Barbie maker Mattel teams with OpenAI to change future of play

Mattel (MAT) is teaming up with OpenAI to integrate the latter's artificial intelligence tools into its toys. The Toy Book editor in chief and The Toy Insider senior editor James Zahn speaks with Asking for a Trend's Julie Hyman about the progress of AI use in the toy industry, the opportunity this partnership presents for Mattel, and regulators' concerns around children's exposure to AI. To watch more expert insights and analysis on the latest market action, check out more Asking for a Trend here. Video Transcript 00:00 Speaker A Mattel, the maker of Barbie dolls and Hot Wheels cars is signing a deal with OpenAI to use its artificial intelligence tools to design its toys. For more on what that means for the industry, we're bringing in James Zahn, editor in chief at the Toy Book and senior editor at the Toy Insider.

James, good to see you. Um, and when I saw this news immediately I thought of you because I was curious to get your take on what this means and if this is going to be sort of the new normal for the toy industry. 00:42 James Zahn Hello, thanks for thinking of me with this. And yeah, AI has been a hot topic within the toy industry now for about three or four years. Mattel started dabbling in it a few years ago for some packaging and things.

They were using the Adobe suite of products at the time, but the OpenAI deal certainly raised a few eyebrows yesterday morning. 01:14 Speaker A And so, you know, have we seen in your view a successful marriage in any of the toy makers, either using generative AI to develop toys, or the toys sort of successfully incorporating AI elements? 01:49 James Zahn So I think you've probably seen some stuff that has used AI in the creative process and it just hasn't been out there as an advertised sort of thing. As far as a successful marriage on the consumer front, uh, in 2023 or so we saw a first wave, if you will, of AI enabled toys and those did not do very well. But what I think's happened now is that the technology has advanced so quickly and it's still, it's advancing as we're having this conversation. It continues to move.

I think that the deal with OpenAI really signals a huge leap forward for Mattel because the first major toy maker to sort of crack the code with incorporating AI not just in the development of their products, and when we think about play, not just toys and games, but the experience of play and what that could mean, it's it's all being reinvented. Whoever cracks that first, and maybe it's going to be Mattel here, they're going to be hailed as a pioneer because AI is not going away. It's here to stay. We need to learn to use it. 03:36 Speaker A So, you know, I don't know if our our puny human brains can can imagine, but like what are some possibilities of how we could see this play out? Like is it going to mean, you know, toy, the playing and toys are radically reinvented, does it mean new features, what should we be looking for? 04:16 James Zahn I have a variety of takes on this.

Uh, first, think about your core toys. Can Barbie talk to He-Man? Can Skeletor go out there and have an adventure with Polly Pocket and converse with them, not only themselves, but with the child, and can they do that in a safe manner? Can you have a Magic 8-Ball and instead of those few stock answers, can it do something that's more personalized? Uh, can you take a game like Uno and incorporate an AI player into it? There's a lot of potential and I also think too beyond the typical toys, games and experiences. There's also the live entertainment element like the LBE, the location-based experience. Can that somehow merge with the physical play experiences? And I think that's what we're going to see going forward because there's a lot of technology that the consumers don't really know about yet and it's moving so quickly. So I I have a really strong feeling that OpenAI and Mattel have something up their sleeves that they're not telling us yet.

06:00 Speaker A Oh, interesting. I don't know if it's Skeletor talking to Polly Pocket, but I eagerly await that day. Um, you sort of touched on this and that is the safety element, of course, right? Where you know, a lot of different states as well as on the federal level, they're trying to figure out how to regulate all of this, but it's really sensitive when it comes to kids, right? So, um, you know, there's obviously also potential safety issues if you've got these toys interacting with kids and you've got artificial intelligence. So, you know, I'm sure there are concerns in the industry and there's awareness and sensitivity to that issue. 07:01 James Zahn Absolutely.

There are a ton of concerns and a bunch of regulations and then of course there are new regulations that are going to have to be made because AI is sort of, as we love to say the wild west of the moment. And a few years ago, and if you back it up, maybe even a decade ago when the first Bluetooth enabled toys and Wi-Fi enabled toys came on board. Uh, there were concerns there. There were some security holes, some folks got into some trouble because of that and they had to go back to the drawing board. I expect AI is going to have that too, because some of the some of the toys we played with in 2023, when they were really just testing the market and these weren't major toy makers.

They were sort of the mid-tier, was testing the waters. There were a few that seemed very GPT driven and that sort of opened up some uh, icky possibilities, I guess you could say. But because we're talking about such a reputable company that has an 80-year legacy, which is Mattel, I really doubt that they're going to put their name on something that's not well thought, and some of the folks that are involved with this, you know, have a really strong track record. 09:17 Speaker A Right. 09:18 Speaker A Right.

09:20 Speaker A And a strong motivation to not screw it up. James, it's great to see you, have a good weekend. 09:25 James Zahn Absolutely. You too. 09:28 Speaker A Thank you.

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