I’m A Barbie Girl in an IoT World

Since her birth 50+ years ago, Barbie has been on several adventures as detective, president, and doctor, just to name a few. Her next adventure is in the digital cloud, where she joins the Internet of Things (IoT) trend that has transformed everything from ceiling fans to cars.

For those unfamiliar, IoT refers “to the rapidly growing network of connected objects that are able to collect and exchange data using embedded sensors”1. By 2020 it is estimated that there will be 200 billion connected objects (26 per every human on earth), “with an estimated value ranging between 14 and 19+ trillion dollars across the global economy”2.

Iconic toy manufactures like Mattel, producer of Barbie, are aggressively looking to tap into this digital revolution to transform their business proposition and adopt their operating model, or risk becoming obsolete.

Move Over Ken – Barbie’s Got A Crush on ToyTalk

In 2Q15 Mattel announced that sales of Barbie were on track to decline for the 4th consecutive year, with previous efforts failing to increase consumer relevance3. With Barbie’s sales down 16%3 over the first 6-months of the year, Mattel seized the opportunity (in anticipation of the holiday season) to leverage the IoT trend to drive relevance with young girls. To differentiate Barbie and bring her squarely into the IoT era, Mattel wanted to fulfill the ultimate childhood fantasy – allow for real time conversation with Barbie.

Mattel’s existing operating model, however, felt short of being able to deliver on such a customer promise, which required significant digital/technical expertise. Consequently, Mattel decided to partner with San Francisco based startup ToyTalk, to bring to life Hello Barbie, “an Internet-connected version of the doll that has real conversations with kids using ToyTalk’s PullString technology”4.

Just A Pretty Face?     

While it is hard to tell by looking at her, Hello Barbie is one of the most advanced toys ever. Hello Barbie’s fashion forward outfits conceal a speaker, microphone, and USB port charger that enable “her to engage in two-way conversations, tell stories, play games and joke around”5. Before children can confide in Barbie, parents need to download an app to connect her to wireless internet, over which recordings of children’s conversations are transmitted to ToyTalk’s servers. At that point “speech recognition software converts the audio into text, and artificial intelligence software extracts keywords from the child’s responses, triggering Barbie to reply with one of the 8,000 lines handcrafted by a team of writers”5. Barbie not only has the capacity to build a data cloud of a child’s likes/dislikes and incorporate it into future conversation, but is also seamlessly updated with new content as Mattel/ToyTalk pull voice files to identify trending topics among children.

Unveiled as a concept in February 2015, Hello Barbie drew mixed reactions, including significant criticism around children’s privacy and data security (Mattel responded that safeguards were in place).  The doll hit markets in November generating significant buzz for Mattel, however in the end “the sell-through was so-so”6. Per Bloomberg Technology “online reviews highlighted problems like a malfunctioning charging station and a shaky Internet connection…. and major retailers have slashed its $75 list price, with Wal-Mart Stores Inc. cutting it to $52.49.”

The Opportunity And Challenge  

Mattel’s foray into the IoT trend with Hello Barbie highlights how the digital transformation has created both opportunities and challenges for the business/operating models of traditional toy manufacturers. The opportunity in the toy industry is clear, to leverage digital to increase consumer relevance/value by enhancing children’s playing experiences through access of information and the ability to interact/adapt. The challenges of delivering on this promise, however, are massive including wrestling with privacy concerns, data security, and outdated operating models.

So, what should toy manufacturers like Mattel do?

Initially the approach should be two-fold. First, conduct significant research to understand how tech and toys can converge in a fashion acceptable to parents. Parental backlash around child privacy and security cannot be underestimated, so it is critical for manufacturers to understand the trade-offs they are willing to make in a world where you cannot have it all. Second, develop deeper relationships with the tech-startup community, potentially through incubator programs to advance the application of technology to toys. Due to culture, lack of operational flexibility and organizational design, traditional toy manufacturers are unlikely to build in-house the necessary capabilities to drive breakthrough innovation, and so outside partnerships will continue to be key.

Hello Barbie is just one of the first examples of traditional toy manufacturers striving to modernizing their businesses in light of the digital transformation. Once manufacturers crack the code to succeeding in the IoT landscape, the possibility for play will be endless.

Word Count: 766

Sources:

  1. Andrew Meola. “Internet of Things Devices, Applications & Examples”. Business Insider UK, August 2016. http://uk.businessinsider.com/internet-of-things-devices-applications-examples-2016-8?r=US&IR=T
  2. Shane Miller. “The Other IOT: The Internet of Toys”. Mutual Mobile, April 2015. https://mutualmobile.com/posts/iot-internet-toys
  3. John Kell “Mattel hasn’t figured out how to save Barbie”. Fortune, July 2015. http://fortune.com/2015/07/16/mattel-barbie-sales-slump/
  4. Evie Nagy. “Using ToyTalk technology, new Barbie will have real conversations with kids”. Fast Company, February 2015. https://www.fastcompany.com/3042430/most-creative-people/using-toytalk-technology-new-hello-barbie-will-have-real-conversations-
  5. Lauren Walker. “Hello Barbie, your child’s chattiest and riskiest Christmas present”. Newsweek, December 2015. http://www.newsweek.com/2015/12/25/hello-barbie-your-childs-chattiest-and-riskiest-christmas-present-404897.html
  6. Matthew Townsend. “Hello Barbie Pleads ‘BuyMe’ as Mattel doll fails to catch fire”. Bloomberg Technology, April 2016. https://www.bloomberg.com/news/articles/2016-04-20/hello-barbie-pleads-buy-me-as-mattel-doll-fails-to-catch-fire

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7 thoughts on “I’m A Barbie Girl in an IoT World

  1. The trend of digitization of kids toys is both interesting, mostly when thinking of educational benefits, and scary due to the increased ease access to kids’ brains, in a sense. It seems to me like “marketing” is increasingly trying to target kids at a younger age to try and get children to build certain customer behaviors early in their lives, and Hello Barbie seems to me like a tool to do so at an even younger age, maybe unconsciously. I am all for digital toys which provide educational benefits to kids, such as learning the alphabet, math, etc. but I am critical of corporations such as Mattel trying to use the Barbie brand and digitization to get access to more young consumers in an effort to market other products, maybe Barbie add-ons or other toys. Just like the apps have the ability to sell in-app purchases to kids nowadays, I am scared that it will be the case with digitized toys as well, despite the fact that many of these kids are too young to understand purchasing decisions and the value of money. Nevertheless, if properly used for educational/training purposes, I think digital toys can be helpful for a child’s early learning.

  2. Very good post! While some of the privacy concerns as well as the bad feelings that come with toy and/or tech companies getting access to children’s brains at such young age (see Sebastian’s comment) are very valid, I still think the benefits, even absent any specific educational mission that Hello Barbie pursues, could outweigh the risks.
    One very specific (maybe too specific) benefit came to mind when I was thinking back to a story that I read about how Apple’s intelligent, voice-controlled assistant Siri can actually help children with autism to practice the syntax of human communication. By having conversations with Siri about the weather or about how well they like a song that Siri played, autistic children can actually become more comfortable carrying on such dialogues with real people. (Here is the original article: http://www.nytimes.com/2014/10/19/fashion/how-apples-siri-became-one-autistic-boys-bff.html?_r=0). I think by being the relatable toy that Barbie is, it could – at some point in the future – be even more powerful for children with autism in that regard (at least for girls). And with the prevalence of autism in children having increased 119% between 2000 and 2010 (now at 1 in 68) the importance of this benefit is likely only going to increase.

  3. Very interesting post! This topic made me think of LEGO’s try of building up LEGO.COM and providing “digital designer” service for children to design their own LEGO toy online, virtually. Also, I just saw a Japanese game developer just created an AR VR cooking game for children. This inspired me that both LEGO and Barbie could do the same thing – use AR VR technology to develop games for children to create their own LEGO model or Barbie’s outfit. We could even create online communities for children to post their works online and share with kids from other parts of the world. However, safety and privacy should be an important issue. It’ll be essential to involve parents and schools at the early stage of this business model research and avoid what happened to Hello Barbie as you mentioned in the post.

  4. Very interesting post! It’s nice to see that Mattel is continuously trying to innovate its core product – last year Mattel offered Barbie in an array of different body types/skin colors etc. so that children could better relate to the doll. In addition to the privacy concern you brought up (which I agree with!) I also wonder if parents will be concerned with the possibility that their children will be developing fewer “creativity skills” by playing with digital dolls. One could argue that the learning that comes from playing with dolls is imagining different scenarios and responses. If Mattel predetermines responses based on contextual clues and trends, how will children be able to shape their own play environments?

  5. Awesome blog post! For what it’s worth, I was a big Barbie fan as a child and would have LOVED this toy. I imagine the trend will only continue for toys that safely connect kids to the digital world, and I’m excited about the educational opportunities these toys present. I’m also intrigued by your suggestion for Mattel to “develop deeper relationships with the tech-startup community, potentially through incubator programs to advance the application of technology to toys” — Disney actually did this with their Disney Accelerator for entertainment startups (originally run in partnership with well-known accelerator Techstars before Disney decided to do it themselves). Disney has had several toy companies go through the program and views the startup accelerator as a way to acquire innovation. Mattel right now doesn’t have the in-house expertise (and culture) to foster new technological innovation in the toy space, so I agree with you that engaging with startups seems like a good approach.

  6. Great post! I commend Mattel’s efforts to modernize Barbie. Barbie is such an iconic toy, but it is becoming increasingly more difficult to appeal to children in the age of iPads and video games. You mentioned that Mattel should develop relationships within the start-up community, which is a great suggestion. It also made me think that children’s toys and games could be an area ripe for disruption. I know digitization is transforming educational technology and I wonder if those same concepts could be applied to toys. I would also be curious to see market research on whether Barbie still appeals to girls in current times. Mattel may be better off buying a company with technology that could be applied to Barbie, rather than trying to produce in house.

  7. Thanks for the interesting post! We all know what can happen when toys or devices are connected to the internet — among the most formidable concerns is privacy. What can Mattel do to protect the young children who play with these dolls and also comfort parents who ultimately buy these dolls for their children? Given the potential privacy concerns should parents have to provide permission to allow their child to play with the Hello Barbie or does the act of purchasing the doll provide that permission inherently? Furthermore, are there any concerns or risks regarding government regulation? These are some of the questions I think Mattel will have to get comfortable in order to make Hello Barbie a true success.

    References:
    https://mutualmobile.com/posts/iot-internet-toys

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