El Segundo’s Mattel dives into digital toys with new Silicon Valley partnership – The Daily Breeze

Iconic El Segundo toymaker Mattel, struggling to recapture its dominance in the marketplace, is turning to Silicon Valley for a makeover.

New CEO Margo Georgiadis, a former Google president, is working to turn around the fortunes of the 72-year-old company, whose famous Barbie, Hot Wheels and Fisher-Price brands haven’t kept up with digital trends as LEGO became the industry leader.

Georgiadis has promised to transform Mattel’s internal culture to be “leaner, faster, smarter” while pushing the company’s “power brands” through an “innovation pipeline.”

MindRacers: Old toy, new game

Its newest game, MindRacers — the result of a partnership with Palo Alto-based Tangible Play Inc.’s Osmo platform of educational iPad games — debuted just in time for the holiday season.

Mattel also recently invested $5 million in the tech startup, founded four years ago by a former Google product manager.

Such partnerships are part of a broad, long-term strategy to regain relevance in the lives of children and their families.

“Our vision is to inspire the wonder of childhood as the global leader in learning and development through play,” Georgiadis said in a statement to investors. “As we shift our business aggressively in a new strategic direction and transform how we operate, I believe we have the assets to achieve this vision and shape the future of the toy industry.

“The strength of the underlying Mattel franchise, supported by important trends such as a growing global toy market and an increasingly digital, mobile-first world, provides an opportunity for Mattel to create significant long-term value for our investors.”

‘Convergence of digital and hands-on play’

MindRacers comes on the heels of Mattel’s new Hot Wheels track, which is enhanced with artificial intelligence, and a new Barbie Dream Horse that prances, dances and neighs on command.

The fast-paced game of strategy for ages 7 and older combines toy Hot Wheels cars and a track that connects to iPads, allowing players to “launch” the cars at the device, where they are stored in a “garage” on the back. Software-enhanced cameras recognize player cues in the physical world and recreate them in the digital racing game.

MindRacers players throw tokens at the launchpad to direct their cartoon cars to “spin,” “attack,” and “boost.”

“Osmo is all about this convergence of digital and hands-on play,” said company co-founder Pramod Sharma. “MindRacers is about fast, critical thinking and strategy. “(The screen) can actually make any toy funner. Whatever you have in your hand, the iPad can see — that’s what we’re trying to master.”

Robots and drones

Mattel also is taking a new approach to its community partnerships. Workers recently brought a load of big bouncy balls, coloring books, Hot Wheels tracks and other games to a play event at Jefferson Elementary School in Lennox.

Students lined up for the chance to play with the tried-but-true toys at the event, which will now take place yearly.

But however fun those classic games are, they won’t be at the top of Christmas wish lists this year. Robot-building kits, interactive dolls with “personalities” that are more expressive than ever, highly personalized video games and drones are the most sought-after games of the season.

Three out of 10 kids play on a mobile device every day, according to market-research firm NPD Group. That statistic is changing everything, allowing tech startups to encroach on market share previously locked down by corporations like Mattel and Hasbro.

“There’s no question that Mattel has to go digital,” said Omar A. El Sawy, president of USC’s Data Sciences and Operations Department. “But the question is: How do you do it? Who do you partner with? How do you keep your focus?”

LEGO winning at digital

El Sawy researched LEGO’s turbulent but ultimately highly successful digital transformation. The colorful brick-maker’s worth is $7.9 billion and rising, according to Forbes. Its nearest competitor is video game maker Bandai Namco, worth $1 billion.

Fischer-Price, Barbie and Mattel brands follow at $773 million, $388 million and $252 million, respectively, according to Brand Finance’s annual report in March.

But, in 2000, LEGO verged on defaulting on its debt, El Sawy said.

“LEGO had diversified too quickly into amusement parks, video games, toys for infants, clothing, and other adjacent markets that it had little experience in,” he said. “Now they know where their strengths are and they are focused on those. They’ve ingrained digital into their culture, all the way from their CEO.”

The company’s success really exploded after its acclaimed film, “The Lego Movie,” was released in 2014. But its ability to provide educational content and connect with its varied audience in digital communities has continued to propel the brand.

“LEGO has a very sophisticated way of dividing its customer base of kids, parents, grandparents, fan clubs for die-hards, and conferences,” El Sawy said. “People have a soft spot for that because they played with them when they were kids.

“What’s happening to a lot of businesses is they’re changing themselves into what they call a platform. That’s a digital phenomenon.”

The rise of the digital platform

Online communities are key for digital platforms, experts say. Beyond playing games, consumers want to engage with other fans in the virtual world.

For example, LEGO’s Ideas program allows customers to pitch new toys and will consider developing them if they can receive 10,000 votes of support.

Game-based apps also are critical for continued customer engagement, and can leverage brands into new markets.

“It’s more than just having an electronic game,” El Sawy said. “You have to engage differently. They’re selling you the experience more than the product.”

But there’s no clear-cut path to success in the digital marketplace.

Mattel’s Hello Barbie toy, introduced in 2015, was resoundingly denounced by critics because of security and privacy concerns. The Wi-Fi-connected doll records its “conversations” with children.

The company recently teamed up with Microsoft to feature Hot Wheels at the Microsoft Education Workshop’s STEM Saturday, allowing people to take apart the cars to learn how they work at free drop-in classes.

“Hot Wheels is rethinking its marketing to better communicate the benefits of its products directly to parents,” a company statement reads.

Chris Down, senior vice president and global brand manager of Hot Wheels, added: “We aim to nurture the ‘challenger spirit’ in all kids by encouraging them to try, fail, and repeat to achieve success.”

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