Many people I speak with complain about the cost of MYO cards compared to the cost of buying blank MIFARE Ultralight EV1 cards from 3rd party sources. There is obviously an upsell because of file-hosting/web-serving costs, MYOs being higher quality cards than typical off-brand NFC cards, etc.
Recently I was discussing this with someone and wrote up a feature design that you might actually consider given the business model (as I understand it) Yoto has right now. For the (probably) small number of users who see this as a meaningful choice, this feature would probably re-capture their attention and wallet and likely tap into another audience population who currently sees the Yoto card ecosystem as very vendor-locked content (despite MYO cards/playlists being actually very open). Lean into the open-by-design idea that Yoto seems founded on. Charge a premium for that 'openness', but let the user choose if they want it.
Concept: Sell users an "unlock license". This could be per-device or per-account.
You could easily figure out some average post-device-sales profit margin (I guess it may be $200 per account, with 2-4 devices per account; assuming an average profit of $5 per card, that assumes 40 card sales to get to the $200). Sell the unlock license for $25 per device and you can instantly recover most of that profit margin that MIGHT be lost, plus you also still have the ability and obvious utility for selling digital cards and Club subscriptions. I bet Yoto would sell a lot more digital cards if they sold this unlock license.
Implementation Notes for consideration:
Mobile App
The mobile app will need to check if the account has ANY unlock licenses, and if so, it can be used to write to 3rd party cards.
App would need to be capable of formatting, and applying the NDEF commands
App would need to be able to scan 3rd party cards to assess validity (e.g. 'nope this card won't work its a 128bit card, you need MIFARE Ultralight EV1 48b', 'yep this card will work!' 'nope this card won't work, its a MIFARE Classic, you need MIFARE Ultralight EV1 48b'.
Yoto Players
The device would require an active license to be able to write to the 3rd party cards or play them.
Players could be sold pre-unlocked with a bundle of 3rd party cards
License management
License could be permanently tied to the device, making second-hand unlocked devices slightly more valuable, and greatly encouraging new card sales to come from the second-hand market device sales
License could be tied to the account owner. e.g. i might buy 3 unlock licenses since i have 3 devices and assign one to each device in the app/settings; when i buy a new device it won't have a license but i could move it from one device to another.
License could be granted to the account owner such that all devices under that account become unlocked as long as they are linked to the account.
License Delivery
as a firmware patch to the device requiring 2 firmware to exist for each device (standard/locked vs unlocked). when applying the license it pushes the new firmware to the device from the mobile app.
as a special Yoto Card that applies the license when loaded in the device to "play" its content
applied as a setting configured from the mobile app.
Yoto Store
Yoto could go so far as to sell packs of 3rd party cards on their stores for a far cheaper cost.
When buying, you could force the sale to be bundled with a license if the account holder doesn't already have at least one license (to protect user idiocy).
This could be a [license + 20 cards] bundle for $50, compared to the 10 MYO cards for $30 currently.
Cards could be sold in packs of 10, 20, 50, 100. If you make the larger packs 1% cheaper at each level, it will appear to be a better deal, but the bulk processing allows Yoto to save a LOT more money on purchasing, thereby raising profit margins on the larger packs.
Selling larger packs also likely reduces the number of packages to ship which helps save the environment from more CO2 emissions, a more 'green' choice.
Taking it a step farther, a 'certified' list could be maintained by Yoto to inform consumers which 3rd party card manufacturers products have been tested by Yoto and confirmed to work. You could probably work out a referral deal with those sellers to just point customers there, so you don't need to handle sales, or pass the sales through directly so Yoto takes the sale and passes the dropship order to the manufacturer.
The cost of 20 off-brand cards is $15 or less when consumers buy them. Yoto could bulk purchase and bring that cost down even farther obviously, especially when not needing to brand/imprint them.