Toys Industry Trends, Licensing Growth, and Smart Play Innovation

Introduction

The global toys industry has reached a point where simply having a large scale will not be sufficient for survival anymore. Top players are investing heavily in intellectual property, digital engagement, and portfolio restructuring to keep their margins intact. Companies such as Hasbro Inc. are now focusing on a smaller portfolio of high-value brands, aiming to drive higher earnings by expanding across entertainment, gaming, and consumer product channels.

Other firms like Mattel Inc. are also putting a lot of effort in rebranding their products. They are concentrating on developing movie-related merchandise, content partnership, and premium collectibles. Management teams are also reiterating the importance of inventory management which is something that retailers are now enforcing strictly and more than before. In February 2026, the LEGO Group highlighted new LEGO SMART Play interactive sets and multiple reveals across popular themes like Star Wars at Toy Fair 2026, showcasing the future of play.

Moreover, Asian manufacturers are also strengthening their positions. Bandai Namco Holdings Inc. continues to expand its character-driven merchandise business, strategically linking toys with its gaming and animation ecosystem. Firms are increasingly integrating digital engagement to extend consumer interaction across platforms, aiming to build long-term brand loyalty and recurring purchases rather than relying solely on short-term, seasonal sales spikes.

Check out the full Toys Market Report for complete segmentation, forecasts and competitive benchmarking.

Major Drivers, Trends and Challenges

Product development strategies are focused on connected play. For example, Spin Master Corp. offers app-controlled robotics and interactive pets that are capable of gathering behavioral data and thereby increasing user engagement. Digital-enabled categories are experiencing a faster growth rate compared to the traditional segments.

On the other hand, large-scale retailers are making procurement decisions that reflect their sustainability commitments. Companies like LEGO Group are making huge investments for the research of sustainable materials, and they aim to develop fossil-free plastics by the end of the decade. They are continuing to pilot recycled and bio-based bricks along with keeping a high standard of product durability. This changeover is capital intensive, and margins might not be maintained in the short term. However, the top management teams see it as a vital move for securing license partnership and being compliant with future regulations.

Private equity-owned and mid-tier manufacturers are directing their attention to niche educational product lines. STEM-focused construction kits as well as science-based sets are getting marketed as a supplement to the curriculum rather than purely as leisure products. Several United States distributors are extending their school channel partnerships by taking advantage of the cycles of federal education funding. This push from an institutional level gives a better order visibility on a recurring basis, although the time to shelf may be delayed due to certification requirements.

In addition, licensing has its advantages as well as disadvantages. When franchise-driven product launches align with major global entertainment releases, they can generate exceptionally strong demand and rapid sell-through across retail channels. However, profitability is often constrained by royalty obligations tied to licensed intellectual property. Companies are now in the process of renegotiating contracts and are considering co-development agreements as an alternative to pure licensing ones.

Manufacturers who have the power to control proprietary brands, digital extensions, and also have operations in different geographical areas expected to capture greater shares in the market. Companies that can combine cost management with continuous investments in product differentiation are expected to sustain their growth in the market over the forecast period.

Table of Contents

1. Introduction
2. Definition and Scope
3. Brand Portfolio Strategies
4. Connected Play Developments
5. Licensing and IP Expansion
6. Sustainability Investments
7. Manufacturing and Supply Chain Shifts
8. Regional Revenue Performance
9. Retail and Distribution Adjustments
10. Competitive Positioning Overview
11. Financial Performance Benchmarks
12. Future Outlook

Related Resources

Sports and Outdoor Toys Market

Smart Toys Market Forecast

Licensed Merchandise Market Outlook

Children’s Entertainment Centers Market