Guest Post: Technology, Toys, And Reaching Kids—Insights From The 2010 Engage! Expo

Today’s Ypulse Guest Post comes from Shann Biglione, a digital media advertising expert, who reports back from the 2010 Engage! Expo, sponsored by Engage Digital Media, which took place in Santa Clara, CA. If you work in youth media or marketing and have an idea for a Ypulse Guest Post, email us!

Technology, Toys, and Reaching Kids—Insights from the 2010 Engage! Expo

Last week, I had the pleasure to join members of the toys and games industries in Silicon Valley’s Santa Clara for the Toy, Game and Technology track of the Engage! conference. It was a great opportunity to hear what toy manufacturers, game publishers, analysts, marketers, and even venture capitalists thought of the arrival of technology and new media in the mix of kids’ products.

While many subjects were touched on (from how to run a virtual world to “mommy bloggers” to mobile phone publishing), I personally found the impact of technology on the industry most exciting. As the old adage says, “we always overestimate how quickly change will come, but underestimate how deep the change will be.” Here’s some of what I learned about how tech is opening doors for product development and marketing to kids.

Technology holds much hope for a fast moving toy industry

Carter Keithely (President of the Toy Industry Association) keenly reminded the keynote’s audience that making toys is not a lazy business: 80 percent of the products sold each year are new products. Like fashion, toys need a huge creative pipeline, and armies of creatives hoping to be the next big thing release a whopping 7,000 new toys every year.

The constant need for novelty coupled with the strong competition from gaming and “virtual” alternatives have made the fight for the family purse one where innovation and technology can play a central role, and the industry has clearly made huge investments in that direction over the last few years. As a testament to this evolution, Keithly reminded us that some of 2007’s toys already used “more processing power than the Apollo mission that landed on the moon.”

Technology has a role to play, but it needs a story to tell

As an illustration of the efforts made by the toy industry, Sean McGowan (Senior Analyst at Needham & Company) gave attendees an outlook on some of the exciting products coming out soon, like the Spy Net Video Watch or Spy Video Trakr (quite literally transforming kids into household-infiltrated agents), or more familiar toys like the Big Foot action figure, now with updatable sounds via Bluetooth.

However, a brief look at 2009 sales can be sobering for even the most enthusiastically nerdy toy inventor out there. Tech toys can sell well and have an extra cool factor, but they’re still far from the number one spot in toy sales: the category saw a decline last year, while old-fashioned building sets were the only toys seeing double digit growth year on year (+13%). According to McGowan, this can be partly blamed on the usually high price of tech toys (he mentioned that Webkinz would have never been a success if it had been priced at $30). But more importantly, in his opinion, what makes a kid happy is not the toy or the technology—it’s the story he is able to tell (himself and others) with it.

A little bit of silliness can go a long way

In this context, the focus should be on using technology (and marketing!) to open “windows to limitless worlds, expand the canvas and palette with which the kids can tell their stories, and transform the toy into the ultimate storytelling device.” McGowan summarizes this in the ability for technology to help kids “REALize the imagined.”

It’s not really surprising, then, to see virtual worlds (and web-connected toys) attracting a lot of attention, and providing insight into the approach necessary to engage kids. As explained by Izzy Neis from Gazillion Entertainment, virtual worlds are “about pretending and role play…they’re not just about the avatar or the games.” Neis advocates it’s paramount to “have silliness in your world if you want to succeed.” It’s a point Habbo Hotel’s CEO Timo Soininen also knows well, as his users create their own activities and games (something he deems crucial to Habbo’s long-term success, along with its differentiated concept, look and feel). For him, it’s not about replicating reality, which is neither easy nor, in many cases, interesting.  Even Rovio’s “Mighty Eagle” Peter Vesterbacka is convinced that their addictive iPhone game Angry Birds wouldn’t have been as successful without great characters and a universe that had its own back story and style, something they invested a lot of effort in before working on the gameplay itself.

Technology as a means to open new doors

One of the obvious takeaways from the conference was genuine excitement about how the industry is evolving around technology, how it’s both a challenge and a great opportunity. And while we’re still in the early years of the technological shift, where everyone learns as he or she goes, three opportunities seemed to emerge from the different presentations.

1) Technology as a way to test and launch new IPs. Strong kid IPs do not necessarily need to come from books and TV series anymore. The scalability offered by online platforms has let franchises explode to gigantic (global) levels, with striking examples in the likes of Club Penguin (now a kid’s favorite for any type of consumer product) or the growing potential of Angry Birds, an IP designed to thrive around its battle between angry birds and hungry pigs.

2) Technology as a way to expand and enrich your brand’s story. While the digital generation may not be as dexterous with technology as some might think, it is clearly a normal part of their lives and they increasingly expect to extend their experience of the brand (and the story they build around it) beyond the physical product or game. Most recently, Mattel made the most of it with Monster High, a successful doll series whose launch was heavily supported (if not driven) by an innovative 360 campaign combining  online experiences where girls could literally become part of the dolls’ high school, a YouTube music video with stellar results, and key partnerships in the teen fashion world, both on- and offline. While many digital marketers have been advocating efforts in that field, most toy distributors were facing reluctant retailers only interested in their TV spending. It was a relief to hear Cynthia Neiman, VP of Mattel Digital Network, share the fact that the original resistance from retailers has since been replaced by a keen interest and more open mind to this type of approach.

3) The venture capitalist’s dream: toys as a service. Technology as we know it in toys can be seen as a rite of passage for the industry. But according to Timothy Chang, Principal at Norwest Venture Partners, the future of the industry lies in one simple goal: transforming the toy into a service. According to Chang, the maturity of the Chinese supply chain coupled with the decreasing cost of technology means that toys will soon be able to embed cloud-based technologies and connectivity. Toys will soon stop being static products we simply buy and will instead become fully upgradable, connected and social, to the point where “cloud connection will change the rules of toys.” This represents an opportunity toy producers take very seriously—and it’s one in which Disney has already invested a lot of effort through Disney Toy Bridge, an open standard for toy connectivity presented during the conference by Armen Mkrtchyan (Tech manager, Toys and Consumer Electronics, Disney Consumer Products), set for release later this year.

As a whole, the conference proved very interesting and participative, with a series of enthusiastic presenters who clearly felt they were part of a movement. The industry is ready to take on this challenge, and while mistakes will be made, it is clear that some amazing developments are ahead of us. One area that remains to be explored, in my opinion, will be the impact toys and games can have on a child’s education. Playing is learning, and the arrival of technology to the mix (especially if  toys can be updated and grow with a child) could have a tremendous impact on child development. I imagine we’ll be seeing more attempts in that field (educational virtual worlds are already just around the corner), and that educators and audience specialists will have an increasingly important role in shaping the product offering of the new generation.

About Shann

Shann is Director of Digital Strategy at Digital Outlook USA, the newly opened Los Angeles branch of London based Digital Outlook, a strategically-led creative agency that helps clients connect with today’s family.  Shann has spent the last five years advising global entertainment and FMCG clients on how to engage audiences through digital media. Follow him on Twitter @digitaloutlook @leshann, or e-mail shann(a)digital-outlook.com