Last Updated on May 10, 2021 by Danielle
Hasbro believes the key to its future success is to become more than a toy company.
Hasbro is in town for the Toy Fair unveiling its lineup for 2016. Hasbro brands include Nerf, Play-Doh, My Little Pony, Transformers, Littlest Pet Shop, and more.
On the show floor this week, we get an early look at some of the top toys for Christmas 2021. For 2016, Hasbro has a new Play Doh line, another version of Pie Face, and a brand new lineup of Star Wars toys. 2015 was a very good year for Hasbro. Brian Goldner, the CEO, of Hasbro believes that for it to continue with positive trends in revenue, margin, and earnings growth, Hasbro must focus on becoming an entertainment company.
2015’s success was broad based across Hasbro brand, partners, as well as geographies. Hasbro says it current lineup of merchandise targets the broadest demographics in its history, which really positions Hasbro for long term success.
Goldner believes that Hasbro’s Gaming division really helps differentiates Hasbro. Hasbro creates some of the best board games for kids. Pie Face won the 2016 TOTY award for gaming. Last year, Hasbro’s gaming division grew 8%. Hasbro really has a strong foothold in gaming from digital games like Magic the Gathering to Face To Face Gaming like Pie Face.
In 2015, consumer demand for the Hasbro brands was very strong and continues even this year. Hasbro franchise brands and partner brands grew with double digit gains and Hasbro’s total revenue grew 13% across all major markets. around the worldthis in
With brands like Transformers, Hasbro is known for its cool toys for boys. The girls segment was down 17% this year because of the slowing sales of Furby, which was one of the top toys for girls in 2014. This year Hasbro will be producing the Disney Princess and Frozen line after acquiring the license from Mattel. Disney Princess and Frozen is a 500 million dollar business, but this year is a transitionary year for Hasbro.
Hasbro is growing even more in emerging markets. Emerging markets grew 15%. Hasbro has made significant investments its retail presence in these markets. Hasbro believes that Transformers in China is a big opportunity.
The toy industry had a very good year, with the US growing close to 7%. Russia, Mexico and Poland grew double digits. The top 11 markets grew 7 %, which translates to 3 billion dollars of market growth. Russia grew 26%. At 13%, Hasbro had greater growth than the industry. In Europe, Hasbro is now the number 2 company.
Industry experts continue to forecast growth. The global growth is expected to be 10% between now and 2019. Hasbro wants to capitalize on this growth especially in emerging markets. In developed economies, Hasbro wants to grow in market share gains, innovation, and entertainment
Stronger consumer demand for Hasbro franchise brands as well as partner brands were supported by Hasbro’s brand blueprint. At one time, Hasbro wanted to merge with Dreamworks animation. The deal didn’t happen but it gives you insight as to how Hasbro thinks of itself as an entertainment company not just a toy company.
Hasbro believes that consumers are embracing its innovation and connecting to the stories behind Hasbro’s brands. The relationship continues to deliver higher gross margin and operating margin. Hasbro believes these levels are not only sustainable but they want to improve margins over time.
What gives Hasbro the confidence for brand expansion? Something they call the brand blueprint which ties entertainment and social media to its brands. With its execution Hasbro develops multiyear plans that will leverage brands to their full potential. These blueprints are largely in place but Hasbro will continue to invest in them.
The strategy works. 52% of Hasbro’s revenue came from Hasbro’s 7 franchise brands in 2015. These brands are the further along executing the blueprint. Franchise brands grew 7% despite a decline Transformers. Nerf was the largest brand across Hasbro. In totals, these core brands have operating margins above 19 % , which is higher than the average.
Licensing is obviously very important to Hasbro. Hasbro’s focus on the strategic execution of its blueprint led to 5th straight year of revenue growth in entertainment and licensing segment. The compound annual growth rate over 5 years was 12%. The segment is very important to Hasbro, growing from 4% to 6% of revenue. The average operating profit margin was 28%. Licensing revenues totaled 2.6 billion dollars in 2015.
Story telling allows Hasbro connect to global audiences. Through the development of characters and stories, My Little Pony has become a part of everyday life. It’s bed room decor, a comic book, and television program, and a live action show. To deliver this full range experience, Hasbro has invested in its licensing efforts known as Hasbro Consumer Products.
This investment drove greater than 50% consumer product licensing revenue since 2013. Hasbro expanded the scope and scale of this team in international markets. Hasbro broadened the category focus and added new disciplines such as location based entertainment. Hasbro continues to invest in these teams both geographically and in multiple disciplines.
The digital ecosystem connects digital experiences with play. Hasbro wants to grow its expertise in the rapidly growing mobile industry. They have bought 70% of Backflip Studios as they unveil their mobile efforts with Hasbro franchise brands.
Earlier this week Transformers Earth Wars was announced and its Hasbro’s first mobile game collaboration.
Storytelling brings Hasbro’s brands to life, connecting to audiences. Hasbro is telling stories with every interaction with fans. The best story tellers are working on Hasbro brands across all screens
Since 2009, when Hasbro formed Hasbro Studios, the company has produced over 1500 half hours of television. This resulted in 1.6 Billion dollars in TV backed merchandise. 2015 was the largest year to date. Hasbro has built a digital team that creates digital content for all screens. Hasbro’s films have grossed billions of dollars at the box office and in merchandise.
In partnership with Paramount, Hasbro’s writers are developing new films. Next year with Michael Bay and Mark Walberg, the next chapter of Transformers is slated for release on June 23, 2017. For June 8, 2018 Hasbro is working on the story that tells a never heard before story of Bumblebee.
For 2019, the next Transformers story will launch on June 28. Writers are also creating a multi property universe of interconnected universes with several of Hasbro’s great brands such as GI Joe, Micronauts, ROM, Mask, and Visionaries. Paramount and Hasbro’s All Spark studios are producing these movies to develop deep stories and characters .
Whether it is a Hasbro brand or partner brand, data shows that entertainment backed brands outperform the market. In 2015, 5 of the top 10 global industry growth drivers were backed by major theatrical releases. Storytelling across all platforms drives the business.
Star Wars, Marvel, and Jurassic World were significant contributors to Hasbro’s success in 2015. Partner brands were 28% of Hasbro’s revenue. Each told a fun and engaging story with global reach and broad demographic appeal. These are stories not only creating heroes but heroines which children aspire to be.
Star Wars Revenue increased significantly last year and Marvels Age of Ultron drove total Marvel growth which finished just behind Star Wars. Jurassic World returned with amazing new dinos, which exceeded Hasbro’s expectations.
Star Wars delivered revenue that was on par with the last movie. With a new movie and strong demand, Star Wars momentum continues in 2016; Hasbro’s revenues in 2016 could equal 2015’s revenue.
2015 was an unprecedented era of entertainment. Visibility in the entertainment space is bigger than it has ever been. It’s not slowing down anytime soon. 2016’s and 2017’s movie lineup is powerful, which will drive Hasbro’s sales. In 2017, 2 major Hasbro brands will have theatrical releases, My Little Pony and Transformers.
From All Spark pictures and Lionsgate, My Little Pony The Movie will release in November 3, 2017. It is Hasbro’s first animated film. The My Little Pony brand is resonating with fans and consumers around the world. Hasbro believes that My Little Pony is ready to take the next step to the big screen.
Entertainment and stories reach far beyond theatrical films. Hasbro’s investments in storytelling has created brands that resonate with kids of all ages. Through episodic television shows, digital shorts, and social media Hasbro is engaging fans in a number of ways. Adweek ranked Hasbro 4th among the brands that broke the Internet in 2015.
While research shows the 73% of kids are engaged with a mobile device every week, traditional play including toys and games, and arts & crafts is the top activity. Technology play including video games, television, and music ranks the next highest. Kids move seamlessly between mobile technology, and traditional play. Hasbro believes their engagements with brands must do the same. Each experience is interrelated to the next but capable of standing on its own.
Play Doh and Nerf exemplified this experience. Each brand offers traditional play. Consumer led demand has led to new innovation such as Nerf Rival and this year Play Doh Town.
Play Doh celebrates its 60th anniversary this year and has never been bigger. It was up 32% this year. Last year, was its biggest year its 60 year history. Parents love the brand because it gives kids the ability to express their creativity. Hasbro puts a lot of innovation in the play sets. This year, Hasbro is launching Play-Doh town. It’s character based with play sets.
Social engagement has built communities and experiences where consumers and can engage on personal level. While Hasbro doesn’t produce a lot of content with these 2 brands, fans do. These were the 2 top growth franchise brands last year. Nerf is now the largest brand across Hasbro. Hasbro will invest in both of these brands to achieve revenue potential.
Not every franchise brand will grow every year, but a multi year strategic plan is always built to drive revenue and margin. It’s built on storytelling and digital engagement on every screen.
Today Hasbro has better visibility than ever on how to increase revenue and profit. In developed economies, Hasbro is targeting single digit growth through brand innovation and market share gains. In emerging markets, it wants double digit growth. Hasbro believes that 2015’s operating profit margins are sustainable. Through the execution of its media strategy and operational efficiencies, it wants to focus on improving margins in coming years.
What about the Hasbro and Mattel merger rumor? Goldner called the Mattel rumor, “Just a rumor.” He said, “we focus on our own brands and building our own brands. We are open to doing something to expand the capabilities in that blueprint and we do look at some kinds of acquisitions that add on.”
It has taken Hasbro 10 years to build capabilities of Hasbro. True transformation doesn’t happen overnight but Hasbro is excited what it can achieve and what it will create in the years to come.