Global Toys Industry: what are people playing with in 2025

The global toy industry is experiencing its most significant transformation in decades, reaching $114.4 billion in 2024 with projected growth to $203.1 billion by 2034. Five revolutionary trends are reshaping the landscape: the explosive adult collector market now representing 30% of global revenue, artificial intelligence integrated toys are becoming gaining popularity, sustainability evolving from nice-to-have to business-critical requirement, supply chain diversification away from China-centric models, and licensed content driving an unprecedented 34% of total toy sales. These shifts reflect fundamental changes in consumer demographics, technology adoption, and environmental consciousness that are redefining what constitutes play in the 21st century.

This transformation extends far beyond simple market expansion. "Kidults" (adults buying toys for themselves) generated $6.7 billion in U.S. sales alone in 2024, while smart toys integrated with AI are projected to grow at 26% CAGR through 2032. Meanwhile, sustainability initiatives have become mandatory for major brands, with LEGO investing $150 million over 15 years in sustainable materials research and 45% of parents under 40 now considering environmental impact when making purchasing decisions. The industry's ability to simultaneously serve nostalgic adults, tech-savvy children, and environmentally conscious families while navigating geopolitical supply chain challenges demonstrates remarkable adaptability and innovation.

Technology revolution redefining play experiences

Artificial intelligence and digital integration represent the most disruptive force in modern toy development. Mattel's groundbreaking partnership with OpenAI, announced in May 2024, exemplifies this shift toward AI-enhanced play experiences. The collaboration introduces AI-powered versions of Barbie and Hot Wheels featuring adaptive algorithms, emotion recognition, personalized storytelling, and on-device natural language processing. CEO Ynon Kreiz described this as "a transformative opportunity to redefine how children learn and play," signaling industry-wide recognition that traditional static toys must evolve or risk obsolescence.

The smart toys market reached $13.77 billion in 2023 and is projected to grow at 16.7% CAGR to $55.14 billion by 2032, driven by parents' increasing demand for educational value. AI toys now comprise 75% of the smart toy market, a dramatic leap from just 5% in 2000. Leading products include Miko 3 AI learning robots with personalized educational experiences, FurReal Friends with voice recognition and conversational AI, and Cozmo robots offering adaptive STEM challenges. This technological integration extends beyond novelty features to create genuinely adaptive learning experiences that grow with children's development.

Augmented and virtual reality are transitioning from experimental to mainstream adoption. The Apple Vision Pro launch in 2024 catalyzed broader AR/VR adoption in entertainment and education, while products like BabyFirst's AR-enabled toys bring digital characters to life through smartphone interactions. LEGO's digital integration strategy includes physical-to-digital construction importing and apps that transform built structures into interactive games, exemplifying successful hybrid play experiences.

Subscription-based toy models represent another technological disruption, with the market growing at 12.1% CAGR from 2024-2030. Adoption jumped from 0% in 2000 to 40% in 2025, led by companies like Lovevery and KiwiCo offering age-specific STEM kits. These services combine personalization algorithms with educational expertise to deliver customized play experiences that traditional retail cannot match.

Adult market explosion drives premium transformation

The emergence of "kidults" as a dominant market force represents perhaps the most unexpected trend reshaping the toy industry. Adults now account for 17.3% of U.S. toy sales ($6.7 billion in 2023) and 30% of global toy market revenue, making them the fastest-growing consumer segment. This demographic shift is driving fundamental changes in product development, pricing strategies, and marketing approaches across all major toy categories.

European data reveals similar patterns, with adults generating $4.8 billion in toy purchases in 2023 (a 5.5% increase), representing 16% of total toy sales. The phenomenon spans generations, with Gen Z to Gen X consumers seeking nostalgia, stress relief, and collectible investments. Adult toy sales grew 18% in the first half of 2025, significantly outpacing traditional child-focused categories.

This demographic expansion has created entirely new premium market segments. Collector-grade action figures now command $50-200+ price points, while LEGO's Creator Expert/18+ sets featuring complex builds with 3,000+ pieces appeal specifically to adult builders. Funko Pop! became the #1 action figure manufacturer in the EU, growing 13% in France alone, demonstrating how collectibles culture has evolved into a mainstream adult purchasing behavior.

Building sets experienced their fifth consecutive year of growth, up 14% in 2024, largely driven by adult consumers willing to pay premium prices for sophisticated, display-worthy products. LEGO's record 13% revenue increase in the first half of 2024 exemplifies how companies successfully serving both children and adults can dramatically outperform those focused solely on traditional demographics. The company's botanical collection and architectural sets specifically target adult buyers seeking stress relief and creative expression.

Sustainability becomes core business requirement

Environmental consciousness has evolved from a peripheral concern to a fundamental business requirement, driven by both regulatory pressure and shifting consumer values. The sustainable toys market exploded from $22.5 billion in 2023 to projected $51.9-64.1 billion by 2030-2032, representing a 12.5-13.2% CAGR that significantly outpaces overall toy market growth. This transformation reflects deep changes in consumer priorities, with 78% of consumers now considering sustainability important when making purchasing decisions.

LEGO Group leads industry sustainability efforts with ambitious targets: 100% renewable/recycled materials by 2032 and net-zero emissions by 2050. The company achieved 30% certified sustainable resin in H1 2024, investing $150 million over 15 years for sustainable material research after testing 600+ materials. Notably, LEGO ties employee performance bonuses to annual emissions targets starting in 2024, demonstrating genuine organizational commitment beyond marketing statements.

Mattel's comprehensive sustainability strategy targets 100% recycled/recyclable/bio-based materials by 2030. Their Barbie Loves the Ocean collection uses recycled ocean plastic, while the Tesla Roadster Matchbox incorporates 99% recycled materials. The company eliminated 90% of wire twist ties (363 tons) and is exploring compostable sugarcane packaging, showing how sustainability initiatives can create both environmental and operational benefits.

Regulatory changes are accelerating industry transformation. The new EU Toy Safety Regulation converting from directive to directly applicable regulation includes enhanced chemical restrictions, Digital Product Passport (DPP) requirements with QR codes, and stricter online marketplace obligations. Implementation expected in 2025 will fundamentally change how toys are designed, manufactured, and sold across European markets.

Consumer behavior strongly supports sustainable products, with 45% of parents under 40 considering environmental impact when buying toys. North America dominates the eco-friendly toy market with 76% market share, valued at $300 million in 2024. This consumer preference creates competitive advantages for companies investing early in sustainable materials and production methods.

Regional markets drive localized innovation strategies

Global toy market dynamics reveal distinct regional characteristics requiring differentiated strategies. North America maintains dominance with 35.5-39.9% market share, generating $32.4 billion in 2024, but Asia-Pacific emerges as the fastest-growing region with 4.21-9.5% CAGR and 40% of global revenue according to some analyses. These regional variations reflect different cultural values, economic conditions, and regulatory environments that successful companies must navigate.

European markets emphasize premium quality and sustainability, with building sets commanding 28.2% of the European market. The region's new EU Toy Safety Regulation creating enhanced chemical restrictions and digital passport requirements will likely influence global manufacturing standards. German consumers prioritize educational toys and STEM focus, driving companies like HABA and Playmobil to leadership positions in premium educational segments.

Asia-Pacific presents the most complex opportunities, with China handling 79% of global toy production while simultaneously representing a major consumer market valued at $22.8-43.9 billion. Electronic and remote control toys comprise 55.8% of China's market share, reflecting cultural preferences for technology-enhanced products. Japan's $15.0 billion market leverages pop culture influence from anime, manga, and gaming to drive global trends, while India's emerging manufacturing capabilities support the "Made in India" initiative with $152-153 million in toy exports.

Latin American markets show strong digital adoption, with online channels accounting for 55% of total toy sales. Brazil's Mercado Livre experienced 260% growth in toy sales from 2018-2020, while Mexico's 87% of children/teens active on social media daily demonstrates how digital influence shapes purchasing decisions. These markets prioritize traditional outdoor and sports toys alongside growing demand for electric and tech toys.

Distribution evolution favors e-commerce across all regions. Amazon maintains 37.8% U.S. e-commerce market share, while Chinese platforms Alibaba, Tmall, and JD.com dominate their domestic market. Mobile commerce accounts for 80% of retail website visits globally, forcing traditional retailers to adopt omnichannel strategies or risk obsolescence.

Licensed content reaches unprecedented market dominance

Entertainment licensing has become the industry's most powerful growth driver, with licensed toys now representing 32-34% of the global toy market (a record high) and growing 8% in 2024. The top 5 toy companies generated $35.4 billion in licensed goods sold at retail, while 36% of licensors plan new toy line launches for 2024/25 and 50% forecast increased engagement. This dominance reflects fundamental shifts in how entertainment content is created, distributed, and monetized across multiple platforms.

Streaming platforms drive new licensing opportunities beyond traditional movie tie-ins. Netflix's "Wednesday" became a licensing success surpassing "Stranger Things", demonstrating how serialized content can generate sustained toy sales rather than short seasonal spikes. LEGO Fortnite attracted 87 million players, showing how physical toy brands can successfully integrate with digital gaming platforms to create hybrid experiences that serve both markets simultaneously.

Anime and manga franchises increasingly influence global toy trends. Properties like Naruto, Dragon Ball, and Yu-Gi-Oh! drive collectible markets worldwide, while Pokémon trading cards experienced 39% growth in 2025. Gaming IPs generate explosive growth, with Poppy Playtime merchandise sales up 350% in H1 2024. These properties demonstrate how content created for digital-native audiences can translate into highly successful physical product sales.

Cross-platform licensing strategies create multiple revenue streams from single properties. Disney partnerships with both Mattel and Hasbro for different product categories maximize market penetration, while Hasbro-Mattel collaboration products like Barbie Monopoly and Transformers UNO/Hot Wheels show how competitors can cooperate to expand market opportunities. Sports licensing partnerships, including Formula 1 with LEGO and Hot Wheels, tap into adult enthusiast markets willing to pay premium prices.

Regional content adaptation becomes increasingly important for global success. Localized content partnerships help international brands succeed in specific markets, while pop culture influence remains strongest in Asia-Pacific where domestic entertainment properties often outperform Western licenses. Companies succeeding globally must balance universal appeal with regional customization.

Supply chain diversification reshapes manufacturing landscape

Geopolitical tensions and supply chain vulnerabilities exposed by recent disruptions are driving fundamental changes in toy manufacturing and sourcing strategies. While China still manufactures 80%+ of the world's toys, major companies are actively diversifying, with some reducing China dependency from 96% to 45% over recent years. This strategic shift has positioned Vietnam as a leading alternative manufacturing hub, with the country's toy export value growing 47% year-over-year to reach $1.2 billion in 2024. This shift represents one of the most significant structural changes in the industry's modern history.

Supply chain challenges created immediate operational pressures in 2024. East Coast port strikes affected Q4 holiday inventory, while container shipping prices increased from $2,500 to $26,000+ during peak disruption periods. Raw material costs rose 15-20% for plastic resins, forcing companies to absorb costs or implement strategic price increases. These disruptions demonstrated the vulnerability of highly concentrated supply chains and accelerated diversification efforts.

Major companies are implementing regional manufacturing strategies, with Southeast Asia emerging as the primary beneficiary of this diversification trend. Vietnam, in particular, has attracted significant investment due to its competitive labor costs, improving infrastructure, and growing expertise in precision manufacturing. The country's Free Trade Agreements with major markets, including the EU-Vietnam Free Trade Agreement, provide additional cost advantages that make Vietnamese manufacturing increasingly attractive for toy companies seeking alternatives to traditional sourcing models. Supply chain regionalization moves production closer to end markets, reducing shipping costs and delivery times while providing greater flexibility to respond to local market demands. This trend benefits regions like Latin America, Southeast Asia, and Eastern Europe that can offer competitive manufacturing costs with reduced geopolitical risk.

Technology innovation supports supply chain transformation, with Vietnam leading Southeast Asia in adopting advanced manufacturing techniques, automation, and quality control systems that meet international toy safety standards. The country's investment in modern manufacturing infrastructure has enabled production capabilities previously concentrated in China, while specialized sourcing companies have emerged to help international brands navigate the transition to Vietnamese suppliers and establish reliable local partnerships. Advanced manufacturing techniques, automation, and quality control systems enable production in regions previously considered unsuitable for toy manufacturing. Sustainable sourcing requirements also drive geographic diversification as companies seek suppliers meeting environmental standards while reducing transportation emissions.

Investment in local manufacturing capabilities represents a long-term strategic shift, with companies building regional design and development centers, local supplier relationships, and distribution networks that can serve multiple markets. Successful implementation of these diversification strategies often requires specialized knowledge of local manufacturing capabilities, regulatory environments, and supplier networks – expertise that has become critical for brands seeking to establish reliable production outside traditional markets. This localization strategy provides competitive advantages through faster time-to-market, reduced inventory requirements, and greater responsiveness to regional preferences.

Category evolution reveals changing play patterns

Traditional toy categories are experiencing varying performance based on their ability to adapt to technological integration, educational demands, and demographic changes. Building sets lead growth with 14% increase in 2024, marking their fifth consecutive year of expansion driven by both child educational value and adult collector interest. LEGO's 13% revenue growth demonstrates how companies successfully serving multiple age groups can dramatically outperform category averages.

Educational and STEM toys show explosive expansion, growing from $5.5 billion in 2023 to projected $13.1 billion by 2032 (9.1% CAGR). Engineering toys represent 38% of the STEM market, while the 8-12 age segment comprises 41% of market share with 14.7% CAGR growth. Parents spending $1,200 annually on educational materials and homeschooling trends drive sustained demand for learning-focused products.

Smart toys and electronics demonstrate massive potential with markets reaching $19.3 billion in 2024 and projected 14.4% CAGR growth. School-age children (6-12) generate 47% of segment revenue, while educational robots show 13.2% CAGR growth. However, this category faces challenges from rapid obsolescence, high R&D costs, and privacy concerns that require careful navigation.

Action figures and collectibles benefit from demographic expansion, with collectibles growing 5% in 2024 and adults comprising 30% of the market. Funko Pop's rise to #1 action figure manufacturer in the EU with 13% growth in France exemplifies how collectible culture drives sustained purchasing behavior across age groups. Premium collector figures commanding $50-200+ price points create high-margin opportunities for companies serving enthusiast markets.

Traditional categories face mixed performance. Dolls and fashion toys maintain strong positions through inclusivity and diversity initiatives, while board games and puzzles grow at 5.5% CAGR to projected $20.6 billion by 2034 as families seek screen time alternatives. Outdoor and active play toys represent the largest category by volume (21.9% of market) but face seasonal limitations and competition from digital entertainment.

So now what?

The global toy industry's transformation in 2024-2025 represents a fundamental evolution from traditional child-focused play to multi-generational, technology-enhanced, environmentally conscious experiences. Adult consumers now drive 30% of global revenue while AI integration becomes standard and sustainability requirements reshape manufacturing to demonstrate how successfully the industry has adapted to changing demographics and values. Companies like LEGO posting record 13% growth and Mattel partnering with OpenAI for next-generation products show how market leaders are thriving through innovation rather than merely surviving disruption.

The industry's resilience through supply chain challenges, regulatory changes, and economic uncertainty while simultaneously expanding into new demographics and technologies positions it strongly for continued growth. Licensed content dominance at 34% market share, smart toys projected to reach $55.14 billion by 2032, and sustainable toys growing at 12.5% CAGR create multiple pathways for expansion beyond traditional play patterns.

Most significantly, the toy industry's evolution reflects broader societal changes around lifelong learning, environmental consciousness, technological integration, and the recognition that play serves psychological and developmental needs across all ages. Companies successfully navigating this transformation by serving both nostalgic adults and tech-savvy children while meeting sustainability requirements will likely define the industry's next decade of growth.

Realizing these opportunities requires strategic implementation, particularly in supply chain diversification and regional manufacturing partnerships. As companies seek to reduce China dependency while maintaining quality and cost efficiency, specialized sourcing expertise in emerging manufacturing hubs becomes critical for successful market entry. Vietnam's emergence as a leading alternative manufacturing destination, combined with Southeast Asia's growing capabilities in precision manufacturing and sustainability compliance, presents significant opportunities for brands ready to diversify their production strategies.

LEGO's monumental $1.3 billion investment in Vietnam exemplifies this strategic shift, with the Danish toymaker inaugurating its sixth global factory in Binh Duong province in April 2025. The state-of-the-art facility, LEGO's first carbon-neutral factory and largest overseas investment, employs 4,000 people and runs entirely on renewable energy through 12,400 rooftop solar panels and adjacent battery storage systems. Located just outside Ho Chi Minh City and spanning 62 soccer pitches, the facility demonstrates how major toy companies are prioritizing Vietnam's manufacturing capabilities, skilled workforce, and sustainability infrastructure to reduce supply chain risks while maintaining the precision manufacturing standards required for toys built to "the accuracy of 1/10th of a hair's width”.

Companies seeking to navigate these opportunities and explore Vietnam's manufacturing capabilities as part of their diversification strategy can access specialized guidance on Southeast Asian toy manufacturing and sourcing solutions by contacting info@play-trail.com for strategic consultation on regional production partnerships.