NEW YORK (Reuters) - The hottest toy of the 2010 holiday season could be a cheap, small, squishy character packaged in a plastic bubble reminiscent of grocery store toy machines, said toy experts Jim Silver and Christopher Byrne.
"Never underestimate the power of cute," Byrne said, in explaining why he thinks "Squinkies," the $7 collectible capsule toys which double as pencil-toppers, can emulate the success of last year's runaway hit Zhu-Zhu pets.
Blip Toys' "Squinkies," Spin Master's colorful collectible Zoobles and Mattel Inc's plush Sing-A-Ma-Jig harmonizing dolls are among the 16 toys on the 2010 "Most Wanted" list compiled annually by the two veterans for their website www.TimetoPlayMag.com.
While the U.S. recession may be officially over, Silver and Byrne expect most U.S. shoppers to keep an eagle-eye focus on prices when they shop for toys this holiday season.
That explains why 11 of their 16 top holiday picks cost less than $30.
"Toy companies have realized that price points are important," said Silver, who with Byrne has compiled a hot toy list for about a decade.
Their picks come ahead of what is shaping up to be a highly competitive holiday season, which is by far the toy industry's most important period.
Last week, retailer Sears Holdings Corp told Reuters it planned to launch toy shops inside 85 of its namesake stores, just weeks after specialty retailer Toys R Us Inc said it would open about 600 Toys R Us Express temporary stores and 10 FAO Schwarz "pop-up" stores this year.
Meanwhile, industry behemoth Wal-Mart Stores Inc said it is "absolutely committed" to winning on price in the area of toys.
U.S. retail toy sales are up just 0.4 percent from a year earlier for the 12 months ending August, according to market research firm NPD Group.
With such modest growth, cut-throat competition is a given.
Plus, seasoned players are also facing new competition from bookstore chains like Borders Group Inc and Barnes & Noble and drug stores like Walgreen Co.
Time to Play's top toy list, closely watched by industry executives and analysts, also features popular names like Mattel's Hot Wheels' Stealth Rides vehicles, Hasbro Inc's Nerf N-Strike Stampede blasters and a board game from Lego.
Themed dolls are in fashion too.
Mattel's Monster High dolls, offspring of famous monster characters, are perfectly timed with the popularity of television shows like "The Vampire Diaries" and "True Blood" and the Twilight movies, Silver and Byrne said.
"If you took this trend five years ago, I don't know if it works. There is so much to timing," Silver, editor-in-chief of TimetoPlayMag.com, told Reuters.
As if to illustrate the importance of timing, the release of Time to Play's toy list coincided with the unveiling of a line of singing dolls based on teen heartthrob Justin Bieber.
Aside from the cute, collectible toys that inhabit most retailers' top holiday toy lists, Silver and Byrne also highlight toy makers who dared to innovate.
For instance, their list features "Paper Jamz," a $25 electric guitar made of cardboard that produces music from touch-sensitive electronic sensors hidden beneath its surface. "Paper Jamz" is made by U.S.-based Wowwee.
The list also includes pricier educational toys like VTech Holdings Ltd's V reader, priced at $60 and dubbed as the "Kindle (e-reader) for kids," and LeapFrog Enterprises Inc's "Leapster Explorer," a $70 handheld gaming device cum e-reader and photo-and-video recorder for kids.
While the holiday lists may serve as gift guides for parents, the experts stressed that each child is unique.
"The hot toy is only hot if it is hot for your kid," Byrne said.
Reporting by Dhanya Skariachan, editing by Gerald E. McCormick