Talking teddy bears highlight the challenges of AI toys

Teddy bears have come a long way. Over 120 years after the iconic children’s toy first hit shelves, they can now chat with kids in real time thanks to AI. But in November, one went so far off-script that its maker had to pull it from the shelves.

The troubled bear, named Kumma, was built by China-based FoloToy. Researchers from the US Public Interest Research Group Education Fund reported that the toy could discuss sexually explicit topics and offer questionable advice to children during testing.

FoloToy has since resumed sales of the toy after expanding its child-safety guardrails. The company declined to comment for this story.

Seemingly simple toys can now talk to children thanks to LLMs / Photo credit: Jelena Stojancevic / Shutterstock

The incident reflects a broader tension in the AI toys segment. The sector is projected to reach US$14 billion by 2030, yet it is increasingly facing scrutiny from consumers over safety concerns.

The US is the biggest market for the industry, and insiders that Tech in Asia spoke to say that AI toys have a limited presence in Asian markets. This is partly because Asian toy companies often test new products in the US first, though experts believe there will be broader adoption as prices fall and products prove themselves abroad.

G-Jay Yong, co-founder of Singapore-based kidtech startup myFirst, says that the average price for an AI toy has dropped from about US$100 to US$10 within eight months largely thanks to mass production in China. In October, MIT Technology Review reported that there were over 1,500 registered AI toy companies in China.

ChatGPT in a box?

So what is an AI toy exactly?

“The classification of an AI toy right now is really just a speaker and a Wi-Fi module that links to the cloud,” Yong says.

In China, toy companies can turn their standard plushies into AI-enabled ones by fitting in a chip module that costs as little as 20 yuan (US$2.84), according to a report by Yicai Global.

Many companies are simply integrating LLMs, such as those created by OpenAI and DeepSeek, and calling it a day, Yong adds.

If you take GPT-5 and use it in a product, your product by definition is not for children under 13.

Hai Ta, the CEO of AI firm Olli, says that ideally, AI toys should involve a combination of voice, personality, and personalization.

“So they’re not just interactive, but more like a companionship. That’s why the bar for safety and privacy has to be higher than typical general chatbots,” he adds.

Guardrails or fail tales?

Save Asia for later