Hello and welcome to another coverage of Hasbro’s Conference Calls. Financial Quarter Q1 is over and Hasbro is very happy with the results.
CEO Brian Goldner was present at the event and he is very excited and looking forward to their upcoming product launches for Transformers 5, Captain America: Civil War, Star Wars: Rogue One, My Little Pony Friendship Is Magic, Disney Princesses and Spider-Man: Homecoming.
During the Q&A session, something interesting was revealed. Entertainment segment (specifically Transformers) has been hit hard. It was very clear that Hasbro is looking forward to the next Michael Bay Live Action Movie.
Nothing significant was told during the main presentation; nothing that we haven’t heard before. You can check out what was told regarding Transformers, after the jump. Several important slides are also attached with this news post.
Brian Goldner, Hasbro’s CEO stated:
“Q1 was a tough comparison within the Entertainment and Licensing category. Franchise Brand revenues in the segment declined this year versus last year when we recorded revenue for a multi-year digital streaming deal. The agreement includes MY LITTLE PONY, LITTLEST PET SHOP and TRANSFORMERS programming. The segment also had tough comparisons in consumer products and film revenues related to the 2014 TRANSFORMERS movie recorded last year.”
“TRANSFORMERS toy and game revenues were also down versus a very strong first quarter of last year when it benefited from the movie. Franchise Brand POS in the quarter was up high single digits globally and double digits in the U.S, more than overcoming the negative TRANSFORMERS comparison.”
“As I mentioned, TRANSFORMERS revenue represented the most significant decline within our Franchise Brands for the quarter. New entertainment began late in the first quarter of this year, with the second season of TRANSFORMERS ROBOTS IN DISGUISE on Cartoon Network in the U.S. and currently rolling out internationally. Machinima and Hasbro are unveiling all new entertainment targeting the older TRANSFORMERS fan later this year.”
“We are also actively developing the next chapter of the TRANSFORMERS theatrical stories. In February, Paramount Pictures dated TRANSFORMERS 5 for release on June 23, 2017, with two additional TRANSFORMERS films planned for June 2018 and 2019. We have global teams of talented individuals working on this multi-year theatrical entertainment and innovation slate.”
Deb Thomas, Hasbro’s CFO stated the following:
“Entertainment and Licensing segment revenues declined 30%. In the first quarter of last year, the segment benefited from a multi-year digital streaming deal for Hasbro Studios television programming. Consumer product licensing and entertainment revenues also declined in the quarter, most notably from the difficult comparison with last year’s TRANSFORMERS movie-related merchandise and revenues. Licensing revenue is generally recorded in arrears, and last year’s first quarter reflected the holiday 2014 TRANSFORMERS movie-related revenue.”
Autovolt 127
I'll admit that was hilarious how they finally came out yesterday.
Lumpy
They do that. There are people on these boards who used to work for Hasbro as in store reps. They would check what was in stock, selling, etc. and make adjustments as needed. But ultimately, if the store doesn't listen to the suggestions, then that's on the store for not fixing it.
ZapRowsdower
It's strange to see this phenomenon, considering the general decline in toy quality over the years, but I think new customers are drawn to toys they throw away at the end of the year. These impulse buys don't seem strong enough to create consistent customers – i.e. these kids don't go back to see the next wave of TFs beyond their initial curiosity when the movie was out. Whether this is due to poor toy design (i.e. 1-steps are simple, but no where near as charming as G1 toys were – as evidenced by actual kids playing with G1 over 1-step), or because other technologies distract them (or even that the current gen doesn't have the attention span, with all the competing entertainment).
But the point remains: a morbid curiosity in the toys after seeing the movie is not really enough to see long term growth – rather it points to an increasing DEPENDENCE ON MOVIES to sell the toys. THIS IS A VERY BAD SCENARIO. The movies can fail or get overshadowed by a Marvel or SW release, right? If strong connections to the brand are not created, via the movies, we can consider the sales spikes as flashes in the pan (i.e. the Wii phenomenon). Ask Nintendo how the Wii worked out the second time they released it (Wii U)!
We need to stop blaming stores: Hasbro has to work with these stores to sell product. If there's a consistent problem at Walmart (AND THERE IS! THE GENERATIONS SHELVES ARE USUALLY EMPTY!), then Hasbro has to work with Walmart to alleviate the problem. Not because it's "Hasbro's fault" (or any BS about who is to blame), but because it's in Hasbro's interest to CORRECT THE ISSUE so they can sell more.
It's getting really obnoxious seeing folks on here blame the stores over and over, as if Hasbro has no say or influence. Maybe it doesn't… but considering how much inventory they provide (i.e. they fill several aisles with product!), one would think they might take an occasional visit to Walmart (for example), and then talk to corporate when they see how often the shelves are bare of their product. Maybe offer some assistance in stocking? Sometimes spending a little time/money on a problem can go a long way to boost your profits (especially during a non-movie year decline!).
Lumpy
That's not Hasbro's fault, that's the store being stupid and not clearing out those 35 deluxes that aren't there…
signals3
I still think bad inventory control hurts. You go to a store that never restocks….like I did, and finally have them check. A Wal mart near me says they have 35 deluxes on their pegs. Pegs that have been empty for months. The system reorders, but can't because of a mistake in their inventory. They still haven't fixed it. Hasbro needs to assign new SKU numbers…
CountOrlock
"Glad to see Transformers remains one of their top Franchise Brands. Feel sorry for those over on hisstank.com."
Them Joe fans better pray Hasbro's gamble of putting Joe, MASK, Rom, Micronauts and Visionaries into a big blender actually works. I doubt it though
Still trying to figure out how Visionaries fits in that big list..
eagc7
pretty much they do sell more merchandise whenever a movie is out
because as we see the sales go down during the TV years (not a the end is nigh drop, but still), as opposed to the movie years
Autobot Burnout
Cartoon Network is premium?
Probe
Me too, I've gotten pretty impatient.
But your comment made me check Cybertron.ca and…
Combiner Wars SkyLynx & Onslaught Sighted in Canada – Cybertron.CA – Canadian Transformers News and Discussion
Autovolt 127
Still waiting for Sky Lynx dammit.
Silvershot
Well, the movies are marketed to, and seen by, millions of people. Millions of dollars are spent on advertising and you are exposed to it everywhere – TV spots, Internet ads, Billboards, bus stops, etc. The show is on a cable network that is sometimes available only to premium subscribers, and there isn't a lot of outside advertising. It airs at 6:30 A.M. on Saturdays, which maybe good or bad, but it just doesn't have the same scope of exposure as the movies do.
WishfulThinking
Glad to see Transformers remains one of their top Franchise Brands. Feel sorry for those over on hisstank.com.
Hoffman
Hasbro doesn't decide what stores carry. I can't imagine that Hasbro chose to randomly not offer a wave of CW to UK stores, more likely that Hasbro UK chose not to offer that wave for some reason, probably because there weren't enough re-orders from the big stores when that wave was shipping.
Same thing happens in Canada all the time.
Exinferis
Looking at their pie-chart, Europe (as a whole) makes up almost 20% of their market. That's pretty impressive considering how often they give us the virtual finger! Missing a whole wave of CW didn't help confidence of European fans. I, personally, said "bugger that!" and went with TT's UW instead; they're effectively the same price (well, they were before the Pound dropped against everything else because of this stupid Brexit crap).
If they want to keep fans engaged (and I mean all fans, not just adult collectors) in the non-US territories, they need to stop this not-supplying-a-certain-wave BS. If I could have gotten Motormaster, Dead End, Breakdown and Wildrider in the UK, without having to jump through hoops, I'd have been less inclined to risk a hefty customs fee getting the TT version. But we're always excluded.
Same goes for MLP (another Hasbro brand I collect).
I have no sympathy for Big Brands loosing money when they treat their non-us customers with such disdain. They want our money, when it suits them. It's not just Hasbro, Mattel are just as bad, if not worse for this kind of thing. The only company I can rely on to get all the figures I want from UK retail is Playmates; I've yet to have a single problem finding TMNT figures in UK shops. That's how you keep all of your customer base happy, not just the American one.
Hoffman
I'm sure they'd much rather see steady sales year over year than the constant spike and dip. Even if the spikes become smaller, in the long run it will yield a much higher return.
Autobot Burnout
Isn't the "one film a year" thing precisely what the TFCU's projected strategy wants to do, though?
T-Hybrid
But it is a steady stream of income. When Hasbro says things are "down" it's precisely because the movie boost isn't there and we've fallen back to the levels they expect in an off-movie year.
The risk, though, is if they go too crazy w/ movies the return won't be nearly as large. It's going to be much easier to get a giant retail endcap display if you have a movie every few years than trying to land one EVERY year. Especially now that we're going to have Marvel, Star Wars, DC, etc. all competing for that same retail space every year.
Probe
A few things that we know that might help explain:
This pattern has been going on with Transformers since 2007. Even through Animated, Prime and RiD, there was a sales drop after the movie (but even non movie years do about twice as well as Transformers did before 2007).
The movies get Paramount's marketing money, not just Hasbro's or Cartoon Network's. There's a big size difference there.
Hasbro's sales numbers almost always reflect sales TO retailers. Which does not always 1-1 represent sales to customers.
Strike Creamsicle
Overall those numbers look really good, but to see a decline in what a lot of us think are popular brands is kind of surprising.
If sales are really up in years where there are movies I can see the desire to continue making films, but I would have expected that a show running on TV regularly (instead of movies that come and go) would provide a steadier stream of income. Strange how that works. Is it just more marketing time/money spent leading up to a movie, whereas the shows are just sort of there without a lot of advertising?
Is the market just oversaturated with variety in kids' toys? Or is this a case of Hasbro expanding Transformers into too many toylines, as a lot of fans here like to speculate?
(I mean, when I was a kid in the 80s, it was just "transformers" and it was all a part of the same thing, and I would think that creates less confusion for parents, for instance, among other things, but I haven't seen much market research about that).
Really curious about this sort of thing. Whenever I'm in Target I walk by the toy section and it's kind of overwhelming to see the sheer variety of things on the shelves just in the "transformers" area, let alone the entire toy section.
T-Hybrid
Oh boy, sales figures. Incoming "REPAINTS ARE KILLING TRANSFORMERS!" rants.