Hot in '07: Robots, guitars, more digital toys

NEW YORK (CNNMoney.com) -- If you think that souped-up cell phones, iPods and videogames have rung the death knell for toys, then think again.

Some of the hottest new toys that will be unveiled for the first time this weekend at the annual American International Toy Fair in New York show that toymakers are ready to battle for their turf with plenty of innovation and creativity.

New from Fisher-Price this year are T.M.X. Ernie and T.M.X. Cookie Monster.

The "Singing Pizza Elmo" features Elmo singing and dancing to a silly pizza song. Press Elmo's hand and the pizza that he's holding comes to life. The pizza opens its eyes and moves its mouth to the song. The toy will launch in July, priced at $24.99.

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The standouts include high-tech robots, guitars, MP3 players for babies and a singing "diva" Barbie. Jakks Pacific has a new laser tag game that actually shoots out a visible beam.

No doubt, these examples indicate how companies like industry leaders Mattel (Charts), Hasbro (Charts), Jakks Pacific (Charts) and others have accepted that kids are becoming more technology savvy at a younger age, and therefore are more inclined to discard their Barbie dolls and Power Ranger action figures for the cool MP3 player or camera cell phone.

Indeed, that trend is reflected in the fact that the $21 billion toy industry has struggled to grow sales in recent years.

According to marker research firm NPD Group, toy sales last year came in at $22.3 billion, almost flat versus the previous year.

Chris Byrne, an independent toy industry analyst, said the macro trend for the industry over the past two years has been this push toward tech innovation in traditional toys.

Reyne Rice, toy trend specialist for the Toy Industry Association (TIA), agreed.

'Digital is a part of life now for kids and adults. I am feeling very optimistic for the industry this year," Rice said. "I'm seeing lots of innovation across categories. But at the same time the counter-trend to tech toys is alive and well, whether it's arts and crafts or demand for mind games like Sudoku."

However, Byrne spotted a difference in this year's offerings.

"I think there's a real shift away from incorporating technology for technology's sake and instead using technology to make a good toy," Byrne said.

"When kids have got a Wii or PlayStation 3, they need a compelling reason to play with something else," he said.

Additionally, consumers need to be aware that several of this year's buzzworthy "tech" toys are more pricey.

Said Byrne, "Prices for toys are moving up. But that's also because plastics prices have increased. Higher oil prices affect every aspect of the toy industry. Companies end up paying more for fuel and shipping costs."

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