by Nicole Maestri

Mon Jan 23, 2006 11:03 AM GMT
 

NEW YORK (Reuters) - The room looks like a typical child's playtime fantasy, decorated with bright carpet and packed with toys, games, costumes, and an indoor jungle gym.

But it is also lined on one side with windows and on the other with a one-way mirror.

On this rainy morning, Fisher-Price executives are peering into the room from behind the mirror, watching a group of 4-year-olds play and trying to gather critical data for a line of electronic toys they are developing for their new "KidTronics" line.

If all goes well, the products will be previewed at the Toy Fair in New York in February, and hopes are running high.

"We're breaking new ground here," said David Ciganko, vice president of product design at Fisher-Price, a unit of Mattel Inc. <MAT.N>

The product line, which will include an MP3 music player, a digital camera and the already-released Star Station, which lets kids watch themselves on TV as they sing songs, comes as toymakers are responding to a continuing trend -- replacing traditional toys with flashy consumer electronics increasingly targeted at younger children.

It also comes as U.S. toy sales are in the midst of a slump -- 2005 likely marked the fifth straight year of little or no sales growth after the U.S. industry rang up sales of roughly $20 billion in 2004. But U.S. consumer electronics sales are expected to rise to a record $135.4 billion in 2006, according to the Consumer Electronics Association.

Toy makers are now rolling out their own electronic toys. This holiday, some of the hot toys came from Hasbro Inc. <HAS.N>, including the VideoNow personal video player and ChatNow walkie-talkies that look like cell phones and let kids talk to and text message their friends.

The Fisher-Price Star Station toy that works with TV was also popular. Fisher-Price is now looking at KidTronics as a possible hot seller for the 2006 holidays, when digital cameras and MP3 players will be even more mainstream.

"We're talking to a different mom here," Michael Sullivan, marketing manager of the preschool division at Fisher-Price, said of introducing KidTronics. "They would think nothing of buying one for their kid."

On this cold day, executives were still trying to perfect what will become the Kid-Tough Digital Camera and the Digital Song & Story Player. They were also putting together an online content store that would let parents upload child-appropriate songs and digitally recorded books for the MP3 player.

PLAYTIME ADVENTURE

The children in the playroom tested a camera prototype, which looked like a white video cassette tape with a viewfinder and a small LCD screen on the back.

At first, the kids were reluctant to use the strange object. But once they got the hang of it, following some adult instruction, they eagerly snapped pictures and peered at the screen to see what they had captured.

"It's a good sign when they don't put it down," Ciganko said as he watched from behind the mirror.

Through testing like this, Fisher-Price discovered that a child's natural tendency is to grab a camera with two hands, covering up the flash. So they developed their Kid-Tough camera with two fat grips on either side to protect the flash. The camera also has two-eye viewing, making it is easier for children to look through the viewfinder.

For the Song & Story Player, Fisher-Price settled on a shape that looks like a miniature CD player. Its LCD screen will show song and story titles, and icons so children who cannot read can navigate the technology. Instead of earbuds, Fisher-Price designed pint-sized headphones that conform to volume regulations.

General Manager Kevin Curran said Fisher-Price has a history of developing youth electronics, pointing to the boxy brown tape recorder introduced in 1981 that was shown in ads tumbling down a staircase unscathed.

While other toymakers have rolled out digital cameras and MP3 players for the younger set ahead of Fisher-Price, Curran said Fisher-Price waited to develop the toys until they met three criteria -- low cost, high durability and ease of use.

"We would have loved to do this five years ago," he said. "We waited until the cost came down and we could make it durable."

Fisher Price has been working on the line for a year and a half. The camera is expected to be on store shelves by July, while the Song & Story Player should be available in August.

The company is betting its reputation for producing durable toys will give it an edge over the competition. It also hopes the storytelling aspect of the MP3 player will appeal to parents seeking educational tools.

"When we get it right, it has been a big opportunity for us," Curran said of Fisher-Price's forays into youth electronics.