Businessweek

By Pallavi Gogoi

BEING AN ACTION FIGURE.  At the same time, technology has opened the door to a mind-numbing diversity in game choices. "Children are an extremely well-informed demographic, and companies that deal with them have to accommodate that," says Dennis Perry, founding partner at The Youth Trust, a marketing services company that monitors youth behavior.

If they bother with them at all, kids stop playing with Barbies and GI Joes at younger ages. In a study, the Youth Trust's Perry found that parents still buy Barbie dolls and Hot Wheels cars for children under 5, but 46% of these kids like to play outdoors, while 17% are allowed to watch or play some video games. However, the choice of games shifts pretty dramatically as soon as the kids turn 6. In youngsters aged 6 to 8, 40% favored playing outdoors, and 30% preferred video games. Playing with toys dropped from 25% for kids under 5 to zero interest after the age of 9.

Take teenagers Johan Herrera and Derrick Burgos, who were also shopping for games in Times Square. Now 14, they have been playing video games since they were 2, and neither has ever played with action figures. Herrera says he's hooked on Grand Theft Auto: Vice City. Burgos likes Need for Speed Underground. "You can be whatever you want in these games. I'm not a criminal, but I can be one in the Grand Theft Auto game, and I love it," says the dimple-cheeked Herrera.

As Jason White, an associate editor at toy industry trade magazine Playthings in New York City, says, "Why play with an action figure when you can be the action figure?" White notes that video games for children as young as 4 are also becoming popular.

UPHILL STRUGGLE?  Toymakers believe there's money to be made in dolls and other traditional toys. Some point to the success of Bratz, the flashy, multiethnic dolls with attitude, which have stolen market share from Barbie. But MGA Entertainment, the privately held outfit that makes Bratz, isn't banking on the success of these dolls on their own: It's extending the brand into bikes, CD players, and shoes.

Mattel's Eckert is bent on capitalizing on the popularity of TV's American Idol with a new line of Barbies. These dolls will be on the market in January, timed with the launch of the show's new season, he says. Still, some worry that while Barbie line extensions have been around for years, past successes will be hard to replicate in a world where the competition for kids' minds and wallets is so intense. "If people are buying New York Yankees Barbies, they're not buying the Barbie doll, they're buying the Yankees," says Brand Keys' Passikoff.

Giant toymakers will struggle to hang onto today's savvy, young, informed customer. Surely they realize that an American Idol Barbie won't be quite enough to lure young tech enthusiasts like 11-year-old Wei back to the doll aisle for long.

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Gogoi is a writer for BusinessWeek Online in New York