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updated 5/24/2013 12:46:25 PM ET 2013-05-24T16:46:25

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You could say it was nostalgia that inspired David Merrill and Jeevan Kalanithi to create the plaything of the future. Noting that modern-day games operate increasingly in the virtual realm, with the kinesthetic component reduced to the click of a mouse or tap of a screen, the two MIT Media Lab graduate students felt a fundamental absence--the physical interaction that comes from old-school toys like building blocks and board games.

This was the impetus behind Sifteo cubes. The little computerized blocks communicate wirelessly with one another and respond in varying ways to being pressed, tilted, shaken and rearranged--turning video gaming into a truly tactile experience. "It's taking the wooden blocks you grew up playing with and giving them this digital life," Merrill says.

When Merrill presented Siftables, Sifteo's predecessor, at the TED conference in February 2009, video of the talk went viral, quickly racking up more than 1 million views. "That was kind of our Kickstarter moment--before there was such a thing as Kickstarter," Merrill says. "That was when we realized this was more than just a cool research project and that we really needed to take this idea to the next level and turn it into a product and build a company." Within a few months, Merrill and Kalanithi had moved to San Francisco, raised venture capital and assembled a team to help make their cubes and accompanying games ready for store shelves.

That team is essential to Sifteo's success, Merrill says, but so is the recognition that "we don't have the market cornered on creativity." They've made it a point to connect with people outside the company for game ideas, forming partnerships with Richard Garfield, creator of popular trading-card game Magic: The Gathering, and indie developers like the folks behind the Bit.Trip games. They've even made their software-development kit available for free online and have hosted contests and "Game Jam" weekends to encourage amateur developers to invent games for the Sifteo system.

"We really care about building play experiences that are beneficial to kids, that parents can feel good about," Merrill says. "It's not just entertainment for entertainment's sake." Many of the activities available so far are puzzle and word games that encourage problem-solving, but Sifteo owners can also play the curiously named adventure outing Sandwich Kingdom and a party game inspired by the iOS game Bloop.

The latest version of the cubes came out in November. In addition to Amazon and other e-tailers, they're available at New York's MoMA Store, the Toys"R"Us in Times Square, select Barnes & Noble locations and Marbles: The Brain Store. One of Merrill's goals for 2013 is to expand Sifteo's retail reach. If people can get their hands on it--literally--he's confident they'll be hooked by what he calls "the magic of interactivity."

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