Mattel announced a partnership with OpenAI on June 12, to create AI-powered toys and games. The first product from this collaboration is expected to launch later this year.

The company, known for brands like Barbie, Hot Wheels, and Uno, aims to develop AI-driven play experiences that prioritize innovation, privacy, and safety.

Mattel will also use OpenAI’s tools, including ChatGPT Enterprise, to improve its product development and internal processes.

Brad Lightcap, COO of OpenAI, said that this partnership enhances Mattel’s AI capabilities. It supports productivity and creativity within the business.

To adapt to slowing demand for traditional toys, Mattel has been diversifying its offerings through films, TV shows, and mobile games based on its iconic brands.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ AI toys represent a massive growth frontier amid toy industry headwinds

Mattel’s OpenAI partnership targets what could be the industry’s most promising growth segment, as economic uncertainties challenge traditional toy sales.

The global AI toy market is projected to grow from $42.15 billion in 2025 to $224.75 billion by 2034, representing a compound annual growth rate of 20.48%1.

This growth significantly outpaces the broader toy industry, which is expected to grow from $95 billion in 2019 to $120 billion by 20252.

With eight out of eleven toy supercategories posting dollar growth in early 2025 despite economic headwinds, the industry has demonstrated resilience, but manufacturers are increasingly looking to innovation to drive growth3.

AI technology enables toys to learn and adapt to children’s behaviors and preferences, creating personalized experiences that traditional toys cannot match. This innovation addresses both educational needs and entertainment value simultaneously4.

2️⃣ Mattel follows historical pattern of reinvention through technology

Mattel’s AI push represents the latest chapter in the company’s 80-year history of adapting to changing market conditions through strategic innovation.

Founded in 1945 producing picture frames and dollhouse furniture, Mattel pivoted to toys after the success of the Uke-a-Doodle in 1947, demonstrating an early willingness to follow market opportunities5.