Toyland Meets TV-Land

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You're the parent of a six year-old who has been nagging you relentlessly for the latest hot toy. You weaken. You give in. As you open up your wallet, you're consoled by the thought that this thing will get your kid away from the TV for a while. Or maybe not.
Brace yourself for the latest assault from Toyland: gizmos that interact with the TV. When Batman fires up his Batmobile on a new WB cartoon show debuting this fall, little Tommy's toy version on your living-room floor just might rev its engine and turn on its headlights. And that's not all. Armed with a sort of Bat-PDA, kids will also be able to retrieve secret information about the show beamed to them from the screen, including rap sheets on the villains and details on the Caped Crusader's choice of gadgets.
CONNECT OR DIE. Batman is going to have lots of company. From Barbie dolls to Etch A Sketch, a myriad of TV- and DVD-savvy toys and games are about to make their debut at the American International Toy Fair, the giant annual trade show that begins on Feb. 15 in New York. The $21 billion toy industry has a lot riding on the cute little gadgets. It just rang up a third consecutive year of flat sales, according to market researcher NPD Group Inc.
A big reason for the lack of growth: the popularity of video games from Sony (SNE), Nintendo (NTDOY), and Microsoft (MSFT). Those companies are siphoning off a big chunk of the change that parents once spent on action figures and dolls. So toymakers have decided their best strategy is to liven up old standbys by linking them to electronic content on TV and DVDs. "If you don't have this kind of hook, you are going to get your lunch eaten," says Chris Byrne, a New York-based toy-industry consultant.
The Batman technology is the creation of onetime TV-station owner and toy promoter Edward J. Koplar, now president and CEO of St. Louis-based Veil Interactive Technologies. His company developed a process for encoding special signals into TV broadcasts without harming the picture quality. A Batman action figure, together with his famous Batmobile, will come equipped with optical sensors that can pick up the hidden signals as long as they're within sight of the screen. The toys will be manufactured by Mattel (MAT). Warner Bros. Television owns the license and will get a royalty on all sales.
PLAY ALONG AT HOME. Mattel will also be giving Barbie a high-tech lift, rolling out interactive toys to go along with its latest animated Barbie DVD, The Princess and the Pauper. Thanks to an optical signal, a stuffed cat, Serafina, will sing and make cat-like motions along with the movie. Two Barbie dolls based on characters in the movie will sing songs from the soundtrack in harmony, picking up audio cues from each other.
Not to be outdone, Hasbro (HAS) has a $29 Wheel of Fortune game coming out this year. By receiving broadcast signals from the show, up to three people at home will be able to play along with the real-life contestants on TV. And longtime niche player Ohio Art (OAR) is rolling out a version of its old standby Etch A Sketch called ETO. It connects to the TV, allowing budding van Goghs to show off their doodling on the tube -- in color, and with accompanying sound effects.
The new Etch A Sketch is an example of growing toy category called plug and play. Toymakers connect their contraptions to the TV through the set's standard audio/visual jacks. Toymaker Jakks Pacific has been doing a booming business re-releasing classic video games like Pac Man and Pong through its TV Games toy line. Multiple games are stored on a $20 box with a built-in joystick.
EARLIER FLOPS. Electronic toy specialist Vtech is releasing a line of consoles called V.Smile that connect to the TV. Kids will be able to play educational games built around well-known characters like the Lion King and Winnie the Pooh by inserting $20 "Smartridges" into the $60 consoles.
Will such gimmicks goose sales? The toy industry has tried such products before. Mattel had a line of interactive toys tied to a 1987 TV show called Captain Power and the Soldiers of the Future. It was canceled after one season. Likewise, a 1991 Toby the Terrier doll that picked up signals from videotapes bombed because of its high price and limited vocabulary. "There have been many examples of high-tech applications that have marveled adults but bored kids," says Bruce Stein, a former Mattel executive who now produces movies and TV shows in Los Angeles.
Maybe so. But toymakers are betting that technology has both improved and come down in price enough to make this new generation of interactive characters and board games a hit. So, parents, load up on batteries -- and earplugs. Toys and TVs threaten to become intertwined as never before.