Smart toys bring opportunities and privacy concerns to play

By Stewart Rogers Stewart Rogers has been verified by Muck Rack's editorial team
Published on March 7, 2019

Forget the internet of things. The IoT you want to be thinking about is the internet of toys.

Depending on which research paper you read, the smart toys market is exploding, with sales expected to reach almost $70 billion by 2026.

But the industry has also been plagued with security and privacy concerns, including MiSafe’s smartwatch which was found to be easy to hack, revealing unencrypted data including the child’s name, weight, date of birth, and the parent’s phone number.

I spoke to Just AI UK CEO Nastasya Savina about the current smart toys market, the integration of AI and conversational user interfaces in toys, and what is coming next.

The first thing to note is that the smart toys market while enjoying hockey-stick growth now, is not new.

“Smart toys are interactive devices with their ‘own intelligence by virtue of onboard electronics’ according to Wikipedia,” Savina said. “The first toys were launched more than two decades ago, and since then a generation of kids have enjoyed a variety of devices from Tamagotchi, radio-controlled toy trucks, gamepads, walkie-talkies, and programmable robots.”

Today’s smart toys, however, are taking children’s entertainment and education to new levels, thanks to speech recognition, natural language processing, and natural language understanding.

“The recent progress of conversational AI technologies gave a boost to the kind of AI-enhanced smart toys that can talk using natural language, such as a smart speaker,” Savina said. “Such toys are great at entertaining, educating, and training children, particularly in STEM subjects. Even though this segment is just a few years old because the core technologies achieved maturity recently, it has already captured about a third of the whole $4.2 billion smart toys market.”

It makes sense for toys to use voice interfaces. It saves space and allows toy designers to focus on delivering a fun experience, rather than coming up with simple user interfaces that, invariably, will compromise the design of the product.

“I firmly believe that conversational smart toys will be the hottest market segment to watch,” Savina said. “Voice interfaces have powerful appeal and this is the reason for the explosive growth in the adult smart speaker market. It is the fastest growing segment of consumer electronics in history with more than 100 million devices distributed by the end of 2018 just in less than four years.”

But voice interfaces have been tried before, and without a great deal of success.

“Looking back, in 2015 Mattel launched the ‘Hello Barbie’ talking doll,” Savina said. “It wasn’t commercially successful. Probably this cooled down the enthusiasm for voice-enabled toys in Western locations for a while. However, as we in Just AI can see, their Asian colleagues are launching conversational smart toys very actively, particularly in the last two years. According to our Chinese partners, about 20 million devices have been distributed in Asia. Some of these devices are simple, but they understand natural language, and are able to talk.”

Just AI was the first company to launch a localized smart toy — Emelya — in Russia in 2017.

“Emelya’s skills were developed in collaboration with child psychologists and educational consultants,” Savina said. “So, as a result, it can support a conversation with a child as well as teach, play, tell jokes, recite poems or read fairy tales. Now there are more examples of Russian-based voice-enabled toys, including Mishka AI, the talking teddy.”

This year will see a huge increase in the number of smart toys that are able to sustain conversations with children for the purposes of education and entertainment, with more internet-connected toys arriving next year one the big brands catch on.

“We believe that in 2019 we will witness many pioneer brands and startups that will launch new conversational AI toys in western markets,” Savina said. “We expect that the large toy brands will arrive in the market only by 2020-2021.  When they launch their projects it will be a strong boost in helping to develop global industry standards for safety, security and data processing.”

That’s important because stories of security and privacy issues appear almost every month, and if there’s one class of data or security that we’re all deeply interested in, it is the protection of children.

“Children are the most precious thing we have,” Savina said. “Smart toy developers understand that very well. That’s why when launching Emelya we involved a team of children development experts, phycologists and education consultants to make sure the toy will be beneficial and will do no harm. Technology-wise, we accepted many limitations, including immediate deleting of all logs and data, collected through the cloud for voice processing.”

It will take some time, as with any new class of product or service, to establish rules, regulations, best practices, and more. But it needs to happen, or consumers will lose trust in these devices.

“Since the industry is still very young, there’s no official body, overseeing conversational toy certification and technology audit and control,” Savina said. “I believe that this is a fantastic opportunity for large toy brands to lead this project. Living in the 21st century, our kids are exposed to the benefits and risks of technology — they use smartphones and computers, browse the web and YouTube. Luckily, when using smart toys, kids communicate with a closed IT system. Every smart toy is based upon a special personal assistant, operating in a secure closed environment, therefore the risks are much lower than giving a kid a phone, tablet or a computer.”

Savina offers a simple and effective solution to the problem until that day comes.

“I would advise any concerned parent to read about a conversational toy and developer company in advance, and play with a toy before offering it to a child,” Savina said. “Therefore companies, entering this segment must be ready to address parent’ concerns and make sure that the toy is safe and suitable for children.”

So what’s next for Just AI?

“Just AI develops a wide range of conversational AI solutions, based on the proprietary natural language understanding engine,” Savina said. “Our platforms for chatbot and voice skill creation attract thousands of developers. One of the most important directions for the company is our solutions for conversational smart toys. For example, Aimybox & Aimylogic — an end-to-end software and content package for smart toys — presented at CES in Las Vegas earlier this year drew a lot of interest from international conversational toy developers. We hope that this will result in a few device launches later this year. With this experience and knowledge, we aim to approach large toy brands, when they are ready to enter the conversational toy market in a year or so.”

By Stewart Rogers Stewart Rogers has been verified by Muck Rack's editorial team

Journalist verified by Muck Rack verified

Stewart Rogers is a Senior Editor at Grit Daily. He has over 25 years of experience in sales, marketing, managing, and mentoring in tech. He is a journalist, author, and speaker on AI, AR/VR, blockchain, and other emerging technology industries. A former Analyst-at-large VentureBeat, Rogers keynotes on mental health in the tech industry around the world. Prior to VentureBeat, Rogers ran a number of successful software companies and held global roles in sales and marketing for businesses in the U.S., Canada, Australia, and the U.K.A digital nomad with no fixed abode, Rogers emcees major tech events online and across the globe and is a co-founder at Badass Empire, a startup that helps digital professionals tap into their inner badass, in addition to being Editor-in-Chief at Dataconomy, a publication and community focused on data science, AI, machine learning, and other related topics.

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