Teddy Ruxpin American International Toy Fair 2017 New York
The new Teddy Ruxpin by Wicked Cool Toys is displayed during the American International Toy Fair on February 18, 2017, in New York.Rebecca Greenfield for Fortune
Teddy Ruxpin American International Toy Fair 2017 New York
American International Toy Fair
Passing Power Rangers
Blankie Tails booth
Powerpuff Girls and an American International Toy Fair attendee
Hansa Toys booth
Bananagram emerging from costumed character changing area. American International Toy Fair 2017 New York
Shibajuku Girls booth
Minions dance party
Peppa Pig
Geoworld booth at the American International Toy Fair
American International Toy Fair 2017 New York Hot Wheels
Guardians of the Galaxy merchandise at the Jakks Pacific booth
American Girl's new boy doll at the Mattel showroom
Imagine Toy Company booth
Star Wars Rogue One Hot Wheels at the Mattel showroom American International Toy Fair 2017 New York
B&D Group booth
Lego Batman merchandise at the Jakks Pacific booth
Barbie hologram toy at the Mattel showroom American International Toy Fair 2017 New York
Mystery Pack 'collectibles' at the Jakks Pacific booth
Aristotle baby monitor which implements AI engines at the Mattel showroom
Ty Beanie Boos at the Ty exhibit
Justice League Elite-Tek Batmobile at the Mattel showroom- features smoke release  exhaust pipe, moving missiles on hood of car, roaring engine sounds, and armored up wheels at the Mattel showroom
Smurfs collectibles at the Jakks Pacific booth
DC Comics Madame Alexander dolls American International Toy Fair 2017 New York
Gift 'Ems collectibles at the Jakks Pacific booth
Trumpism randomizer mask generates a Trump-like phrase based on key words like bigly, loser, or wall, still under development by Redwood Ventures Ltd American International Toy Fair 2017 New York
Drone-hunting challenge at the Skyrocket Toys booth
collectibles at the Excell Brands booth
Beauty and the Beast merchandise at the Jakks Pacific booth
Captain America in Legos American International Toy Fair 2017 New York
Splashlings collectibles
Pangea brands booth
The new Teddy Ruxpin by Wicked Cool Toys is displayed during the American International Toy Fair on February 18, 2017, i
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Rebecca Greenfield for Fortune
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How Tech and Gender Inclusivity Are Propelling the Toy Industry

Feb 23, 2017

The toy aisle is one of the happiest places in the world of retail.

At a time when restaurants are struggling with weak traffic due to high prices, department store sales are sputtering because of changing shopping behaviors, and apparel sales are being upended by cheap fast fashion, toy makers like Hasbro (has), Mattel (mat), and Lego are posting several strong years of sales. Experts say players big and small have been particularly adept at innovating, adding new twists to older brands and also coming up with new properties that are resonating with kids.

The industry met this month in New York City to pitch their newest toy ideas for 2017 at a toy fair held at the the massive Javits Center. Fortune got a peak at what many of the major players are planning for retailers like Toys 'R' Us and Walmart (wmt). We've identified four trends kids and their parents should keep an eye on.

Hollywood Halo

Blockbuster films have always been a big motivating factor that drives children and their parents to the toy aisle. In recent years, the industry has greatly benefited from a steady pace of releases from Walt Disney's (dis) Star Wars franchise—one of the biggest toy properties that is seeing renewed interest thanks to new movies. 2017 bodes well for the industry from a film perspective, with about 20 films to be released with ties to the toy aisle. "It is shocking how many films there are this year," said Jim Silver, CEO of toy review site TTPM.com.

Hasbro has toys planned for six of those major films, while Lego has ties to 10 and Jakks Pacific (jakk) well over a dozen. All three of those toy makers have licenses for the biggest film of them all from: Star Wars: The Last Jedi, which will be released in December. Hasbro and Lego will also benefit from their own movie releases in 2017. Hasbro has two films coming out based on the toy maker's own franchise properties, Transformers: The Last Knight and My Little Pony: The Movie. Lego has The Lego Batman Movie—already a strong performer at the box office—and The Lego Ninjago Movie in September.

"It is a very robust film slate," said Hasbro President John Frascotti. He added that in the past several years, toys tied to films have outpaced those that are not based on hot movie properties. "The overall industry is growing in toys, but movie-based properties have grown at a robust pace, while non-movie toys are flat."

Gender Inclusivity

Mattel, Hasbro and Lego have all embraced the theme of gender inclusivity—essentially creating and marketing toys with both genders in mind, rather than dividing the toy space into pink and blue aisles. Executives say this is a sign of the times, as Millennial parents in particular don't want their children to learn stereotypical gender habits.

Lego got some criticism when it launched a girl-focused Lego Friends line that was full of pink and purple bricks and girly themes that some bloggers and child development experts lamented was too gendered. But Lego said that the line was an entry point to get more girls interested in the toy maker's construction sets, and today, it is seeing girls buy more kits that would have typically been boy focused, like sets made for the Lego Batman film.

Hollywood is also adding more female characters to lead roles, and that's helping as well. "The folks at Disney are coming up with a formula that is more gender inclusive when it comes to the starring roles," says Skip Kodak, who is the head of LEGO Systems. "We have an opportunity to bring that to life in Lego play."

Dolls have been historically marketed to girls but even that category is seeing a revolution. Mattel's American Girl brand added the first boy character in the brand's 31-year history. Hasbro's newest Baby Alive doll now says "Mommy" or "Daddy" for the first time—before only "Mommy" was an option. And when Mattel added DC Girls-based cars to the Hot Wheels set, it purposely made the packaging gender neutral featuring blues and reds. In the past, the packaging would have almost certainly been pink.

"We want to be inclusive in our approach across gender and ethnicity," said Frascotti. "Instead of thinking, that's a boy brand or a girl brand, we see them as dual-gender." He said Star Wars, My Little Pony, Transformers—all of them have fans that don't fall into the legacy gender splits that occurred when those brands were launched. "Our approach is we build brands for consumers," he said.

Toys With Tech

When toy makers first understood that mobile devices were a threat, they rushed to link tablets to board games, dolls, and pretty much every other toy imaginable. Most of those early efforts weren't well received.

But this year, toy makers proved that they finally have a firmer handle on how and when to incorporate tech into a toy. Some of the toys that seemed to do this well include Spin Master's interactive Luvabella baby doll, Hasbro's bluetooth-connected Furreal motorized pet, Barbie's futuristic hologram Barbie, and Lego's app-based coding playset. Mattel also debuted a "smart" baby monitor earlier this year at CES. Wicked Toys is bringing back the classic 80s toy Teddy Ruxpin—which originally 'read' stories using a cassette tape—this time with app-powered storytelling capabilities.

"Barbie Hologram is a fun, interactive take on the virtual home assistant trend," said Laurie Schacht , a toy expert for industry publication Toy Insider. She added that Mattel's Internet-connected Aristotle baby monitor would be a good tool to play into the "smart home" trend.

Collectibles

These smaller toys—often sold for just a few dollars near the register—have been a strong performer for the industry. Sales of collectibles jumped 33% to $1.8 billion last year and represented 9% of the total industry's U.S. sales. So-called "blind packs" have been especially popular—little collectible toys that are sold in secretive packaging so you won't know what's inside.

At New York Toy Fair, pretty much ever toy maker is now in the collectible game. Mattel, Hasbro, Lego, Jakks—all some of the biggest players in the toy industry—all have collectibles for 2017. Spin Master's popular Hatchimal brand is going to dive into the collectible craze this year too. "It got very crowded this year, there is going to be some fall out," warns Silver.

Toy makers, however, think the trend will remain relevant for years to come. Australia-based Moose Toys, which generated a massive hit with the Shopkins brands a few years ago, say that collecting toys is a proven way that kids have played for decades.

"Collectibles are good for the industry, it is a repeat purchase that brings people back into the retailer," said Moose Toys co-CEO Paul Solomon. "But the key is that if we have multiple collectibles, they need to be differentiated."

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