Here is your reality check on the AI toys market

AI toys are moving fast, and so are the people trying to keep children safe.

We've found a lot of interesting signals. For example, in November 2025, FoloToy pulled its Kumma teddy bear from sale after a consumer group found it talking about sex and telling children where to find knives. A month later, Mattel said its first product with OpenAI would not come out that holiday season. And in September 2026, California's governor signed a law that bans toys with companion chatbots for children under 16, for four years starting in 2027. Demand is real, but toymakers now have to prove their toys are safe before they can sell them.

In this section, we look at why toymakers keep adding AI anyway, which kinds of toys face the most pressure, and what the new rules mean for companies selling in the US and beyond.

Parents want toys that teach and entertain without another screen. They also want to know what the toy says, and where the recordings go.

We compare six kinds of AI toy companies, from talking plush toys and dolls to learning companions, robot pets, coding kits, game devices and storytelling toys. Their buyers range from parents and grandparents to schools and toy retailers. For each, we rank the biggest pains, like screen time, toys that bore kids within weeks, unsafe answers and unclear data practices.

This shows what parents will actually pay for, and what makes them return a toy after the holidays.

One-time hardware sales, monthly subscriptions for new content, licensed characters, sales to schools and deals to put AI inside big toy brands: AI toy companies make money in several ways.

We compare who pays and what it costs. A toy sold once must cover the hardware, the retailer's cut and years of AI costs. A subscription brings steady revenue, but parents cancel when kids lose interest. Licensed characters sell more toys but take a share of each sale. And every conversation costs money to run, long after the toy leaves the shelf.

You'll see which models can pay for the AI behind the toy, and which ones lose money once the holiday rush ends.

A forecast is just a number until you know what moves it. Here are the forces behind AI toys.

Some drivers are plain to see: cheaper chips and models, parents looking for screen-free play, and big toy brands adding AI to characters kids already love. Others build on each other. Toys that remember a child's name and favorite games keep kids playing longer. More playtime gives makers a reason to sell new stories and content. And clear safety rules can make retailers and parents more willing to buy.

Before building or investing, you should know what makes parents trust a talking toy, and what keeps children playing with it months after it is unwrapped.

Curio and FoloToy make most of the headlines in AI toys, for better and for worse, but they're only a small part of the market.

Many interesting players stay out of the spotlight. Some only make an AI box that clips onto a child's own teddy bear. Others build robot pets that learn tricks, storytelling toys that invent a new bedtime story each night, or the chips and software that big toy brands put inside their characters.

They're hard to spot because many sell mostly in China or through online stores, not big toy chains. Others build the AI behind famous characters, so their name never appears on the box.

Below, you'll find the market grids and ecosystem maps we've built to show who makes what, from the chips to the characters, and where new players are getting in.

Haivivi, KEYi Technology, Miko… a few AI toy makers already sell in real numbers.

Haivivi sold more than 200,000 BubblePal pendants, which make a child's existing plush toy talk. KEYi Technology has sold over 90,000 Loona robot pets worldwide. Miko sells companion robots in more than 140 countries and adds a paid subscription for content. Each found a format parents will buy, though none has yet shown that kids keep playing for years, or that the business stays profitable once AI costs are paid.

We'll look at how these companies chose their first format, earned parents' trust, and kept kids coming back after the novelty wore off.