At a high level, the demand for connectivity in toys has led to an almost predictable swell of well-funded startups emerging to challenge toy incumbents. These startups see a chance to topple even the largest incumbent, using their digital prowess to create better connected-toy experiences than slower corporate giants. And VCs apparently agree.
In the past five years, investors have poured over $300 million into connected toy startups, with more than one-third of that money coming in 2015 alone.
Three segments stand out, receiving the majority of startup and investor interest:
programmable educational toys, and
“toys-to-life,” whereby a physical figurine becomes a virtual character inside a video game