The toy industry is witnessing a fascinating divergence: traditional trendy toys and AI-powered toys are carving parallel yet distinct paths. On one side stands POP MART, defending its IP empire with icons like Labubu. On the other, startups are racing to merge cutting-edge AI with playful designs.
The Rise of AI Toy Startups
Why AI Toys?
With relatively low technical and financial barriers, this sector has become a hotbed for innovation. Key factors driving growth:
- Mature Supply Chains: Leveraging manufacturing hubs like Huaqiangbei and Yiwu
- Advancing AI: Cloud-based LLMs enabling sophisticated interactions
- Funding Boom: 27 Chinese startups secured funding in 2024 alone, including six unicorns
Early Success Stories
- FoloToy's limited-edition ByteDance collab resold for 500% markup
- BubblePal wearable AI devices sold 250K units
- Fuzozo plush presold 5K units in days
Designing the Next Generation
What Defines an AI Toy?
The industry coalesces around two approaches:
| Type | Features | Examples |
|---|---|---|
| Smart Companions | Voice interaction, emotional AI | Fuzozo, Ropet |
| Kinetic Figures | Motorized movements, precision joints | Transformers robots |
Key Insights from Mochi
This upcoming "emotional pet" (WAIC 2025 debut) prioritized non-verbal interactions after testing revealed:
- Users quickly dismissed imperfect voice responses
- Tactile feedback and visual emotions enhanced bonding
- "Five-year-old Border Collie" intelligence struck the ideal balance
"Durability comes from emotional design, not functionality." — Xu Fang, Mochi Creator
Market Challenges
The Subscription Debate
Fuzozo's $10/week "energy card" model sparked backlash despite precedents like Japan's $880/month LOVOT. Startups must educate consumers on recurring revenue models for sustainable AI services.
The IP Paradox
- Weak original IPs risk commoditization
- Strong designs face instant imitation via Huaqiangbei's "public molds"
- Solution: Focus on firmware updates and community building
Why POP MART Resists AI
The $4B giant's philosophy: "Utility invites obsolescence; art endures." Their Labubu success proved emotional value outweighs technological gimmicks.
FAQs
Q: Are AI toys just expensive voice boxes?
A: Premium products integrate adaptive behaviors—e.g., Moflin develops unique personalities based on owner interactions.
Q: What's preventing market saturation?
A: While manufacturers can replicate hardware, proprietary AI algorithms and IP loyalty create moats.
Q: Will AI replace traditional collectibles?
A: Unlikely. The $20B collectible market thrives on scarcity and artistry—qualities most AI implementations struggle to replicate.
Q: How long do users typically engage with AI toys?
A: Voice-only products average 2 weeks, whereas emotionally intelligent designs see 6+ months retention.
The Road Ahead
The sector must navigate:
- Consumer Education on recurring costs
- Technical Thresholds for kinetic designs
- IP Protection against rapid imitation
As Xu Fang observes: "Winning products will balance silicon and soul—AI that feels alive, not just intelligent." With POP MART watching from the sidelines, the race to create the next cult toy is truly on.