A couple of months ago we launched Suwappu, a toy and media concept. For those who don't know them, Suwappu is a range of eight original toy characters, each with swappable tops and bottoms that can be read with connected devices (on your phone, iPad, etc). When you look at the characters through a lens, 3D urban, woodland, and marine environments animate according to each character, and the toys talk to each other and to you, in animated speech bubbles.

Since sharing the idea we've have some exciting progress with toy manufacturers and software partners, and are working to get Suwappu on sale in 2012. We've also been talking to clients about the possibilities behind the technology for all kinds of different products and brands, and about the Suwappu platform as a media channel in its own right.

Today we have an update in the form of a new internal iPhone app. We first worked with Berg to bring our original concept to life with a film, and for this latest stage we have also worked with Zappar (who've taken care of the AR recognition element) to produce the demo.

We're excited about this development in the technology: the app isn't reading markers in the form of QR or any other kind of code; it's reading the unique facial features, the colours and the form of the Suwappu characters themselves. (Our friend and Suwappu fan at Dentsu Tokyo, Natsuki, calls it Face Code!) The integrity and independence of the toy figures in their own right has always been important to us, and the fact that this is markerless technology supports that, in that they can exist as beautiful objects but with a secret life, unlocked by computer vision for those who choose to play in that way.

The more avid Suwappu watchers will notice some minor changes to the characters' faces, which have been made in order to render them more readable. It's possible Badger looks even more criminal.

The idea that this content and storytelling is happening, whether it's accessed or not, is also properly magical for us, like Woody and Buzz when the door's shut. It's a big step to hold the app in our hands and experience the 3D, animated AR playing brilliantly around the characters – easily the most (only?) satisfying AR experience I've had. When it works like this it feels natural, intimate, and immersive.

The 3D storytelling element of the toys throws up challenges as well as massive potential. We're talking about in-house Dentsu writers for the characters, who can produce episodic content over time, and intertwining story lines referencing real world events, as well as the toys' physical experience they've had in the world that week, as they live with their owner. We're also looking at how various other platforms work with the Suwappu platform, like the relationship between each character and Twitter, and his owners' Twitter.

There are two next stages that will happen in parallel. First of all, getting Suwappu and its software to market next year. We're also starting to think about and talk to the kind of clients with products or brands that lend themselves to this kind of play experience. Toys are obvious candidates, especially for younger children playing with their parents, which is where most of the commercial interest in Suwappu has come from so far. But we're also interested in any brands wanting to capture the opportunity to offer play and entertainment in an intimate, magical way that dances between the physical and the virtual, the timeless (product) and the temporal (stories).

At this stage the app is for internal use only, not available for public use. For the people who've asked about dates for Suwappu going on sale, we'll continue to post any developments here, and you can also sign up here to be sent updates direct. It's been a real pleasure to see so many people respond to Suwappu as well as we did here when Camille's characters started taking shape, and having Heather Graham describe them as "fantastic" at their New York MoMA outing was a high point of this year!

Thanks to our partners at Berg (who've written some more here) and Zappar.