This document discusses smart toys that integrate physical toys with digital games. It provides examples of successful toy lines like Skylanders, Disney Infinity, and Amiibo that have generated billions in annual revenue. The document then outlines the key components needed for a real-to-digital toy ecosystem, including figure and merchandise design, interactive technology like NFC chips, customer analytics, and global distributed development teams. It argues that a global approach can provide localized expertise and lower costs, though introduces additional management challenges. Engineering is identified as the most important yet most expensive function, requiring tools and processes to facilitate remote collaboration.