Digital music players for three-year-olds are the new battleground in the 20 billion toy industry.

It would be easy for the toy industry to react to these difficult times by trying to cut costs at every single corner.

In the past few years, the toy industry has been waking up to the fact that it makes good financial sense to cater for overlooked consumer groups.

However, toy industry experts have said that the closure of some factories could help others to survive the downturn, with the biggest and most sophisticated likely to benefit.

These new austerity measures, coupled with the general decline in deals globally, resulted in further contraction within the deal toy industry and its individual firms.