Toys With Byte
Digital Movie Creator, a $99 gadget from Intel Corp. that shoots and edits video, is part toy, part computer peripheral--one of a new crop of sophisticated playthings aimed at kids who are more comfortable with a mouse than a crayon.
Computer-powered toys, such as Movie Creator, are one of the fastest growing segments of the $55-billion global toy industry and button-down technology companies such as Intel are vying for the notoriously short attention span of tykes with traditional toy companies such as Lego.
It’s a bid to reshape the way kids play, but it’s also a clever business strategy to keep families buying faster computers and more powerful gadgets at a time when technology fatigue has slowed the sales of new PCs and other high-tech doodads.
Take the Movie Creator. Although it costs just $99, it requires a fairly high-end PC to run at a speed with any hope of keeping impatient children interested.
“If you’re going to edit video and mess around with pictures, you need a next-generation machine, or it’s going to be slow,” said Rob Enderle, research fellow at Giga Information Group in Santa Clara, Calif. “This was a very shrewd move to capture kids and give parents a justification for buying new computers.”
And that explains why Intel, a regimented, data-driven chip company that for years focused on appealing to corporate systems buyers, finds itself now worried about whether 6-year-olds think it’s cool.
Kids already expect their toys to do more than they did just five years ago. Last year, five of the 10 best-selling toys by dollar sales had at least one microprocessor, according to the Toy Manufacturers of America Inc. In 1995, just one toy had a chip.
“It’s become increasingly less expensive to include high-tech features in mass-consumer products. As a result, technology is becoming more and more prevalent in toys,” said Michael McNally, a spokesman for Lego Systems Inc., which makes Lego Mindstorms, a system that lets kids build their own robots from Lego parts. “Today’s kids are much more media- and tech savvy. Traditional toy manufacturers have to stay relevant. And sometimes, that’s done by incorporating technology.”
Intel’s efforts in the toy business began in 1998 when it teamed up with Mattel Inc. to develop high-tech toys. At the time, it seemed to be a winning combination of left and right brain. Mattel had the toy experience. Intel had the engineering expertise. The collaboration resulted in the Computer Sound Morpher, the QX3+ Computer Microscope and a video game called the Me2 Cam, which has since been shelved.
Two years later, the high-profile partnership quietly dissolved, prompting many to wonder whether Intel learned enough to be successful on its own. This holiday will be Intel’s first year flying solo, and the company is pinning its hopes on the Movie Creator to prove that, yes, geeks can make toys.
But Intel’s approach is undeniably different from that of traditional toy companies such as Mattel or Hasbro Inc., the two largest toy makers in the world. The Intel way is characterized by exhaustive market research and focus testing, relentless data analysis and eye-crossing charts that map out every step in making a toy. The project map for the Movie Creator, for example, spreads 3 feet high by 4 feet wide and contains 174 steps in tiny type.
That’s not to say that toy companies aren’t scientific in their approach or that Intel is not spontaneous. But the goals are dissimilar. With Intel, the PC is central to the strategy, whereas toy companies prefer free-standing toys. That, in a nutshell, is Intel’s greatest strength and its greatest weakness, according to many toy industry observers.
It’s also the reason Intel and Mattel went their separate ways.
“From our perspective, we felt it was too limiting,” said Ivy Ross, Mattel’s senior vice president for design in the girls toys division in El Segundo. “Not that you can’t do great products that are PC connected, but we didn’t want to be bound to that. Kids like to take toys outside with them. And not every household has a PC. We didn’t want the PC technology to drive us. For us, play patterns are a more important driver. It’s different motives. We’re just wearing two different pairs of glasses here.”
Intel’s Carol Murdock, who used to work at Mattel, defended the company’s emphasis on the PC.
“Suddenly, my $90 toy has a $2,000 brain when I connect the two,” said Murdock, a product manager at Intel’s Toy Lab.
From a kid’s perspective, however, the only thing that matters is the fun factor.
“Consumers aren’t going to say, ‘Oh, I see how this fits into the strategic vision of Intel.’ Consumers never buy technology. They only buy fun and functionality,” said Sean McGowan, director of research for Gerard Klauer Mattison in New York.
Indeed, the addition of technology doesn’t necessarily equate with fun. Intel’s Me2 Cam, which placed the child’s face in a series of video games, got nowhere because it was too cumbersome to use.
The process of making a hit toy is part technology, part market research, part magic. When the inventor of the Furby, which sold 42 million units, came to Tiger Inc., the prototype was a tennis ball with pasted-on eyes and a hookup to an external chip.
“The inventor knew there’s more to making a great toy than having an idea for the technology,” said Marc Rosenberg, a spokesman for Tiger, which is now owned by Mattel. “You have to know how to add the form to the function to make it work for kids, a marketing plan to get the word out to kids and the relationship with retailers in order to get the product to the kids.”
McGowan, a longtime observer of the toy industry, believes Intel hit the right combination with the Movie Creator, which will hit store shelves this fall.
“It’s just one of the most innovative, yet simple products I’ve seen,” McGowan said. “It gives kids something we know they like to do. They like to tell stories. They like to act out plays. They like watching movies. And they like sharing pictures with their friends. I can tell it will be huge.”
But at $99, the Movie Creator sits at the upper price range for most toys.
“You’re not going to sell them like they’re Power Rangers. Kids aren’t going to collect them,” McGowan said. “At $99, a lot of people aren’t going to be able to afford it at all.”
Therein lies another dilemma for Intel as it straddles the worlds of consumer electronics and of toys. For a digital movie camera, $99 is a rock-bottom price. But for a toy, it’s nearly stratospheric.
Intel has the additional challenge of establishing credibility as a toy company. Most consumers recognize the “Intel Inside” logo that’s slapped on the vast majority of PCs, but they are unused to seeing Intel outside the box as a maker of PC digital cameras, digital music players and toys.
As a result, some shoppers fail to connect the giant chip company with the products on display, said Tom Vellios, chief executive of Zany Brainy, a 187-store seller of high-tech toys. Other consumers were intimidated by the manufacturer’s name, which they associated with computers.
“The microscope was a great product for us, but customers didn’t understand it in a traditional toy environment,” Vellios said. “That’s the burden of high-tech companies.”
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Times staff writer Alex Pham covers the video game industry. Times staff writer Abigail Goldman covers retailing.
