Connected Toys Market - Global Industry Size, Share, Trends, Opportunity, and Forecast, 2021-2031

The Global Connected Toys Market is projected to expand from USD 13.19 Billion in 2025 to USD 44.82 Billion by 2031, registering a CAGR of 22.61%. This sector comprises physical playthings equipped with hardware and software that enable internet connectivity or data exchange to improve interactivity. The market is primarily propelled by the growing demand for Science, Technology, Engineering, and Mathematics (STEM) educational tools and rising digital literacy among younger generations. Additionally, the extensive availability of high-speed internet and the integration of smart devices into everyday life facilitate this growth.

Despite these opportunities, the industry faces significant hurdles regarding data privacy and cybersecurity risks, which negatively impact parental trust. Ensuring adherence to strict international safety regulations presents a barrier for manufacturers and complicates market entry. A 2024 investigation by Toy Industries of Europe found that 80 percent of toys bought from online marketplaces failed to meet safety standards. This high rate of non-compliance highlights the critical issue of unregulated products undermining consumer confidence and hindering broader market acceptance.

Market Drivers

The incorporation of Artificial Intelligence and Machine Learning is transforming the Global Connected Toys Market by facilitating highly personalized and adaptive play experiences. Manufacturers are advancing beyond simple pre-programmed responses to embed sophisticated algorithms that enable toys to learn from a child’s interactions, deepening engagement through natural language processing and emotional recognition. This shift toward intelligent hardware is supported by the commercial success of startups dedicated to responsive companions. For instance, Entrackr reported in May 2025 that the robotics and AI company Miko saw a 58 percent year-on-year revenue increase to Rs 358 Cr in FY24, indicating a growing consumer willingness to invest in dynamic playmates. This financial performance suggests a market trajectory where value is increasingly driven by software capabilities rather than just physical attributes.

Concurrently, the rising demand for STEM-based educational smart toys serves as a key catalyst, fueled by parents seeking to equip their children with essential digital skills in a technology-driven world. This trend is reinforced by the generational digital knowledge gap, prompting caregivers to find tools that ensure safe and constructive tech exploration.

According to The Toy Book in June 2025, 61 percent of parents noted that their children know more about technology than they do, creating a clear need for edutainment products to bridge this divide. Highlighting the sector's resilience, The Toy Foundation reported in 2025 that sales in the Explorative and Other Toys supercategory grew by 10 percent in the U.S. the previous year, proving the sustained momentum for products combining discovery with interactive play.

Market Challenges

The abundance of unregulated products and the struggle to ensure universal compliance with safety standards represent major obstacles for the Global Connected Toys Market. Although established manufacturers invest significantly in testing to meet international safety and cybersecurity protocols, the market is saturated with non-compliant alternatives available on third-party online platforms. This influx creates unfair competition, as reputable companies incur higher production costs while vying against lower-priced, unregulated items. Consequently, consumer confidence is eroded, as parents worry about potential physical hazards or data privacy breaches linked to smart toys, leading to hesitation in adopting these technologies.

The magnitude of this issue creates a tangible barrier to market expansion. As reported by the British Toy & Hobby Association in 2025, an investigation into online marketplaces showed that 90 percent of sampled toys failed to meet essential safety requirements. This high rate of non-compliance underscores the severity of the challenge, as the presence of unsafe products damages the reputation of the entire category. As a result, the industry faces difficulties in building the necessary consumer trust for mass market growth, thereby limiting revenue potential for compliant manufacturers.

Market Trends

The development of app-connected toys that facilitate remote familial interaction is gaining momentum as families look for meaningful ways to sustain emotional bonds across distances. Unlike standard communication tools, these connected devices allow relatives to record messages, stories, or songs via a mobile app, which children can access through a physical toy, merging digital connectivity with tangible play. This segment is seeing strong commercial growth as consumers prioritize products that offer safe, screen-free digital engagement and bridge the gap between working parents and children. Tonies SE reported in May 2025 a 24.1 percent increase in nominal revenue for the first quarter, validating the increasing consumer investment in platforms that combine physical interactivity with remote family connection features.

Simultaneously, the convergence of physical action figures with augmented reality mobile gaming is reshaping traditional play patterns by layering immersive digital content onto real-world objects. Manufacturers are building "phygital" ecosystems where physical toys act as controllers or unlockable assets within mobile games, extending the product's lifecycle and deepening user retention through continuous digital updates. This hybrid approach helps legacy toy brands remain relevant in a media-saturated landscape by offering value beyond the static physical item. According to the LEGO Group's March 2025 report, the company achieved a 13 percent revenue growth to DKK 74.3 billion in 2024, a performance largely driven by strategic investments in digital technology that complement their core physical portfolio.

Key Players Profiled in the Connected Toys Market

• Sphero, Inc.
• Mattel, Inc.
• Hasbro India LLP
• Wonder Workshop Inc.
• WowWee Group Limited
• LEGO System A/S
• VTech Holdings Limited
• Nintendo Co., Ltd.
• Jabil Inc.
• LeapFrog Enterprises, Inc.

Report Scope

In this report, the Global Connected Toys Market has been segmented into the following categories:

Connected Toys Market, by Interface:

• App-based connected drones
• Console connected toys
• Smartphone connected toys
• Tablet connected toys

Connected Toys Market, by Distribution Channel:

• Retailers
• Online
• Specialty stores

Connected Toys Market, by Region:

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

Competitive Landscape

Company Profiles: Detailed analysis of the major companies present in the Global Connected Toys Market.

Available Customization

The analyst offers customization according to your specific needs. The following customization options are available for the report:

• Detailed analysis and profiling of additional market players (up to five).

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