A four-day international toy show held in Tokyo displayed thousands of toys. The exhibits showed that companies are now focusing more on unique and educational toys. Meanwhile, they have adjusted their business strategy to target older customers. 

The International Tokyo Toy Show displayed over 35,000 items from almost 200 companies. For the last five years, toy sales in Japan are said to have stagnated at around seven billion U.S. dollars.  

However, officials said companies have had to diversify target consumers to maintain shares in the market. 

With declining birthrates, Japanese toy makers are looking into products for older consumers. Analysts said the toy industry has to adapt to Japan's ever-changing demographics, unlike the video game market which has a core customer base.

"Japan is facing declining birthrates, and we have to adapt to the changing demographics," said Masakazu Kobayashi, who serves on the executive committee of the Japan Toy Association. "The local toy industry is now looking to develop and supply toys to a broader range of consumers to sustain the industry, for example, to adults who can either buy toys for themselves or use them to play with their kids and grandchildren."

The industry is placing more emphasis on unique, educational toys because it's popular among parents who want to help develop their children's linguistic and cognitive skills from an early age. 

Also, nostalgia is said to be a strong element stimulating sales. Sega Games company producer Yosuke Okunari said there is a cycle where people want to return to playing classic games that rekindle some of their lost memories.