Are you sure it's not just the delivery? If I want a storybook I don't want to wait 2 business days for it to print, ship, and deliver, and I'm sure most parents/guardians don't think that far ahead. The physical delivery factor turns your product into a mental burden.
If you (or Disney or Hasbro) shipped ebooks that unfolded when you tell it a prompt (in the format of "bibbidi bobbity boop tell me a story about an elephant"), then I'm sure it would fly off the shelves this Christmas. It doesn't even have to be expensive hardware; I'm sure you can build it with a Pi Zero with 2 cheap screens paired to an app on the parent's phone. But perhaps that's not the business you had in mind.
That's a fair point about friction, but we're intentionally focused on physical books - the whole idea is to get away from screens. Most parents we talk to have the opposite problem: too much digital content, not enough tangible things. A printed book that lives on the shelf, gets read at bedtime, gets dog-eared and carried around - that's the product. You're ordering it for a birthday, a holiday, a first day of school. It's not impulse content, it's a keepsake.
I'd be a little surprised that parents who want physical storybooks would actually buy AI generated ones, instead of hoping that you dig up lost manuscripts from Hans Christian Andersen or the Disney golden age. That just seems like a contradictory audience.
If you (or Disney or Hasbro) shipped ebooks that unfolded when you tell it a prompt (in the format of "bibbidi bobbity boop tell me a story about an elephant"), then I'm sure it would fly off the shelves this Christmas. It doesn't even have to be expensive hardware; I'm sure you can build it with a Pi Zero with 2 cheap screens paired to an app on the parent's phone. But perhaps that's not the business you had in mind.