LEGO is the latest toymaker to dip its toe into the $4 billion toys-to-life market, an emerging genre of play that attempts to combine physical toys with digital experiences. The Danish company, like many of its American counterparts, is looking for ways to make its toys more compelling as kids spend more time on devices. But it will face intense competition as other toymakers try to get a piece of the growing market.
It's an industrywide concern, according to Lee Giordano, a retail analyst at Sterne Agee CRT, who expects more traditional toymakers to follow and experiment with different types of toys-to-life products.
"Kids today are certainly technology savvy, and they're looking for ways to combine physical toys with their devices. And parents are looking to make sure that their kids have a diverse play experience," which creates a challenge for traditional toy manufactures, Giordano told CNBC.