Mattel and Hasbro are household names when it comes to toys. I grew up playing with action figures made by the companies, and I’m sure any person born in the 80s or early 90s has fond memories of G.I. Joe, My Little Pony, He-Man and others. Despite being giants in the toy industry, these companies are now facing a new kind of challenger in the form of tablets.

An analyst with Needham and Company are saying that toy companies are starting to get a little scared for their futures. Kids are becoming increasingly interested in tablets and other technologies instead of the toys that generations past were so invested in. In fact, a recent survey of children found that many wanted iPads, iPhones and other devices for Christmas. Of course, the survey only asked about interest in technology-related gifts, but it could be inferred that kids really do want tablets instead of toys.

For their part, Mattel and Hasbro are putting on a brave face. The companies say that nothing is wrong, but you can see the signs of change in their core business. The biggest toys retailer in the U.S., Toys-R-Us, unveiled its own tablet for kids in September called the Tabeo. It’s pretty obvious that what’s considered fun and entertaining for children is changing when even the toy stores are starting to give premium exposure to tablets.

So what can these companies do to stave off their own demise? Get with the times and offer more technology related toys and products. There are ways to tie toys into tablets and video games. Activision proved that last year with the amazingly successful Skylanders that makes kids buy toys to unlock more characters in the game. Mattel could start up a new He-Man toy line and tie it into the latest mobile title for additional unlocks or bonuses. There are plenty of ways for traditional companies to embrace technology while staying true to their core focus. It’s just a matter of finding a solution.

[h/t: BGR]