Sean McGowan, managing director of equity research at investment banking firm Needham & Company, said children as young as 3 years old are receiving tablets such as iPads and Kindle Fires for Christmas this year, instead of Barbie and other traditional playthings, The Financial Times reported Tuesday.
"The top two guys, Mattel and Hasbro, they are terrified," McGowan said. "They should be terrified, but the official party line is they're not terrified."
Hasbro officials said the company is working to catch up to the tech-savvy youngsters.
"Clearly, young people have an aptitude for and expectation with digital platforms that we need to recognize," said John Frascotti, chief marketing officer for Hasbro.
Frascotti said one of the company's attempts to recognize the importance of digital media is the reinvention of popular 1990s toy Furby, which now comes with a free mobile app used to "feed" the toy and translate its language, "Furbish," into English.
Mattel officials declined to comment.