Connected Toys Market – Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Interface (App-based connected drones, Console connected toys, Smartphone connected toys, and Tablet connected toys), By Distribution Channel (Retailers, Online, and Specialty stores), By Region, & Competition, 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 13.19 Billion
CAGR (2026-2031)	22.61%
Fastest Growing Segment	Online
Largest Market	North America
Market Size (2031)	USD 44.82 Billion

Market Overview

The Global Connected Toys Market will grow from USD 13.19 Billion in 2025 to USD 44.82 Billion by 2031 at a 22.61% CAGR. The Global Connected Toys Market consists of physical playthings integrated with hardware and software to enable internet connectivity or data exchange to enhance interactivity. The market is fundamentally driven by the rising demand for Science, Technology, Engineering, and Mathematics educational tools and the increasing digital literacy among younger demographics. Furthermore, the widespread availability of high-speed internet and the seamless integration of smart devices into daily life support this expansion.

Despite these growth opportunities, the industry encounters substantial challenges regarding data privacy and cybersecurity vulnerabilities which deter parental trust. Ensuring compliance with stringent international safety regulations creates barriers for manufacturers and complicates market entry. According to Toy Industries of Europe, in 2024, an investigation revealed that 80 percent of toys purchased from online marketplaces failed to meet safety standards. This statistic underscores the critical issue of unregulated products compromising consumer confidence and impeding broader market acceptance.

Key Market Drivers

The Integration of Artificial Intelligence and Machine Learning Technologies is fundamentally reshaping the Global Connected Toys Market by enabling highly personalized and adaptive play experiences. Manufacturers are moving beyond simple pre-programmed responses to embed advanced algorithms that allow toys to learn from a child’s interactions, fostering deeper engagement through natural language processing and emotional recognition. This shift towards intelligent hardware is validated by the commercial success of startups focusing on responsive companions. According to Entrackr, May 2025, in the 'Miko reports Rs 358 Cr revenue in FY24' article, the robotics and AI company recorded a 58 percent year-on-year increase in revenue, highlighting the growing consumer willingness to invest in dynamic, evolving playmates. Such financial performance indicates a strong market trajectory where value is increasingly derived from software-driven capabilities rather than physical attributes alone.

Simultaneously, the Rising Demand for STEM-Based Educational Smart Toys acts as a critical catalyst, driven by parental desire to equip children with essential digital skills in a technology-centric world. This trend is amplified by the widening digital knowledge gap between generations, prompting caregivers to seek tools that facilitate safe and constructive tech exploration. According to The Toy Book, June 2025, in the 'The LEGO Group Launches New Activities' article, 61 percent of parents stated that their children possess more knowledge about technology than they do, creating a clear imperative for edutainment products that bridge this divide. This focus on learning-oriented play is buoying specific market segments even amidst broader economic fluctuations. As evidence of this sector's resilience, according to The Toy Foundation, in 2025, sales of the Explorative and Other Toys supercategory in the U.S. grew by 10 percent during the previous year, underscoring the sustained momentum for products that merge discovery with interactive play.

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Key Market Challenges

The proliferation of unregulated products and the difficulty of ensuring universal compliance with safety standards constitute a significant impediment to the Global Connected Toys Market. While established manufacturers invest heavily in rigorous testing to meet international safety and cybersecurity protocols, the market is increasingly saturated with non-compliant alternatives sold through third-party online platforms. This influx creates unfair competition, as reputable companies face higher production costs while competing against lower-priced, unregulated items. Consequently, consumer confidence is eroded, as parents become wary of potential physical hazards or data privacy breaches associated with smart playthings, leading to hesitation in adopting these technologies.

The scale of this issue creates a tangible barrier to market expansion. According to the British Toy & Hobby Association, in 2025, an investigation into online marketplaces revealed 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 tarnishes the reputation of the entire category. As a result, the industry struggles to build the necessary consumer trust required to drive mass market growth, limiting revenue potential for compliant manufacturers.

Key Market Trends

The Development of App-Connected Toys Facilitating Remote Familial Interaction is gaining traction as families seek meaningful ways to maintain emotional bonds across physical distances. Unlike standard communication tools, these connected devices allow parents and relatives to record messages, stories, or songs via a mobile app, which children can then access through a physical toy, blending digital connectivity with tangible play. This segment is witnessing robust commercial growth as consumers prioritize products that offer safe, screen-free digital engagement and bridge the gap between working parents and children. According to Tonies SE, May 2025, in the 'tonies delivers strong start to the year 2025' press release, the company reported a 24.1 percent increase in nominal revenue for the first quarter, validating the growing consumer investment in platforms that merge physical interactivity with remote family connection features.

Simultaneously, the Convergence of Physical Action Figures with Augmented Reality Mobile Gaming is transforming traditional play patterns by layering immersive digital content onto real-world objects. Manufacturers are creating "phygital" ecosystems where physical toys serve as controllers or unlockable assets within mobile games, thereby extending the lifecycle of the product and deepening user retention through continuous digital updates. This hybrid approach allows legacy toy brands to remain relevant in a media-saturated landscape by offering value that transcends the static physical item. According to the LEGO Group, March 2025, in the 'LEGO Group delivers record results in 2024' report, the company achieved a 13 percent revenue growth to DKK 74.3 billion, a performance driven significantly by strategic investments in digital technology that complement their core physical portfolio.

Segmental Insights

The Online distribution channel currently represents the fastest growing segment within the Global Connected Toys Market. This expansion is primarily driven by increasing consumer preference for e-commerce platforms that offer detailed product specifications and comparative reviews essential for purchasing electronic devices. Shoppers increasingly rely on digital retailers to verify technical compatibility and safety features, a process often limited in physical retail environments. Furthermore, the rising availability of direct-to-consumer shipping models allows manufacturers to reach a broader audience efficiently, thereby accelerating the market shift toward internet-based sales channels.

Regional Insights

North America maintains a leading position in the Global Connected Toys Market due to high disposable income levels and widespread access to stable wireless infrastructure. This economic environment enables higher consumer spending on interactive electronic products compared to other regions. The market presence is further strengthened by established toy manufacturers in the United States that drive continuous product availability. Additionally, adherence to strict data privacy standards enforced by the Federal Trade Commission helps sustain consumer trust in internet-enabled devices for children, ensuring steady adoption rates throughout the region.

Recent Developments

• In November 2025, Huawei Technologies Co., Ltd. entered the educational and companion toy market with the launch of its first AI-powered robot, "Smart Hanhan." Powered by the HarmonyOS operating system, this interactive device features a plush exterior and utilizes a built-in large language model to engage users in natural voice conversations. The robot is designed to provide emotional support and daily assistance, featuring touch sensors that trigger distinct reactions based on how it is handled. This product launch represents a significant diversification for the technology giant into the consumer robotics and intelligent toy sector.
• In September 2025, Casio Computer Co., Ltd. expanded the market presence of its AI-powered robotic pet, Moflin, by opening pre-orders for consumers in the United States and the United Kingdom. This fur-covered companion utilizes advanced artificial intelligence to learn from user interactions, allowing it to develop a unique personality and simulate emotional bonds over time. Equipped with sensors and an emotional expression map, the robot reacts to physical touch and voice commands with evolving sounds and movements. The global rollout follows a successful initial release in Japan, targeting the growing demand for digital emotional support companions.
• In June 2025, Mattel announced a strategic partnership with OpenAI to integrate generative artificial intelligence into its extensive portfolio of toy brands. The collaboration focuses on developing a new generation of connected products that utilize large language models to offer interactive and personalized play experiences. Through this agreement, the company aims to create toys capable of holding natural, age-appropriate conversations and adapting to a child’s creative storytelling. Furthermore, the initiative includes the implementation of AI tools within the company’s internal product design workflows to accelerate the creation of future innovative play concepts.
• In August 2024, The LEGO Group unveiled its first series of connected building sets themed around the Mario Kart franchise, expanding its long-standing collaboration with Nintendo. Revealed during the Gamescom event, these new products are designed to interact with the company's existing digital figures, allowing characters to trigger specific audio and visual effects when placed in the brick-built vehicles. The technology enables the figures to identify different kart types and perform game-mimicking actions, such as drifting or collecting digital items. This launch signifies a continued investment in hybrid play, blending physical construction with interactive digital elements.

Key Market Players

• 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.

By Interface	By Distribution Channel	By Region
App-based connected drones Console connected toys Smartphone connected toys Tablet connected toys	Retailers Online Specialty stores	North America Europe Asia Pacific South America Middle East & Africa

Report Scope:

In this report, the Global Connected Toys Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• 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
• United States
• Canada
• Mexico
• Europe
• France
• United Kingdom
• Italy
• Germany
• Spain
• Asia Pacific
• China
• India
• Japan
• Australia
• South Korea
• South America
• Brazil
• Argentina
• Colombia
• Middle East & Africa
• South Africa
• Saudi Arabia
• UAE