Toys are a $22 billion-a-year industry, so it only makes sense that some of the biggest innovators in tech are racing to cash in. Insiders at New York City's annual Toy Fair claim the future of toys is in the hybrids that merge traditional, physical toys with video games and smartphones, reports CBS News correspondent Gigi Stone Woods.
Anki co-founder and CEO Boris Sofman said his goal is to transform the toy business.
"I think that the toy industry is one of those industries that hasn't evolved nearly as much as it should have over the last few decades," Sofman said.
He developed the company's toy, Drive, and upcoming Overdrive with fellow Ph.D. graduates from Carnegie Mellon's robotics institute.
"When people see the products we make for the first time, it feels like science fiction to them because it shouldn't exist," Sofman said.
Unlike classic slot race cars of another era, Anki cars aren't limited to the skill of the player since they can think for themselves.
"They sense the environment 500 times per second. They have 50 megahertz computers inside of them. They understand where they are and they communicate," Sofman said. "When you're playing the game, whichever cars you're not controlling, they actually come to life and are self-aware and they compete against you."
Powered by a sophisticated, artificial intelligence technology not typical of a toy, the $150 Drive starter kit is America's second best-selling toy next to dolls from the movie "Frozen."
The co-founders said they spend more time than they should on playing video games to check out the competition.
"We call it research," Sofman said.
They may be small in scale, but the algorithm behind these cars is similar to Google's self-driving car and the driverless armored vehicles sought by the Defense Department.
While Sofman's Ph.D. focused on autonomous military vehicles, he is currently focused on the toy world.
"For us, toys and entertainment was this really great springboard where we could release a product really quickly and have it be within our control and allow it to be adopted and accepted, and then start jumping to other products," Sofman said.
Their vision was so impressive that Apple CEO Tim Cook helped launch the company in 2013.
"Anki is using the IOS platform to create an entirely new category of experiences," Cook said in June 2013.
Sofman said having Apple back his company was "the biggest honor we could hope for."
"From their point of view, I think, we're using their product ecosystem in a way that nobody ever had before," Sofman said.
The smartphone is the new remote control, and toys are now roaming a world without wires.
"We're always going to have teddy bears and duck, duck, goose, but we are going to see more and more toys where artificial intelligence, robotic, engineering are added into them because it makes the toys exciting in a new way," NewYorker.com editor Nicholas Thompson said.
He said this is one of the futures of play.
"I have no doubt that there's going to be a lot more things like this in five years than there were five years ago," Thompson said.
For Sofman, the goal is much broader than just entertainment.
"This is a great way to push these technologies forward. We are in the process of developing core technologies in robotics," Sofman said. "Positioning systems, motion control, the wireless communications, interface systems, manufacturing capabilities."
Developing big concepts for the future from small toys including how the car of tomorrow might make the one of today obsolete.
"Twenty-five years from now, we're going to look back and say, 'It is really bizarre that people would sit there and wiggle their arms back and forth for an hour and a half a day, like who would do that?' It is just going to be absolutely the norm for cars to be completely autonomous," Sofman said.
When asked about the future of robotics, Sofman said he expects robots to continue improving manufacturing, harvest food more efficiently and provide aid to the elderly in their homes.