Zapped!

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Sony, meanwhile, is trying to extend its PlayStation franchise to younger kids with its EyeToy technology, which features a camera that puts the player onscreen. In EyeToy: Groove, players bop to the likes of Madonna and Fatboy Slim, and a calorie counter shows how much of that Big Mac you have burned up — a nod to parents concerned that too much sedentary screen time is making their kids fat. Plug 'n' play games — cheap cartridges that plug directly into the TV — are also expected to do well this season, thanks to a revival of classics like old Atari titles and tie-ins to popular characters like SpongeBob SquarePants.

The popularity of retro items like My Little Pony also suggests that when kids do want traditional toys, the classics resonate. "Kids love horses and playing with hair, and My Little Pony speaks to that," says toy expert Byrne. A recent survey by the consulting firm Funosophy found that kids 6 to 8 prefer toys over consumer electronics 49% to 30%. Trouble is, kids a little older (9 to 11) favor the electronics 42% to 24%.

Since more than half of annual toy sales occur in the fourth quarter, some analysts say it's too soon to call the year a bust. Retailers are stocking less toy inventory this season, which should help them avoid profit-killing sales. Recent price surveys suggest that Toys "R" Us is more competitive with Wal-Mart this year, and Wal-Mart appears to be devoting less shelf space to its Kid Connection private-label toys — good news for brand names like Mattel and Hasbro. A weakening buck may also translate overseas sales into higher profits when converted back into dollars.

Yet regardless of how sales go this season, age compression is here to stay. Some analysts think the worst of it may be over and that toymakers have figured out how to adapt. Kids "expect a bit more electronic sizzle from their toys, but they are still kids at heart, and kids love toys," analyst McGowan recently wrote in an industry report.

Nonetheless, as many parents can attest, weaning your kid off Mario can be tougher than confiscating the Cocoa Puffs. When Kathy Gregovich of Roseville, Mich., suggests to her children Jacob, 9, and Ashley, 6, that they put away the Game Boy and play a board game, "they go through withdrawal," she says. "If they had a choice between playing with electronic games and a friend, they would pick the games."