The smart toy industry has quickly turned into a crowded market over the past year, but that hasn’t deterred a South Korean startup from throwing its hat into the ring.

Attocube is the latest contender to vie for a piece of the flourishing smart toy sector, which is expected to hit US$7.4 billion by 2018—a 470% increase from US$1.3 billion in 2013. Attocube’s unique new educational toy of the same name combines traditional wooden blocks with smartphones or tablets in an effort to foster sensory and motor skills development in kids ages four to 11.

By clipping a reflector mirror attachment to the top of an iOS or Android device, the classic wooden blocks are transformed into smart toys. Next, kids launch a free app, which leads them through progressively harder challenges in which they place nine blocks in three-by-three patterns to match the images appearing on screen. The attachment recognizes the cubes and the app lets kids know when they get a match right.

According to Attocube CEO Ethan Han, his company designed the toy to encourage creativity, collaboration, problem-solving skills, and of course, play. “Attocube takes a three-pronged approach offering physical, mental and creative stimulation to users,” he says. “Rarely do other smart toys manage to engage all three.”

Han explains the idea for Attocube stems from parents’ growing concern that their children are spending too much time with their heads buried in screens. For example, he noticed that although his niece had wooden blocks with which to play, she would always choose to fiddle around on a smartphone instead. That’s when the idea was born to merge the two products, both of which were already familiar to parents.

So, with that in mind, Han began working with a group of educators and parents on the toy’s design. After founding Attocube the company in March 2014, Han and his team launched their toy on Indiegogo in early October. The US$69 starter kit includes nine wooden blocks, a stand, reflector mirror and 100 image cards for offline play, and is slated to be delivered in early December.

Noted in February by the Toy Industry Association as one of this year’s top trends, the smart toy craze has unquestionably taken off in 2015. From the wifi-connected Hello Barbie to Fisher-Price’s Smart Toy Bear, a new wave of playthings that fuse elements of both traditional toys and modern technology is flooding the industry.

For toy industry analyst and CEO of Vermont’s Klosters Trading Lutz Muller, the two aforementioned smart toys essentially act as babysitters for parents, but a toy like Attocube has the potential to be much more.

“If you take something like blocks, which are much more basic than a toy bear or a fashion doll, and you turn it into a technologically driven STEM product, that is totally new. I haven’t seen that happen before,” Muller says. “Now it’s obviously very early days, but I think it’s a brilliant idea personally.”

Looking at the emergence of the smart toy movement overall, Steph Wissink, managing director and senior research analyst Piper Jaffray in Minnesota, says products like Attocube have emerged to fill a gap in the market as video games have been aging up and traditional toys have been aging down. These physical-digital augmented toys still allow kids in the eight to 12 range to play with toys, she adds.

Wissink contends that another reason the industry is being inundated with smart toys has to do with screen time. As parents are having a hard time deciding how much is appropriate, (especially with all the options out there, from TV and PC to tablets and phones), the toy industry has taken note and is trying to develop engaging toys that offer kids the best of both worlds.

“This kind of digital-physical connection allows them to play physically as they always have, but then also creates digital experiences that can be convenient for on-the-go or can augment the physical play experience,” Wissink says.

According to Paul Levine, president and co-CEO of innovation and development company PlayScience, the smart toy trend is being driven by the fact that kids off all ages are fully engaged with digital, yet there’s a US$22-billion toy industry that has no intentions of going away.

“It absolutely makes sense to try to combine the two so that you’ve got a situation where one plus one equals three,” he says.

PlayScience has been tracking smart toys, and so far the company has noticed two main paths: Physical products that interact with devices like iPads, and apps that can control physical objects like a teddy bear.

Levine says while the smart toy game is still new, many companies both big and small are trying to figure out a balancing act to combine the benefits of physical products and digital connections – and there is plenty of room for innovation.

“Innovating is a process, and it’s not easy to capture lighting in a bottle,” he says. “Over the next few years, we’re going to see better incarnations where innovators really begin to get the interplay of play and learning with physical and digital devices much better, so that you’ve got play augmentation and that you’re really adding something to it.”