Latest / The 5G Podcast with Fexingo: Wireless Networks, Carriers, and Mobile Infrastructure / How 5G Is Quietly Transforming the Toy Industry
Transcript
- Lucas: If you have kids, or if you remember being a kid, you know the feeling of opening a new toy — the smell of plastic, the crinkle of the packaging. But the toys hitting shelves this year are fundamentally different from anything we had growing up. Luna: Because they're connected. They're not just things you wind up or push around. Lucas: Exactly. We're talking about the quiet transformation of the toy industry by 5G. Not the flashy robotics or the VR headsets — just, say, a doll that talks to a child using real-time cloud AI, or an action figure that syncs with a mobile game. And the shift is already measurable. Luna: What's the number? You know I love a number. Lucas: The global smart toy market was about eleven billion dollars in 2024. Projections put it at just over thirty billion by 2030. That's a compound annual growth rate of roughly eighteen percent. And the key enabler is 5G. Luna: Why 5G specifically? Couldn't you do this with Wi-Fi or Bluetooth? Lucas: In theory, yes. But Wi-Fi has range limits, latency jitter, and congestion issues. Bluetooth is fine for pairing, but not for streaming real-time conversational AI. With 5G, you get single-digit millisecond latency and network slicing — which means the toy can have a dedicated slice of the network that prioritises its data packets. Luna: So the doll doesn't lag. If a kid asks a question and the doll pauses too long, the magic breaks. Lucas: Right. Mattel learned that the hard way with the original Hello Barbie back in 2015. That doll used Wi-Fi and local processing. The voice recognition was clunky. There was a notorious privacy backlash. But now they're testing a successor that runs AI inference entirely in the cloud via 5G. Luna: And Hasbro is doing something similar with their FurReal line, I think? The interactive unicorn that responds to voice commands? Lucas: Yes. Their latest prototype uses augmented reality via a smartphone camera and a 5G connection. The unicorn 'sees' the room and its behaviour changes based on the environment. If there's a red wall, it might shy away. If you hold up a toy flower, it 'eats' it on screen. All the processing happens on a server, not the toy itself. Luna: That keeps the bill of materials low. The toy is basically a connected shell with sensors and a speaker. The brains are somewhere else. Lucas: Exactly. And that's a big deal economically. Traditionally, to make a toy 'smart', you had to pack in a processor, memory, and battery. That added maybe twenty to thirty dollars to the retail price. With 5G, the toy can be a thin client — cost maybe five more dollars than a dumb version. Luna: But then you need a data plan. Are parents paying monthly for their kid's doll? Lucas: That's the emerging model. Several carriers in Japan and South Korea already offer multi-device plans that include toys. In the US, both Verizon and T-Mobile have started 'connected toy' data tiers — about three to five dollars per device per month. And the toy makers love it because it turns a one-time purchase into a recurring revenue stream. Luna: Subscription-based play. I can see why investors are paying attention. Lucas: There's also an interesting competitive dynamic. Traditional toy makers are racing against tech companies. Amazon has its Echo Dot Kids Edition. Google has the Nest Hub for kids. Those are smart speakers with screens. But they're not really 'toys' in the classic sense — they're assistants dressed up as playmates. Luna: Right. A kid wants an action figure that talks back, not a speaker that tells them the weather. Lucas: Exactly. And that's where 5G enables a form factor that's actually playful. Take the example of a connected race car from a company called Sphero — they've been around since the BB-8 droid. Their latest uses 5G so that up to twelve cars can race simultaneously with real-time feedback, each car's telemetry streamed to a cloud server that runs the race logic. Luna: So no local console or app required. Just the cars and a 5G network. Lucas: Yes. The race can be controlled from anywhere — a parent could join from their phone while the kid is in the living room. And because of network slicing, the latency is consistent even if the home network is congested with streaming video. Luna: That's clever. But it also raises the privacy question again. A connected toy is a listening device in a child's bedroom. Lucas: It's the single biggest obstacle. In 2023, the FTC fined a company called VTech over violations of child privacy laws. Their connected tablets were collecting data without proper consent. And the EU's GDPR has specific provisions for children's data. So toy makers are treading carefully. Luna: Has the industry responded with any standard or certification? Lucas: There's something called the 'Kitemark' from the UK's Internet of Things security code of practice. And the Toy Association in the US launched a 'Connected Toy Safety' framework last year. But enforcement is still fragmented. The real pressure is coming from parents and advocacy groups. Luna: So the tech is there, but the trust isn't. That's a fascinating tension. Lucas: It's the exact same tension we saw with smart speakers a decade ago. Eventually, consumers decided the convenience was worth it — but only after clear privacy labels and opt-in mechanisms became standard. The toy industry is going through that same journey, just with higher stakes because of the age of the users. Luna: I also wonder about the educational angle. A doll that can actually answer factual questions in real-time — that could be powerful. Lucas: There's a startup called Embodied that makes a social robot called Moxie. It's designed for children with social anxiety, and it uses cloud AI to have conversations. It's already in use in some therapy settings. With 5G, the responses are faster and more natural. Early studies show a reduction in anxiety markers after a few weeks of interaction. Luna: So it's not just entertainment. It's therapeutic. Lucas: And that's where the thirty billion dollar projection starts to make sense. The market isn't just replacing dolls with connected dolls — it's creating entirely new categories of play that weren't possible before. Luna: Before we get into the challenges, let me ask — what does this mean for the actual manufacturing? Are toy factories retooling? Lucas: Yes, especially in Shenzhen. The big contract manufacturers like Foxconn and Pegatron have dedicated lines for connected toys. They're essentially building IoT devices with plastic exteriors. The supply chain for 5G modems is already mature because of smartphones, so the component cost is dropping fast. Luna: Which makes the thin-client model even more viable. Lucas: Right. And one more thing: the content updates. A traditional toy is static. A 5G-connected toy can receive new skills, new stories, new games over the air. That means a doll bought today can learn new languages next year. That's a huge value proposition for parents. Luna: Provided the company doesn't go bankrupt and shut down the servers. That's a real risk. Lucas: It is. And that's why some startups are building on open standards — like using the open-source Matter protocol for IoT — so the toy can be repurposed if the original manufacturer folds. But it's early days. Luna: If today's conversation gave you something usable — a new way to think about your niece's birthday gift, or a better understanding of the tech behind it — the way these episodes stay ad-free is through listener support. You can head to buy me a coffee dot com slash fexingo. No pressure, just an option to keep this going. Lucas: Yeah, it really does help us keep the show independent and focused on the substance. So if it's useful, that's the link. Luna: Alright. Back to the toys. Lucas, you mentioned earlier that the biggest challenge isn't tech, it's trust. Where do you see the industry heading in the next two years? Lucas: I think we'll see a major retailer — probably Target or Walmart — launch a '5G-ready' aisle with clear privacy labels, maybe even a certification badge. That would signal to parents that these toys meet a baseline standard. And I think the subscription model will become the norm, with the toy itself being sold near cost. Luna: Like how printers are cheap but the ink is expensive. Lucas: Exactly. The razor and blades model, but for play. And it works because the recurring revenue smooths out the seasonality of toy sales — you're not dependent on the holiday spike alone. Luna: I'm also curious about the impact on classic toys. Are we going to see a 5G-enabled Lego set? Lucas: Lego actually has a patent from 2024 for a connected brick that communicates with a base station. Imagine a Lego city where traffic lights actually sync with each other, and cars follow real-time traffic rules. That's a physics simulation in a box, powered by 5G. Luna: That would be incredible for educational purposes. Kids could learn basic programming logic through play. Lucas: And that's the quiet transformation — not replacing the physical toy, but augmenting it with a digital layer that makes it smarter. The toy stays in your hands. The magic happens in the network. Luna: And the network needs to be everywhere. Rural areas still have spotty 5G coverage. Lucas: That's the final piece. For this market to really scale, you need ubiquitous, low-latency 5G. The C-band rollout is helping, but we're probably two to three years from meaningful rural coverage. Until then, smart toys will be an urban and suburban phenomenon. Luna: So the next two years are about building trust and coverage. The tech is ready. Lucas: Exactly. And the toy companies are betting big. Mattel's R&D budget for connected toys has doubled year-over-year since 2024. Hasbro just acquired a small AI studio in Montreal. The pieces are moving. Luna: It feels like we're at the same point with toys that we were with smartphones in 2007. The hardware is almost there, the network is getting there, and the killer app is still being defined. Lucas: That's a great framing. And if history is any guide, the winner won't be the company with the best tech — it'll be the one that makes the experience feel most like play, not like homework. Luna: I look forward to the day I walk into a store and see a doll that can actually hold a conversation. That's going to be strange and wonderful. Lucas: It's already happening in pilot programs. By Q4 of this year, you'll see them on shelves. And that's the quiet transformation — it's already here, just not evenly distributed.