Morning Brew Daily — Are AI Companions a Threat to Toys? & The Kidult Economy is Booming

Date: November 28, 2025
Hosts: Neal Freyman & Toby Howell
Guest: James Zahn (Editor-in-Chief, The Toy Book, aka “The Rock Father”)

Episode Overview

In this Black Friday special, Neal and Toby dive deep into the evolving world of toys with industry expert James Zahn. The discussion covers the rising influence of AI companion toys, the ongoing boom of the "kidult" (adult toy collector) market, collectibles as investment assets, the symbiotic relationship between movies and toys, and the ever-complex hunt for this season's hottest gifts. Laden with nostalgia, wit, and industry insight, this episode provides a comprehensive look at how play has changed for kids and adults alike.

Key Discussion Points & Insights

1. AI and the Modern Toy Landscape

• Toy Story 5’s Villain (The iPad Stand-in): The episode opens with Neal asking if tablets or tech should be the “villain” for toys in 2025 (02:37).
• James’s Take: “I would probably lean toward AI companion robots as the villain.” (02:55, James)
  • The latest Toy Story movie features a “lily pad” — a stand-in for Leapfrog’s leap pad — highlighting tech’s displacement of traditional toys.
  • Zahn notes children’s play rapidly shifts digital, prompting constant evolution in both consumer and industry behavior.

When Is “Going Digital” Appropriate for Kids?

• No universal answer; families must choose what works for them (03:59).
• Zahn recommends delaying handheld screens for as long as possible:

  “You don’t really want to have—it’s like holding a television in your hand at all times of the day. … I kind of see it as like a traditional childhood. You grew up, you watched TV, then you went outside and you played sports or you rode your bike around the neighborhood. … Active play is what we end up losing when the kids are always just looking at the thing.” (05:00, James)

AI as a Threat or Opportunity for Toy Companies?

• Major toy makers like Mattel and Hasbro are deeply engaged with AI:
  • Mattel has a deal with OpenAI for new “experiences”; Hasbro has an in-house AI studio (05:38, James).
• AI’s role isn’t new—elements have existed in toy-tech (packaging, design) for years.
• However, the “AI companion boom” of 2023 largely fizzled (“failed spectacularly”).
  • Toys that rely on external tech platforms can suddenly become obsolete:

    “You’re not in the toy business. … You’re in the rental business. … If [the robot] ceases to work two years from now, did they really own it? No, they rented the service.” (07:32, James)

  • Psychological impact: “The last thing you want is to have a kid that becomes so attached … and then just tell them, sorry … it’s not going to talk to you anymore.” (08:19, James)

2. The “Kidult” Economy — Adults and Toys

• The Surge in Adult Toy Collectors:
  • Neal asks why adult buying is the industry’s #1 growth driver—and if this is new (09:09).
• James’s Response:
  • “The idea of the adult collector … is not a new thing.” (09:32, James)
  • Adult collecting stretches back centuries—Russian nesting dolls, Hot Wheels in the 60s, Barbie in the 80s.
  • What’s new? Scale, visibility, and the “first wave nostalgia” of late ‘90s/early 2000s, supercharged by the pandemic.

    “The term kidult, also not new. … There are people that just think that it’s childish because it’s not necessarily adults acting like children. It’s adults leaning into passion and, in some cases, buying things as legitimate investments.” (12:40, James)

  • Example: Trading cards as a massive share of toy industry growth (70% of growth in H1 2025 from trading cards).

Collectibles as Investments

• Collectibles now compete with gold, Bitcoin, etc. (14:14, Toby; 14:32, James).
• Scarcity and rarity—particularly for played-with toys/cards—drives value.
• Modern preserved collectibles may lose future value (if everyone saves them mint). Instead, “super rares, one-of-ones,” etc., command the highest demand.

3. Trends & Fads — The Case of Labubu

• Labubu Phenomenon:
  • “An overnight success that took 10 years to happen.” – James (17:51)
  • Labubu is extremely hot in the US now, but craze has passed in China (its origin).
  • Most US demand is speculative (“flippers” seeking to profit on resale).
  • Zahn sees it more as an accessory than a toy—celebrities wield them as fashion/status items (19:09).
  • “Like every craze, it’ll have a peak and then it’s going to crash. But for right now, folks are going to ride it, enjoy it…” (19:29, James)

4. Toys & Movies — A Mutually Beneficial Cycle

• Symbiotic relationship:

  • Example: K-Pop Demon Hunters (Netflix/Sony) — became a massive hit, but retail toy tie-ins lagged the release due to initial industry skepticism.
  • Rush to market: Funko Pops are first to drop, with more elaborate dolls and games to follow slowly.
  • Landmark: Mattel and Hasbro collaborating—Mattel’s high-end dolls, Hasbro’s K-Pop Monopoly (20:10, James).

• Reverse IP Flow:

  • Movies from toys: Barbie, Labubu, etc.
  • Sometimes, expected “toy hits” flop—James recalls the spectacular failure of 1997 Godzilla toys, which stores couldn’t sell (22:52).

5. The “Toy Mount Rushmore” (Neal’s Challenge)

• James’s Picks (24:08):

  1. Original Big Wheel Trike (late 60s)
  2. Original GI Joe (early 60s)
  3. Original Barbie (late 50s)
  4. Radio Flyer Little Red Wagon

• Where should it be built?

  • Manhattan, NY — “The original toy building [at 200 Fifth Avenue] was … the hub of the North American toy industry … for roughly a century.” (25:30, James)

6. The Holiday Hot Toy — “Just One” Recommendation?

• Zahn refuses to choose only one.

  “There is no one definitive toy because every kid and every family is different. … That’s why we have a hot 20.” (27:22, James)

• Directs listeners to The Toy Insider’s annual “Hot 20” list instead of a single pick.

Notable Quotes & Memorable Moments

• On AI Toys and the Rental Model:

  “If it ceases to work two years from now, did they really own it? No, they rented the service that it was going with.” — James Zahn (07:35)

• On Kidult Collecting:

  “It’s not necessarily adults acting like children. It’s adults leaning into passion and in some cases buying things as legitimate investments.” — James Zahn (12:40)

• Labubu & Accessories:

  “I don’t think of Labubu as a toy as much as I think of it as an accessory … You see celebrities with a really expensive Labubu hanging on their purse.” — James Zahn (19:09)

• “Mount Rushmore” of Toys:

  “I’m going to go with the original Big Wheel, original GI Joe, original Barbie, and the old school Radio Flyer, Little Red Wagon.” — James Zahn (24:08) “That Mount Rushmore should be like a Times Square-type installation, right at the center of Manhattan, because that’s where it really began.” — James Zahn (25:35)

• On Nostalgia:

  “I wish I was kid Neil. This got me nostalgic again.” — Toby Howell (28:18)

Timestamps for Major Segments

• 02:37 — How tech and AI are becoming the “villain” of play in Toy Story and real life
• 03:42 — The pros/cons of kids going digital and the impact on development
• 05:38 — AI companions: toy industry’s threat or opportunity?
• 09:32 — The rise of kidults and long history of adult toy collecting
• 12:20 — “Kidult” market, nostalgia cycles, and investment
• 17:51 — Labubu: Fad, accessory, and global product lifecycle
• 20:10 — Movie/tv show IP feeding toy industry and vice versa
• 22:52 — Movie-toy tie-ins that flopped
• 24:08 — Mount Rushmore of toys
• 27:22 — Best holiday toy? Why there’s no single answer

Summary Table: “Mount Rushmore” of Classic Toys

| Toy | Why It Made the List | |------------------------|------------------------------------| | Original Big Wheel | Defined a generation of trikes | | GI Joe (1960s) | Launched the action figure genre | | Barbie (1950s) | Reinvented the doll aisle | | Radio Flyer Red Wagon | Iconic American outdoor toy |

Conclusion

This lively, nostalgia-driven episode with James Zahn powerfully underscores how both kids and adults are redefining “play” in an era of rapid technological change. Toy companies are chasing new tech, but are wary of pitfalls, while grown-ups fuel a booming collectibles market where toys become both comfort objects and legitimate investments. Whether discussing sentient AI robots, collection fads like Labubu, or the perennial resonance of a GI Joe or a Little Red Wagon, the real takeaway is that toys continue to serve as cultural touchstones, economic drivers, and sources of joy—no matter your age.

For more holiday toy inspiration, check The Toy Insider’s Hot 20 list.