In this "View From The Field," we deep-dive into one of our ten venture predictions as outlined in our 2024 Outlook Report.

2024 Prediction #3: Robots become embedded into toys and become your child’s most loved, personalized companion

The history of robotic toys traces its roots back to the late 19th and early 20th centuries.  The world was captivated by the emergence of animatronic birds and other animals housed in cages with life-like movements and behaviors that mesmerized audiences. Although rather primitive, these early iterations provided both entertainment and companionship, sparking the imagination of inventors and scientists, and setting the stage for a robotic revolution that many would/could not even fathom. 

For those of us who grew up in the late 1990s and early 2000s, one of the first interactive robotic toys, the Furby, holds a nostalgic place in our hearts.  Its ability to “learn” and respond to interactions through sensors and pre-programmed language was revolutionary for its time. The idea that we could turn inanimate objects into pseudo-living creatures opened the world to a boom of robotic and virtual toys. These innovations represented a pivotal shift away from novelty-driven playthings that required one's imagination to drive utility to pre-programmed gadgets offering real interaction. For the first time, they helped bring to life creative and innovative ways for children to connect with their toys, foreshadowing the diverse range of robotics that would soon captivate children around the world.

The real revolution, however, occurred in the modern era, driven by the rapid advancements in artificial intelligence. Today's robotic toys exhibit lifelike behaviors, emotions, and personalities that blur the lines between plaything and companion. They engage with children on a level that was once the realm of science fiction, offering interactivity and customization that are a far cry from the dozen commands the Furby could master. Children today simply expect more from their playthings, and the demand for personalized experiences is at an all-time high. From educational tools that stimulate cognitive and social development to emotional support systems that offer comfort and security, robotic companions have the potential to revolutionize the way children play, learn, and grow.

Educational robots have become increasingly prevalent as tools to enhance children’s learning experiences both in the classroom and at home. Many of them today are designed to teach children about various topics in STEAM (science, technology, engineering, arts, and mathematics). The bots vary greatly from simple kits that can be assembled, to “out of the box” robots, to complex machines that require programming skills. These products serve all skill levels and ages to teach children about basic programming concepts, and logical reasoning. Cubetto, for example, is a wooden, screenless, robot that can teach children as young as 3 years old the basics of computer programming through adventure and hands-on play.  By helping shape the skills and mindsets of the next generation, these robots can pave the way for a future where children are better equipped to thrive in an increasingly automated and technology-driven world.

Robotic toy companions can also have a profound impact on a child's emotional well-being. Several robots are on the market doing just this- but one bot, called Moxie, developed by AI company, Embodied is quickly becoming a market leader. The tabletop bot first gained attention for helping kids with loneliness and anxiety through the pandemic. Moxie makes eye contact and uses play-based conversational learning to support skill development. Just a few months ago, the company announced that Moxie is getting a few AI upgrades, it will now be able to recognize up to four children and soon will be able to engage kids in reading, math, science, and social studies, offering guidance with “all the patience in the world” according to Embodied CEO, Paolo Pirjian. 

The strong bond that can form between a child and a robotic companion can provide a sense of security, comfort, and companionship, particularly for those facing emotional challenges or feelings of loneliness. Several recent studies have concluded that children are more willing to confide in robots (over adults) making them more effective at detecting mental health issues compared to traditional questionnaires. The ability of these toys to exhibit empathy, respond to a child's needs, and offer a consistent, non-judgmental presence can be truly transformative.

However, as with any technological advancement, the integration of robotics into the world of toys raises important ethical considerations. The collection and use of sensitive data about a child's behaviors, preferences, and interactions raises valid concerns about privacy and data security. Ensuring the ethical and responsible handling of this information is crucial in protecting the well-being of young users. Additionally, the potential impact of robotic toy companions on human relationships must be carefully navigated. While these companions can complement and enrich a child's social and emotional development, it is important that they do not replace the vital connections children form with family, friends, and peers. Striking a balance between the benefits of robotic companionship and the importance of human interactions is a delicate but necessary task.

As we embrace the future of robotic toys, it is crucial that we approach this transformation with a thoughtful and balanced perspective. By addressing the ethical challenges and maximizing the benefits, we can create a world where robotic toy companions enhance the lives of children (and adults) in profound and meaningful ways. Imagine a future where children will have the option to become fully engulfed in an enriching conversation or educational experience with their robotic toy versus a mind-numbing session on their iPad!

All the best,

John N. Ailanjian, CFA
Managing Partner

Caleagh Creech
Director, Direct Investments