Has Digital Products Caused a Decline in Physical Toy Sales?

More and more kids over the years have begun to ask for digital toys over physical toys. What impact on sales has this caused?

As the holiday season rolls around, millions of individuals flood stores to purchase toys for the children in their families, or for other kids around the world. Yet, as technology becomes a more prominent being in day-to-day life, there could be a shift away from physical toys. Many online games are becoming more and more popular among kids, has this influenced the way parents have shopped for the holidays? Has there been a decline in physical toy sales?

As technology progresses, online games have become a staple in young children's lives. Games like Roblox, Fortnite, and Minecraft are just among the few games that almost every kid has played before. One thing that connects all these games together is that they have in-game currency. For those who are not aware, ‘in-game currency” is the way players of these games can purchase items in-game, often converted from official currencies. For example, in Fortnite, players can acquire “V-Bucks” by purchasing it. 

Oftentimes in these games the only way to advance or “to look cool” is to purchase currency, meaning that you have to spend real-life currency. This is where we lead into the holiday season. Many kids ask their families for a gift card for in-game currency or to just give them money so they can purchase it. This in turn could mean that they are asking for less physical toys so they can get more money towards their games. But is that the truth?

Typically for kids who are under 5 years old, the rise in online games/toys has not affected them too much, since many parents are screen-free. However, for those who are not screen-free, it’s still not common that kids will ask for only online currency. 

However, for kids who are 5 and older, they have been affected by the shift in technology from physical toys. According to the Entertainment Software Association (ESA), it found that 62% of Gen Alpha Kids will ask for video game related gifts this holiday season. This means that 62% of kids aged 5-12 will ask for an online-related gift, whether that is alongside a physical gift or not. Additionally, the report found that 43% of kids asking for video game related gifts are specifically asking for in-game currency. Altogether, this report found that many kids are asking for online game related gifts reflecting that the rise in digital products has affected this age group. 

This shift is bound to have some effects. According to the Toy Association, in 2024, Global toy sales did not change from the Month of January to December, meaning there wasn’t a net increase or decrease. However, compared to the previous year (2023), sales decreased. Over the year 2024, multiple updates to online games occurred. For example, the popular Playstation 5 Pro was released in 2024. The decrease in physical toy sales shows that there is a shift away from this genre of toys, whether it’s because of video games or not. 

Overall, the digital products becoming more accessible to families of different kinds may not necessarily be a bad thing, however it has a negative correlation with physical toy sales. In general, holiday shopping for parents has been impacted by this shift since many more kids are asking for digital toys versus physical toys. Physical toy sales have seen a decrease in children aged 5 and older from previous years. However, kids under 5 have not been significantly impacted by this change. I don’t see physical toys completely disappearing in the next couple years due to the data seen, but it could be a possibility in the next couple decades. 

Citations

Gruenwedel, Erik. “ESA: 58% of Kids Want Video Game Gifts for Winter Holidays.” Media Play News, JCH Media INC. , 30 Nov. 2025, www.mediaplaynews.com/esa-58-percent-of-kids-want-video-game-gifts-for-winter-holidays/. Accessed 22 Dec. 2025. 

“Circana: U.S. 2024 Toy Sales Remain Flat, Moving from ‘Correction to Consistency.’” Home, The Toy Association, 30 Jan. 2025, www.toyassociation.org/ta/PressRoom2/News/2025_News/circana-us-2024-toy-sales-remain-flat-moving-from-correction-to-consistency.aspx#:~:text=Global%20toy%20industry%20sales%20also,12%2Dmonth%20period%20in%202023. Accessed 22 Dec. 2025.