Toy and Game Market
The future of the global toy and game market looks promising with opportunities in the offline store and online store markets. The global toy and game market is expected to reach an estimated $362.6 billion by 2035 from $303.5 billion in 2027 with a CAGR of 2.2% from 2027 to 2035. The major drivers for this market are the increasing demand for educational toys, the rising popularity of interactive games, and the growing interest in licensed character toys.
- Lucintel forecasts that, within the product type category, video games is expected to witness higher growth over the forecast period due to increased interest in video game consoles and mobile games.
- Within the distribution channel category, online stores is expected to witness the highest growth over the forecast period due to varied game catalogs delivered to customers' doors.
- In terms of regions, APAC is expected to witness the highest growth over the forecast period due to a young, large, and quickly growing market, with a passionate user base for smartphone games.
Emerging Trends in Toy and Game Market
The entire toy and game market is rapidly changing. Between 2025 and 2027, a focus will be on safety and sustainability of products. While this occurs, manufacturers will adjust their products to ensure they meet the demands of various markets. According to Lucintel, in the future, the market will be segmented by a greater variety of factors including age, price, and the channel through which the goods are distributed.
- Sustainability: In 2025, changes in the sustainability and safety of toys and games continued. The EU and other regions focused on design rules to reduce the impact of toys and games on the environment. Manufacturers changed their focus on the safety and sustainability of their products to reduce the carbon footprint of their products. Rules and regulations will drive these changes and increase costs to manufacturers.
- Digital Play: In 2025, Hasbro and Mattel integrated digital play with their physical products. A focus on digital play will require manufacturing changes, and increase the cost of toys and games. Manufacturers should expect demand to increase for toys that integrate digital play.
- Premiumization: In 2025, a focus on fewer, high end, and special edition products (such as Lego) continued. More manufacturers focused on special and premium products to improve profitability. Expect special editions and high end products to continue.
- Automation: The cost of labor, and regulations, increased in 2025, requiring manufacturers to automate. Continue to expect manufacturing and product changes towards automation.
- Regional Supply Chains: Uncertain tariff situations and freight disruption in 2025 will lead suppliers to reject risky single country supply strategies. Renewed interest in production in North America and Europe is expected. A sourcing strategy that utilizes two or three regions will be adopted, and will help in reducing risk of supply chain disruption and will allow companies to create and distribute products that are most appropriate to be sold in different regions. This strategy will be in place from 2025 to 2030.
From 2025 to 2027, companies will have to integrate better play value into their toys and be mindful of pricing in order to thrive. Integrating better environmental initiatives will also help. Continuing efforts to merge positive supply and demand will help sustain growth and capture repeat consumer purchasing. Failure to implement these strategies will result in increased disposal of unsold inventory.
Recent Developments in the Toy and Game Market
The market for toys and games is expected to experience significant M&A and strategic activity for the years 2025 to 2027. Investment in local production and direct to consumer (D2C) capacities is likely to increase, while the toy and game industry is expected to remain fragmented, and selective in nature, with preference toward higher end toys and games.
- Investment: In June 2025, LEGO started construction on a second production plant in the US, with anticipated completion in 2027. The plant, located closer to LEGO's consumer base, is expected to positively impact the supply time and volume for LEGO's North American operations.
- Product Innovation: The June 2025 release of Nintendo Switch 2 and its strong market introduction with 3.5 million units sold, is expected to motivate the industry to further integrate and develop add-on and flexible hybrid hardware and software solutions.
- Licensing: In February 2025, Mattel and Disney signed a licensing agreement granting Mattel the right to produce and develop toys and games based on Disney's movies and TV shows. The agreement demonstrates the industry trend toward greater consolidation of the media and entertainment industry and the value of owning and licensing a prominent media franchise.
- Portfolio Acquisition: Spin Master's purchase of HEXBUG from Innovation First International in March 2025, meant that HEXBUG's robotics toys would be part of Spin Master's activities, games, and toys. The trend of consolidation in the toy industry means Spin Master can leverage HEXBUG and its products against rival offerings in the marketplace.
- Retail Partnership: The partnership between Hasbro and Netflix in January 2025, in the creation of toys and games based on Netflix properties, shows how the toy industry perceives the marketing potential of individual Netflix shows and movies. Likewise, the toy industry expects design, manufacturing, and distribution lead times to compress.
Miscellaneous capital has shifted to incorporate interactive, physical playthings. The same uncertainty in the global logistics network that recently disrupted the toy industry means that manufacturers will need to ensure that their inventories of safe, reliable, and consumable goods are positioned near the point of sale, particularly over the next three to five years.
Strategic Growth Opportunities in the Toy and Game Market
The market for toys and games is developing as parental preferences for playtime activities that divert children from screens, as well as retail preferences for quick turns in inventory, continue to grow. Forecasts for the years 2024 to 2026 consider the effects of changing populations as well as the rise of direct to consumer (D2C) commerce and facilitate the evaluation of play concerning learnings in various fields including STEM, and psychomotor development. Wellness and mindfulness toys are expected to gain traction as the preference for toys that promote and enhance mental wellbeing continues.
- Play To Learn: The request for educational toys should benefit from the $1.4 billion awarded by the United States Department of Education's 2025 Education Technology grants. Additionally, the American Recovery Plan (ARP) Act of 2021 earmarked funds to help State Educational Agencies (SEAs) and Local Educational Agencies (LEAs) make improvements to existing instructional materials and student assessment systems.
- Manufacturing: Changes in consumer expectations toward more tailored and diverse offerings, shortened production and launch lead times, and reduced inventory will contribute to the adoption of more individualized production and greater use of rapid prototyping. These trends will continue to benefit Mattel's Barbie dolls Creations platform.
- Sustainable Materials: Lego reported in April 2025 that 52% of the materials by weight that they purchase is from renewable or recycled sources. This number will continue to grow as packaging becomes more sustainable and lower-impact materials are used in product development.
- Adult Customers: It has been reported that customers in the collection category (adults) are less seasonal and more stable than the child collection (birthday) category. The continued popularity of the Pokemon franchise is evidence to support a stable and growing adult collection category.
- Aftermarket Services: The extension of a product's useful life through aftermarket services (repair, trade-in, resale) creates a stable, post-sale revenue stream. The Ecodesign legislation, enacted by the EU in June 2025, establishes minimum standards for the design of durability of various consumer products. This will encourage manufacturers to create product lines to support service and maintenance in order to extend the useful life of the product and reduce waste.
There is potential for a strong, long-term financial performance, if product development focuses on fulfilling customers' emotional needs (e.g. potential customers, educational products) in addition to creating a product line that can be manufactured using varied and sustainable raw materials. Investors should consider the average order value, number of purchases, and rate of return when assessing a product's longevity.
Toy and Game Market Drivers and Challenges
The consumption-driven nature of the toy and game industry presents challenges and opportunities due to factors such as digital and economic conditions, sustainability and safety regulations. Recently, the industry has experienced increased demand for physical toys and games and continues to benefit from trends such as online shopping and the collectibles and games craze. While these create opportunities, they also add pressure on manufacturers to ensure toys and games are safe, of good quality, and sold at an affordable price. Continuous investment in research and development is essential for manufacturers to meet the seasonal demand, assure quality and safety, and keep prices low.
The factors responsible for driving this market include:
- Increasing Investment in R&D: Leading toy and game players are channeling significant investment in research and development, product design, and differentiation. Continuous Innovation has enabled industry players to grow their market shares and extend their competitive edges.
- Digital and Interactive Innovation: Digital and interactive play is dominating the toy and game market. At the 2025 CES, many of the interactive consumer products on display featured ways to use voice commands and other software to enhance user engagement and create a more interactive experience. Manufacturers are combining physical products with digital and variable content to create a more personalized experience. In the next few years, the toy and game market will see plenty of new and different products, and companies will use the toys and games to collect user data. Companies will create ways to extend play and use the data to find other ways to make a profit beyond the sale of the game or toy.
- Rise of E-Commerce and Omnichannel Retail: The way consumers buy and sell products is evolving. With the growth of e-commerce and online shopping, manufacturers can create and sell products without having to rely on physical retail space. During the 2025 holiday season, retailers who created an online presence, or who sold their products through online and social platforms, earned a greater share of the seasonal sales. There will be more growth in the market during the next several years as retailers and manufacturers focus on creating a seamless and integrated shopping experience across multiple online and retail platforms.
- Sustainability and Safer Materials: There is a push towards packing and products that are more recyclable, durable, and contain safer materials. The EU updated its toy safety framework in June 2025 to include more stringent control of chemicals in toys and required digital product information. The update created more transparency in the product safety and information framework. While it adds a greater compliance burden on companies, it presents an opportunity for companies to differentiate themselves from their competitors. The focus on sustainability will reward companies that work to decrease their environmental impact in ways that are measurable. During this time, companies should anticipate that their customers will base their purchasing decisions on a company's commitment to sustainability.
- Manufacturing and Product Innovation: There is a focus on increasing efficiency in manufacturing and product development. This has allowed companies to quickly bring new products to the market. Role-play and building toys, games and figurines are a few of the several products showcased at the 2025 London Toy Fair. Improvements in manufacturing have also allowed companies to produce smaller, more customized, and less wasteful products. This trend will continue for the next few years.
The challenges facing this market include:
- High Production and Input Costs: Continuous increases in the costs of plastics and other commodities, component shortages, labor, energy, and freight costs negatively affect bottom line profits. Uncertainty with respect to the cost and conditions of international transportation of goods remains for 2025. Strained supply and demand conditions create conditions ripe for manufacturers to pass along higher costs to customers. Alternatively, manufacturers may redesign their products to use less expensive, and potentially lower quality components. There are strategies to mitigate the costs of production and the effects of market conditions, but these strategies may ultimately diminish the attributes that consumers find important and desirable. Volatility in the market conditions is expected to continue, particularly for consumer products, and favorable conditions will exist for large and well-established competitors.
- Growing Complexity of Product Safety and Regulatory Requirements: Stringent new product safety regulations as well as new requirements for the use of and implementation of various digital technologies further increase the expense of bringing a product to market. The new requirements will also accelerate the need for supply chain transparency and data to support compliance. During the next several years the ability to effectively manage suppliers and comply with an ever-changing body of law will determine which products enter a given market, and the speed at which those products can be brought to market.
- Intense Competition and Volatility: The toy industry is notoriously competitive. There are countless ways to entertain kids outside of traditional toys including movies, TV shows, video games, apps, and more. Additionally, companies like Amazon and Walmart dominate the toy market by selling private label, low-cost toys. Established brands are struggling to compete. The Spielwarenmesse is the world's largest toy fair. The 2025 fair showcased an abundance of new toys and games. All of the innovation in the toy industry creates a saturated market. To capture and retain kids' attention, companies must be proactive, engagement-focused, and develop products quickly, especially in the face of declining interest. This is the focus of many industries.
There are many reasons the toy and game industry is thriving. Kids are more interested in learning and engaging with the world around them. Sustainability focuses on how products are made, packaged, and distributed. With digital play taking over, the future of the industry will be dominated by affordable, safe and quality products made with responsibly sourced and sustainable materials. Leading companies will successfully interpret consumer desires and needs, particularly concerning product differentiation.
List of Toy and Game Market Companies
Companies in the market compete on the basis of product quality offered. Major players in this market focus on expanding their manufacturing facilities, R&D investments, infrastructural development, and leverage integration opportunities across the value chain. Through these strategies toy and game market companies cater increasing demand, ensure competitive effectiveness, develop innovative products & technologies, reduce production costs, and expand their customer base. Some of the toy and game market companies profiled in this report include-
- Mattel Inc.
- Hasbro Inc.
- Funskool India Ltd.
- TOMY Company, Ltd.
- Spin Master Corp.
- Bandai Namco Holdings Inc.
- MGA Entertainment Inc.
- Funko Inc.
- VTech Holdings Ltd.
- Ravensburger AG
Toy and Game Market by Segment
The study includes a forecast for the global toy and game market by product type, category, age group, distribution channel, and region.
Toy and Game Market by Product Type [Value ($B) from 2019 to 2035]:
- Traditional Toys & Games
- Video Games
Toy and Game Market by Category [Value ($B) from 2019 to 2035]:
Toy and Game Market by Age Group [Value ($B) from 2019 to 2035]:
- Infant & Toddler (Below 2 Years)
- Children/Teenager (2-18 Years)
- Collectors & Adult (Above 18 Years)
Toy and Game Market by Distribution Channel [Value ($B) from 2019 to 2035]:
- Offline Stores
- Online Stores
Toy and Game Market by Region [Value ($B) from 2019 to 2035]:
- North America
- Europe
- Asia Pacific
- The Rest of the World
Country Wise Outlook for the Toy and Game Market
In the 2025-2027 outlook, government policies and investments in manufacturing drive changes in toy and game market systems, including localization and expansion of standards. According to Lucintel, strategic decisions including capacity and ownership, as well as technology and intellectual property, remain key competency levers for international markets.
- United States: Domestic investment and production of Mattel and Hasbro continued in 2025. Mattel focused on live and physical game shows, as well as classroom games and toys, and Hasbro expanded its digital game and application offerings. Both companies should be well-positioned for the next several years with improved design and production of their respective offerings.
- China: Guangdong, a major toy manufacturing region of China, invested in advanced manufacturing to enhance its existing production capability. Shantou's Chinghai district of Guangdong is home to more than 2,000 toy manufacturing companies.
- Germany: Toy fairs in Germany as well as regulations and enforcement of EU toy standards help ensure that toys manufactured in Europe meet the requisite safety standards.
- India: The Indian government's quality control processes to equate covered toys with the requirements of the Bureau of Indian Standards (BIS) continued in 2024. However, the local toy industry reported an increase in production and exports in 2024. Per the government data, the value of India's toy exports reached US$ 177 million in 2024. The focus on quality will provide reassurance to potential buyers and facilitate the establishment of toys manufacturing industries in the country.
- Japan: In 2024, the group consolidated businesses of Bandai Namco included 11,000 employees across various operations, and continued to invest in the integrated businesses of toys, games and entertainment. The companies will be positioned to launch higher-end products and increase monetization across different media. It is expected that the companies will launch new products in the next 3 to 5 years.
Features of the Global Toy and Game Market
- Market Size Estimates: toy and game market size estimation in terms of value ($B).
- Trend and Forecast Analysis: Market trends (2019 to 2026) and forecast (2027 to 2035) by various segments and regions.
- Segmentation Analysis: toy and game market size by various segments, such as by product type, category, age group, distribution channel, and region in terms of value ($B).
- Regional Analysis: toy and game market breakdown by North America, Europe, Asia Pacific, and Rest of the World.
- Growth Opportunities: Analysis of growth opportunities in different product types, category, age groups, distribution channels, and regions for the toy and game market.
- Strategic Analysis: This includes M&A, new product development, and competitive landscape of the toy and game market.
Analysis of competitive intensity of the industry based on Porter's Five Forces model.
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This report answers following 11 key questions:
- Q.1. What are some of the most promising, high-growth opportunities for the toy and game market by product type (traditional toys & games and video games), category (mass and premium), age group (infant & toddler (Below 2 Years), children/teenager (2-18 Years), and collectors & adult (Above 18 Years)), distribution channel (offline stores and online stores), and region (North America, Europe, Asia Pacific, and the Rest of the World)?
- Q.2. Which segments will grow at a faster pace and why?
- Q.3. Which region will grow at a faster pace and why?
- Q.4. What are the key factors affecting market dynamics? What are the key challenges and business risks in this market?
- Q.5. What are the business risks and competitive threats in this market?
- Q.6. What are the emerging trends in this market and the reasons behind them?
- Q.7. What are some of the changing demands of customers in the market?
- Q.8. What are the new developments in the market? Which companies are leading these developments?
- Q.9. Who are the major players in this market? What strategic initiatives are key players pursuing for business growth?
- Q.10. What are some of the competing products in this market and how big of a threat do they pose for loss of market share by material or product substitution?
- Q.11. What M&A activity has occurred in the last 7 years and what has its impact been on the industry?