San Francisco Barbie: Mattel partners with OpenAI to create AI-powered toys amid declining sales

Barbie-maker Mattel has partnered with OpenAI to develop AI-powered toys and games, with plans to launch its first AI-enhanced product later this year. The collaboration comes as toy manufacturers face declining demand amid economic uncertainty, prompting companies to explore new technologies and revenue streams to revitalize their core business.

What you should know: Mattel will integrate OpenAI’s technology into both its products and internal operations to drive innovation across the company.

• The partnership focuses on creating “age-appropriate play experiences with an emphasis on innovation, privacy, and safety,” according to Mattel’s announcement.
• Beyond consumer products, Mattel will incorporate OpenAI’s ChatGPT Enterprise into its business operations to enhance product development and company-wide productivity.
• The collaboration gives Mattel access to OpenAI’s advanced AI capabilities and tools for large-scale transformation initiatives.

The big picture: Traditional toy companies are turning to emerging technologies as they navigate challenging market conditions and shifting consumer behavior.

• Toy manufacturers are currently battling muted demand as consumers reduce spending amid concerns about economic fallout from President Trump’s trade policy changes.
• Over the past year, Mattel has diversified beyond physical toys by producing films, TV shows, and mobile games based on properties like Hot Wheels and Barbie to offset slowdowns in its core toy business.

Why this matters: The partnership represents a significant shift toward AI integration in the traditionally analog toy industry, potentially setting new standards for interactive play experiences.

• AI-powered toys could create more personalized and engaging experiences for children while addressing parents’ growing expectations for educational and developmental benefits.
• The collaboration positions Mattel to differentiate itself in a competitive market where innovation increasingly drives consumer interest and sales.

Current challenges: Mattel faces mounting financial pressures that are reshaping its business strategy and pricing approach.

• Last month, the company withdrew its annual forecast and announced price increases on some domestic products to offset higher supply chain costs.
• The economic headwinds underscore the urgency for toy companies to find new growth drivers and operational efficiencies.

What they’re saying: OpenAI executives view the partnership as an opportunity to demonstrate AI’s potential across diverse industries.

• “With OpenAI, Mattel has access to an advanced set of AI capabilities alongside new tools to enable productivity, creativity, and company-wide transformation at scale,” said Brad Lightcap, OpenAI’s chief operating officer.