AI Toy Craze: ByteDance and Tesla Join the Race

When you think of major tech companies like Tesla and ByteDance, what immediately comes to mind? Perhaps it's the sleek electric vehicles zooming down city streets or the sophisticated algorithms reshaping entertainmentSurprisingly, these giants have recently diverted their focus towards a seemingly trivial sector: toysThis shift has opened the gates to a multi-billion dollar market that no one anticipated.

The foray of these industry titans into the toy realm raises intriguing questions about the nature of innovation and consumer engagementTesla's introduction of the "Tesla Bot Action Figure," priced at just $40, sold out within 24 hours of its releaseSuch was the hype around this novelty that it is now being resold for over $1,300 on secondary marketsLikewise, ByteDance's adorable plush toy named "goofy" (Xian Yan Bao), featuring a built-in AI model, quickly gained popularity and saw its price balloon to hundreds of yuan shortly after launch

The unexpected success of these toys begs the question: what drives this recent fascination with toy products?

Additionally, the trend isn't confined to just these two companiesGrimes, a musician and former partner of Elon Musk, teamed up with Curio to create three plush toys using OpenAI's voice technology, aiming to charm children aged 3-7. Meanwhile, "BubblePal," an interactive toy from former Tmall Genie partner Li Yong, managed to sell over 20,000 units at a hefty price of RMB 449 shortly after its introductionThese examples highlight a burgeoning toy revolution spearheaded by significantly influential players in the tech industry.

The common denominator behind this phenomenon seems to stem from the peculiar blend of technology and novelty that AI-infused toys bring to the tableFor example, ByteDance's "goofy" may appear at first glance to be an innocent plush figurine, but its true strength lies beneath the surface with its AI capabilities

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• AI Toy Craze: ByteDance and Tesla Join the Race

Once endowed with speech recognition and synthesis, the plush toy engages with users in a remarkably lifelike manner—instantly rendering the world of "Toy Story" a vivid reality in homes, where toys seemingly interact as sentient beings.

Forecasts suggest that the global AI toy market could exceed $35 billion (approximately RMB 255 billion) by 2030, according to Contrive Datum InsightsBut beyond impressive revenue prospects, these toys serve as more than just inanimate objects; they are companions that resonate emotionally with children.

Prior to the advent of AI toys, interactive gadgets such as smart speakers and reading pens existed in the marketplaceHowever, these devices often lacked a personal touch, making them feel more functional rather than emotionally connectiveMany toys marketed as AI companions today are typically sold in the range of RMB 300-400, yet their simplicity in conversational ability leaves much to be desired

True AI toys, which boast more interactive features, often demand a budget of over RMB 1,000.

Take, for instance, small robots equipped with facial recognition, touch feedback, and voice capture technologies, which represent the pinnacle of this new wave of merchandiseThese not only react to users' actions but also appear endearingly needy, nudging for attention at leisure timesIf the sharp edges of robots don't appeal, AI plush toys provide a softer alternative, purring contentedly when petted and even entering an “EMO mode” when left unattended for long stretches.

The introduction of personalized voice modules allows parents to etch their children's names into these interactive toys, providing a personalized touch that transforms fantasy into realityA parent relayed an anecdote about their child being utterly captivated when their name was called by none other than Queen Elsa, illustrating the powerful emotional connection these toys can foster.

Beyond playfulness, AI toys bring forth the added value of positive reinforcement

For instance, when a child expresses low self-esteem, like saying "I don't think I look good," an AI toy can respond with uplifting affirmations, reinforcing self-worth and encouraging individualityIn this way, these toys become not just playmates but also important emotional support systems.

The audience for AI toys extends beyond just childrenMarket data forecasts a striking increase in toy businesses, with 11.98 million forming in China alone, and a significant surge in new businesses registered in 2024. This boom is intricately linked to the rise of AI toys, which thrive on longer and more lucrative payment cycles—an essential departure from traditional toys that often follow a one-off purchase model.

AI toys possess the versatility to evolve in various directionsThey can deepen their focus on early childhood education and companionship by utilizing supportive speech features, addressing the emotional needs of younger demographics, or they can enhance their entertainment and interactivity to appeal to older audiences and even adults.

Importantly, the trend toward AI toys has fostered an influx of smaller companies entering the market, all vying for a share influenced by the potential seen in this expanding field