Can the combination of AI and trendy collectibles produce the next Labubu?

It seems that AI toys and traditional trendy toys are on two parallel tracks. One is the marathon of creating a dominant IP. Pop Mart is still proving to the outside world its ability to continuously incubate and operate characters like LABUBU. The other is to combine IP with AI, competing in technology to achieve speed and cost - control capabilities. Countless startups are striving to break through.

Currently, LABUBU, which has become a social currency, is stimulating the ambitions of a large number of AI toy entrepreneurs: to make characters like LABUBU come to life!

They think like this: The AI toy is almost the AI application track with the lowest technological and financial thresholds. These startups rely on the intelligent hardware and toy production bases and supply chains in Huaqiangbei, Shantou Chenghai, Yiwu and other places. The increasingly mature large - scale models make technological implementation no longer out of reach.

Many of them come from large companies. In the past two years, Li Yong, a partner of Tmall Genie, founded Yueran Innovation; Bao Ta, the former vice - president of Meituan, founded Singularity Intelligence; Sun Zhaozhi, the former head of product design at XPeng Robotics, established Luobo Intelligence. Some traditional toy manufacturers also want to get a share of the pie.

According to incomplete statistics, since 2024, 27 startups in the domestic AI toy track have received financing. Among them, 6 have raised over 100 million yuan. IDG Capital, Sequoia China, Hillhouse Ventures, Jinqiu Fund associated with ByteDance and other investors have participated.

Soon, products under the new concept of AI toys were launched one after another: The "eye - catching gift" customized by FoloToy for ByteDance has been resold for hundreds of yuan on second - hand platforms. The toy pendant BubblePal of Yueran Innovation has a cumulative sales volume of 250,000 units. The first AI plush pendant Fuzozo of Luobo Intelligence was launched for pre - sale on June 18th, with a total sales volume of about 5,000 units across all channels.

The sales volume and market feedback of these star products have caught the attention of Huaqiangbei manufacturers. Once they sense a certain degree of certainty, some factories dare to tell brands that they have achieved "public molds and copyrights" (mold - making manufacturers share molds and copyrights) and can replicate and mass - produce at any time.

However, in the face of the AI wave, Pop Mart, the trendy toy giant with top - tier IPs and abundant cash flow, has chosen to stay put. According to Wang Ning's theory of "the usefulness of the useless": once a product has functional attributes, it means a short life cycle and an inherent decline.

It seems that AI toys and traditional trendy toys are on two parallel tracks. One is the marathon of creating a dominant IP. Pop Mart is still proving to the outside world its ability to continuously incubate and operate characters like LABUBU. The other is to combine IP with AI, competing in technology to achieve speed and cost - control capabilities. Countless startups are striving to break through.

Polishing the First - Generation AI Toys

What are AI toys?

There is no common definition in the industry yet. But one of the mainstream forms is the appearance of traditional toys (plush dolls and trendy toy figurines) combined with an intelligent AI core. The AI core usually integrates a microphone, a speaker, a networking module (Wi - Fi/Bluetooth) and a main control chip, and interacts with people by connecting to a large - language model in the cloud. Currently, toys in this form are represented by Meng uu, Fuzozo, and Ropet.

Another type of AI toys are action figures, which integrate sensors, precision motors, joint technology and algorithms. They can perform actions according to AI instructions, such as the Transformers of Lexon and the Lingtong Robot priced at over 10,000 yuan.

Some manufacturers take an unconventional approach. They don't produce toys but only provide AI modules. BubblePal is an "AI bubble" that can be hung on a plush toy. Through this "plug - in" hardware, users can make old toys "talk" and retain conversation memories.

There is a discrimination chain among different forms of toys: Action figures form a niche group due to their high unit price. Toy companies with self - designed IPs think that bionic pets lack recognition and will be quickly eliminated. Companies that carefully design cute pet appearances and focus on emotional companionship look down on the learning machines in the parenting track that pretend to be AI trendy toys.

On social media, according to different interaction methods, AI toys are also divided into two camps: "talking" and "non - talking".

"Talking" toys focus on language interaction and intelligent companionship. "Non - talking" AI toys express emotions and personalities through actions, sounds, light effects and postures, and are more like bionic pets.

Mochi is a plush doll of the cultivation type that can recognize human voices, make rich changes in its electronic - screen eyes, and give feedback like a living being according to human touches. This trendy toy will make its debut at the World Artificial Intelligence Conference (WAIC) in late July.

(Photo provided by the interviewee of Mochi)

When creating Mochi in the early stage, founder Xu Fang and her team expected it to be able to have conversations. But after multiple tests, she found that once the responses were not intelligent enough, Mochi would be labeled as an "artificial idiot" by users. The emotional experience of AI emotional - companion products should take precedence over practical functions.

"There is no shortage of products on the market that can tell stories, answer questions and report the weather. Large - scale models are also sufficient to support the intelligence of AI dolls to talk," Xu Fang said. She believes that this is just the value of an AI voice box and there is no real emotional interaction. Therefore, she positions Mochi as a human companion and a spiritual sustenance, "as smart as a 'five - year - old border collie' and just being cute is enough."

Xu Fang's team spent a lot of effort on Mochi's appearance, including how to make the eyes more vivid and how to interact with people more naturally.

Xu Fang also firmly chose plush as the appearance material because Mochi's target customers are mainly female consumers aged 20 - 45 in first - and second - tier cities. "Touching the plush texture can change the hormones in the human body, making people naturally feel close to furry things."

This is also the inspiration that AI toy entrepreneurs have gained from Pop Mart: Pop Mart described 2024 as "the year of fluffiness" in its financial report. In this year, the revenue from trendy toys in the plush category increased nearly 13 times year - on - year and became the annual hit product. Among them, LABUBU, which was born in 2015, became popular globally after launching a plush pendant in October 2024, and single - handedly pushed the revenue of Pop Mart's THEMONSTERS series to over 3 billion yuan.

Educating Each Other with the Market

In the first half of this year, a large number of AI voice box products flooded the market. Affected by tariff policies, some traditional plush toy manufacturers are seeking transformation. The simplest and most productive way to transform products is to add a voice box to the original plush products.

Xia Xue, the product manager of Mochi, found through research that the usage cycle of AI toys with a simple voice box added to plush toys is very short, usually no more than two weeks. Therefore, they chose to remove the voice function. Xia Xue said that this has nothing to do with cost - reduction. The cost of a voice box accessory is about dozens of yuan, and the prices of software and hardware will decrease in the future. "The real reason is that this type of product has poor playability. To make a toy show intelligence, the most important thing is to be 'cultivatable'." Xia Xue believes that first, there must be something that can impress users, such as a cute appearance and a "life - like" interaction experience; second, it can establish an emotional connection with people, remember what people say, sense people's emotions, and have the ability to be cultivated. AI toys with voice boxes basically do not have such functions.

The electronic pet Moflin launched by Casio in Japan in November 2024 looks like a guinea pig and can neither talk nor walk. But it can gradually form its own personality and emotions through voice and gesture - based recognition software according to the way its owner touches and talks to it. Currently, Moflin is priced at nearly 3,000 yuan, is often out of stock, and has even been resold for over 10,000 yuan on second - hand websites.

Since mid - June, a group of bloggers specializing in designing trendy toy IPs have appeared intensively on social media platforms such as Xiaohongshu and Weibo. They generate and publish a large number of IPs every day in different styles such as abstract, cute and funny. Once they find out which IP can become popular, they will sell it to downstream companies.

A person from a trendy toy startup revealed that the company operates multiple accounts on Xiaohongshu. In addition to the exclusive IP accounts, there are also industry accounts that professionally disassemble various AI toys on the market and update industry news to attract players interested in AI toys. If the self - developed trendy toys with IPs don't succeed, there is still a hope to package them as a solution and sell them to manufacturers as a backup plan.

Wang Yimian, a senior trendy toy practitioner, said, The core of trendy toys is IP. If startups overly emphasize technology while having weak IP design, it is difficult to succeed.

After experiencing many products on the market, Wang Yimian summarized that the most impressive thing about AI toys is to maximize the emotional effect of the eyes. If the pet's body can precisely sense the strength of human touches and give corresponding feedback, such as showing a heart in the eyes when being gently stroked and showing a screen full of bubbles when being stroked vigorously, it will enhance the interaction experience.

In addition to the product form, many AI trendy toy brands also need to reach a consensus with consumers on product service prices.

The AI toy brand fuzozo started pre - selling a product on June 18th, priced at 399 yuan. Before the product was delivered, it had already received a large number of customer complaints. Fuzozo officially stated that the doll has "energy" consumption for daily conversations. Users can buy energy cards to experience more value - added functions after using up the energy, and each weekly card is priced at 10 yuan. Calculated in this way, the annual recharge fee is about 520 yuan. Users feedback that the cost of "raising a toy" is too high.

In fact, this service model is not new. The trendy toy LOVOT from Japan is sold at 30,000 yuan, and users also need to pay 880 yuan per month for software and system updates. Moflin also has a subscription fee for regular maintenance.

Industry insiders said, Some AI voice boxes generate traffic fees, which are actually charged by large - model companies to B - end customers through interfaces. This pricing model subverts the logic of traditional toys being a "one - time deal".

Seize the Opportunity and Race

Although the business model is still being polished, upstream and downstream suppliers have smelled business opportunities.

The boss of a communication - module manufacturer noticed that the supply of AI toys was increasing. "In late 2024, more and more customers came to consult. By February this year, the solution was mature, and mass production started in April."

The manufacturer's boss revealed that as long as customers provide IPs, manufacturers in Huaqiangbei can customize products. One - stop services have been realized for some forms of AI toys. For example, Espressif Systems provides the "heart and nervous system" (chips and underlying connection technology) for AI toys, Tuya Smart provides the "brain and operating system" (intelligent solutions and apps connecting to cloud - based large - scale models), and Xiaozhi AI provides an open - source voice - interaction kit.

However, the quick reaction and replication ability of Huaqiangbei also bring pressure to AI toy startups.

A person from a trendy toy brand said that in recent months, the order volume of downstream manufacturers for customizing AI toys has doubled. "Whether it is for sample - making or mass - production, from the fur to the outer - shell mold - making, upstream and downstream manufacturers are making money. But the brands responsible for IP and sales operations may not necessarily make money." He is worried that once the core - solution suppliers enter the market themselves, it will be a crushing competition for small trendy toy companies.

Startups need to race against Huaqiangbei, find the right product positioning, launch products for sale as soon as possible, and cultivate user stickiness.

The person from the aforementioned trendy toy startup gave an example: "Fuzozo is priced at only 399 yuan, which is actually a strategy of lowering the hardware threshold and relying on subsequent subscription fees for operation. The price in the hundreds of yuan can target some student users. But unexpectedly, students are more resistant to long - term payment."

Different from this, Xu Fang plans to open offline experience stores for Mochi in airports, beauty and health - care stores and other scenarios, targeting potential customers with a certain payment ability and emotional - healing needs.

A good appearance can attract customers to place an order, but to make users "raise" AI toys in the long term, it depends to a large extent on the intelligence of the core.

A person in charge of providing cloud services to B - end enterprises (such as toy manufacturers) at Volcengine told Economic Observer that through the background data of AI hardware customers' calls to GPU or Doubao large - model APIs, they observed that the AI toy industry may be on an upward trend since this year. At the same time, the data he saw showed that: 90% of enterprise customers in the AI toy industry have a high - frequency API call cycle of no more than three months, and then it starts to decline sharply.

While the AI trend is booming, Pop Mart, the absolute giant in the trendy toy industry, is unusually restrained. An employee of Pop Mart revealed that the company has never developed any AI - related products internally.

Wang Ning, the founder of Pop Mart, once asked a question: "What practical value can trendy toy figurines provide?" His answer was that trendy toys have no practical value. They are not like cups that can hold water or pens that can write. The reason why trendy toys exist and why consumers like them is that they carry an emotional or spiritual function.

The person from the aforementioned trendy toy startup said: "If Pop Mart adds AI or other functions to its IPs, it will downgrade itself from a high - end cultural brand that creates 'artworks + emotional value' to an electronic - product manufacturing company, and thus lose its most core brand premium."

This article is from the WeChat official account "Economic Observer", author: Chen Yueqin, published by 36Kr with authorization.