Barbie has arrived in girls' bedrooms in coaches and convertibles, on party buses and dream boats, her friend Ken at her side. Now her latest vehicle is a data port, and her newest dream house is online. On Apr. 26, Mattel Inc. (MAT) unveiled its newest Barbie: a $60 device that connects girls to a new Web site, BarbieGirls.com. Mattel is hoping that Barbie Girls will invigorate the brand and serve as a case study in how a 1950s-era business finds its place in the Digital Age.
At stake is Mattel's newfound momentum. The El Segundo (Calif.) toymaker's stock, a laggard for much of the past six years, has surged 80% since July 14, in part because of a feeling on Wall Street that even though Barbie's U.S. sales are falling, Mattel overall is doing a better job connecting with tech-savvy kids. Top sellers last year included a $40 Elmo that wiggled across the floor and a $70 digital camera for tots. "Mattel watched products like iPods sell so well," says Sean P. McGowan of Wedbush Morgan Securities Inc. "They know parents will spend money if the toy is fun."
This combination of online and offline play is shaping up to be the hottest trend in toys. The most visible example is Webkinz, from privately held Canadian toymaker Ganz. The $11 stuffed animals come with distinctive pass codes that give kids one year of access to a site where they can play games and chat with friends. Ganz says it has sold more than 1.5 million of the critters since their introduction two years ago.
The latest Barbie isn't a doll but a 4 1/2 - inch-long gadget that attaches to a PC via a docking station and USB port. When the device goes on sale in July, it will be the only way kids can fully interact with BarbieGirls.com. In this virtual world, girls will create a character they can name, dress, and customize by skin tone, hair style, and expression. They'll shop for clothes and furniture in a virtual mall, using "B-bucks" earned by playing games and watching product promotion videos.
Girls will also be able to chat with friends on the site. Security software will monitor the exchanges and prevents them from giving out names, addresses, or phone numbers that could end up in the hands of predators. The Barbie device doubles as an MP3 player so kids can listen to music when not online. "We've had to redefine what a toy is," says Chuck Scothon, the Mattel senior vice-president in charge of the Barbie brand.
Clearly, Mattel hopes to borrow a page from the online video games, social networking sites, and instant messaging services that are so popular with today's kids. The company has run a Barbie.com site for a decade. Its mix of games, video clips, and product info makes it one of the more popular online destinations for girls, according to comScore Inc. The majority are 6 to 11 years old, many of them former doll buyers who are now likely to say they're embarrassed to play with a plastic princess. On the other hand, more than half of American 6-to-11-year-olds have gone online in the past 30 days, says Mediamark Research Inc.
How to turn that into cold, hard cash? Mattel will sell snap-on accessories to dress up the Barbie Girls device, much the way people customize cell phones and iPods. But unlike some gaming companies, Mattel won't charge real money for virtual clothes and accessories; its goal is still to sell dolls, not run a Web business.
The competition will be close behind. Isaac Larian, CEO of MGA Entertainment Inc. and maker of trendy Bratz dolls, says he'll launch his own interactive doll and Web site, Be-Bratz.com, later this year. That's fine with retailers. "The more the child interacts with the brand, the more she'll go back and buy the traditional product," says Toys R' Us Inc. Chairman and Chief Executive Gerald L. Storch. At least that's the plan.
By Christopher Palmeri