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.
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- 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
- Shane Miller. “The Other IOT: The Internet of Toys”. Mutual Mobile, April 2015. https://mutualmobile.com/posts/iot-internet-toys
- John Kell “Mattel hasn’t figured out how to save Barbie”. Fortune, July 2015. http://fortune.com/2015/07/16/mattel-barbie-sales-slump/
- 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-
- 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
- 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