For more than a century, the maker of Lionel Trains made generations of kids and kids-at-heart happy by selling a pastoral play activity – watching scale-model trains rolling gently past miniature villages, farms and bridges.
But these days, the Lionel brand barely registers with people 20 and younger – a generation that has grown up with interactive, fast-paced, action-packed video games.
So in August, Lionel released Lionel Battle Train, an iPad game that involves the decidedly not pastoral goals of derailing and blowing up enemies.
Lionels strategy to survive into the digital future is part of a larger trend thats remaking the toy industry – real-world, physical toys being linked to virtual play on a video screen.
Research told us that childrens play patterns have moved significantly from a passive play pattern to very active involvement, meaning more engagement, more ability to imagine, more interactivity, Lionel representative Tony Bordon said during a recent video-game conference in San Francisco.
Were trying to build that bridge from the digital world to the offline toy world, he said.
But the bridge may also be the end of the road for companies that make only physical toys, a trend that raises concerns about whether children of the future will still be able to enjoy the benefits of play.
I just think kids need to get dirty and play in the mud and go out into the woods and play jump rope and have real experiences before (toys) become electrified and digitized and not balanced, said Stevanne Auerbach, a renowned child development expert and author who is known as Dr. Toy.
Electronics have long been a part of the toy world. Even the original Lionel trains made use of the then-new, early 20th-century innovation – home electricity. But the onset of interactive video games, played on a variety of platforms, has transformed the landscape.
Children today dont experience the world as either virtual or real. Its all real to them, said Richard Gottleib, CEO of Global Toy Experts, a toy industry consulting company in New York.
So toymakers, who have seen flat sales over the past decade, have to adjust to the times.
The fight is no longer for space on the shelf, its for time in somebodys head, Gottleib said.
During the summer, the toy industry was abuzz with the release of a highly promoted expandable action figure set from Disney Interactive, a unit of media conglomerate Walt Disney Corp.
The Disney Infinity set offers collectible action figures from the Mouse Houses famed stable of characters, including Mr. Incredible from Pixar Animations The Incredibles and Capt. Jack Sparrow from Disneys Pirates of the Caribbean.
When a child places the figure on an included base, the embedded near-field communications chip activates an animated version of the character in a virtual toy box, an expandable world played through a home game console, a mobile tablet or online.
Disney, which reportedly spent $100 million developing Infinity, is hoping for the same kind of success that Activision Blizzard has enjoyed with Skylanders, which also marries action figurines with an interactive video game.
Toy industry analyst Lutz Muller said Skylanders has already had a major effect on the toy market and has earned Activision about $1.5 billion in sales.
Skylanders was a game changer, said Muller, president of the industry consulting company Klosters Trading Corp. of Vermont.
They took a video game and married it to actual toys. Thats why theyve been so fantastically successful. Skylanders totally dominates the action figure market.
Pokemon recently released Rumble U, a Pokemon toy married to Nintendos Wii. And there are more of these hybrid virtual-physical toys on the way, Muller said.
He predicts the virtual-real world hybrids will eventually give a digital makeover to Mattels Barbie and other longtime toy icons.
The hybrids will also give toymakers a competitive advantage over those that produce only physical toys, which in turn could completely transform the industry.
Pure toy companies, the old-fashioned physical toy companies, will be gone in 10 years, said Richard Gottleib, the industry consultant.
But Muller said digital wont cause physical toys to disappear anytime soon.
Yes, it will eat into the toy market, Muller said. Will stand-alone toys disappear? Absolutely not.
If that happens, he said, it will be a very, very long time.