and location details, parents and regulators are becoming more worried about possible breaches and misuse, which makes trust an essential obstacle to adoption. Adherence to tight regulations such as GDPR in Europe and COPPA in the U.S. also complicates the process and increases the costs of operations to manufacturers. These security challenges are coupled with the fact that connected toys cost more to obtain owing to their provision of embedded sensors, artificial intelligence, and wireless capabilities, which makes them unaffordable to many in low-income areas like Asia-Pacific, Africa, and Latin America. Also, the high rate of technological change makes the old models unnecessary, and thus, the family of the child does not want to invest in their future. All these problems contribute to the inability to be accepted by many and delay the global growth of connected toys.

Market Opportunities:

The connected toys market is experiencing opportunities that have the potential to be promising, owing to the increasing demand for interactive learning with the amplifying smart home ecosystems. Connected toys are becoming more and more popular amongst parents and educators as an option to combine elements of play with education through AI, AR, and voice recognition to improve a range of skills, including coding, language learning, and problem-solving, which is why it resonates with the mass movement in favour of STEM education worldwide. Simultaneously, the emergence of home IoT introduces an opportunity for toys to be integrated into systems, such as Alexa and Google Home, with personalized, interactive interaction, which can be integrated into the overall digital lifestyle. The combination of these aspects makes connected toys not only entertainment goods but smart friends that are capable of following the technological trends and consumer demands.

CONNECTED TOYS MARKET

Market Segmentation:

Segmentation by Type:

• Smart Robots
• App-Enabled Toys
• Interactive Dolls
• Educational Kits

Smart Robots are the most dominant players in the connected toys market because they have an amalgamation of artificial intelligence, motion sensors, and voice recognition to provide highly interactive experiences. These toys are not only entertaining but also help children develop problem-solving and coding as well as critical thinking, which is why they are popular with parents and educators who want to have fun and at the same time obtain valuable educational qualities. Their flexibility to the reaction of the children and their ability to give them individual attention have made them the most dominant in the market.

However, the fastest-growing segment is Educational Kits because the demand for STEM-based learning solutions is growing at a higher pace globally. The kits transform traditional play by turning it into a practical learning experience through teaching science, mathematics, engineering, and coding in a fun way. Educational kits are becoming increasingly popular due to the growing integration of digital learning into the curriculum of schools, parents, and after-school programs as a skill-building tool. The increase is also facilitated by the current emphasis on early digital literacy in the world and the growing acceptance of gamified learning.

Segmentation by Application:

• Home Use
• Educational Institutions
• Entertainment

The biggest application market in the connected toys category is Home Use, which is driven by the increasing interest in consumers towards interactive play activities that blend fun and digital interaction. Smart toys are smart devices that combine artificial intelligence, sensors, and voice recognition capabilities to allow their parents to offer children more personalized entertainment, learning, and even parental monitoring capabilities. This segment is further supported by the fact that the use of smart homes and IoT ecosystems is growing, and connected toys can be easily connected to platforms such as Alexa and Google Home, which provide an immersive play environment. This has been the application area of convenience, entertainment value, and ability to stimulate early learning at home.

Educational Institutions are becoming the most rapidly growing application area due to the inception of digital literacy and the increased emphasis on STEM-oriented education. Connected toys like coding robots, AR-enabled devices, and interactive learning kits are being used in schools and learning centers to improve the engagement of the classroom in general and the accessibility of complex concepts to students. In addition to encouraging problem-solving and creativity, these toys are in line with the global educational efforts to equip children with a technological future. This growing pace of need for smart learning solutions puts educational institutions as the most dynamic growth driver within the connected toys market.

Market Segmentation: Regional Analysis:

• North America
• Europe
• Asia-Pacific
• South America
• Middle East & Africa

The largest related toys market is still North America, where the region is characterized by early adopters of smart technologies, a high level of consumer spending, and the availability of major toy manufacturers and technological innovators. The area enjoys a developed digital infrastructure, extensive usage of IoT devices, and an increase in parental interest in educational and interactive toys. The strong regulatory systems concerning child safety and data privacy have also compelled businesses to create quality and safe products, increasing market dominance in the region even more.

Asia-Pacific, on the other hand, is the fastest-growing connected toys market, which is driven by fast urbanization, escalating disposable income, and the growing use of digital learning instruments. Due to the growing awareness of the educational and entertainment value of tech-enabled toys, the demand for these in China, India, and Japan is rampant, contributed to by the young population and an increased understanding of the value of learning based on STEM. The growth is further boosted by the spread of smartphones and the internet, as well as favourable government policies that encourage online education, which makes the region one of the major sources of market expansion in the future.

COVID-19 Impact Analysis:

The Global Connected Toys Market has been affected by the COVID-19 pandemic in both a positive and a negative way. On the one hand, schools have closed and switched to remote learning, which resulted in a strong surge in demand for educational toys and e-learning equipment, giving a push to the sales of connected toys. Interactive and educational toys have become the favourite of many parents who want their children to be entertained and learn at home. Conversely, the production and distribution of related toys were delayed as a result of global supply chain and manufacturing process disruptions. Retail stores were also closed down during lockdowns, and this resulted in a drop in in-store sales. Nevertheless, the increase in online purchases during the pandemic offered another sales channel to related toy producers and contributed to the alleviation of some of the adverse effects. With the world slowly becoming normal, it is projected that the market will only keep expanding, and the amount of investment in digital and interactive learning tools will increase.

Latest Market News:

• In Jan 02, 2024: Spin Master completed its acquisition of Melissa & Doug for $950 million, closing the deal announced in October 2023 and adding a strong early-childhood play brand to its portfolio.
   
• In Jan 2024, Spin Master also reported that full-year 2024 revenue exceeded $2.2 billion, up 18.8%, underscoring how strategic M&A and new product lines have boosted its top line.
   
• In Mar 2024, Mattel renewed its licensing agreement with Universal’s Universal Products & Experiences (Jurassic World and other franchises), extending rights that keep Mattel producing action figures, vehicles, and playsets tied to the film franchise.
   
• In Apr 2024, Mystic Moose and WowWee announced a partnership to develop blockchain-connected toys under the “Planet Mojo” concept, signalling experimentation with web3 features in play experiences.
   
• In Jun 2025, Mattel announced a strategic partnership with OpenAI to integrate generative AI into its brands (Barbie, Hot Wheels, Uno, etc.), and said the first AI-enabled product from the collaboration is expected to launch later in 2025.
   

Latest Trends and Developments:

There are a number of trends that are observed in the connected toys market. Manufacturers are also paying more attention to the creation of toys with health-oriented purposes, which should contribute to physical activity and mental health and help overcome the problem of too much screen time, as parents are concerned. Smart devices that combine toys with wearable technology and fitness trackers are becoming popular. There is also the introduction of AR and VR technologies in related toys, which are forming learning and game experiences that are more immersive. Furthermore, sustainability emerges as one of the primary trends, and producers use materials and packaging that are environmentally sensitive to meet the demands of the environmentally aware buyers. The increased significance of data privacy and security has resulted in the creation of safer and more compliant connected toys, as well.

Key Players in the Market:

• LEGO Group
• Mattel, Inc.
• Hasbro, Inc.
• VTech Holdings Ltd.
• Sphero, Inc.
• WowWee Group Limited
• Fisher-Price
• Anki

Digital Dream Labs, Inc.