Hasbro CEO Brian Goldner spoke to the gathered press and investors at UBS Global Consumer And Retail Conference earlier today to explain the company’s strategy in the coming years.
Some of the highlights:
- Success of Hasbro’s Franchise Brands.
- Partnership with Paramount Pictures.
- Boulder Media Studio animation initiatives.
- Toys’R’Us situation.
- China’s Nezha and the Transformers.
We’ve painstakingly transcripted every single word, for you to analyze and leave a comment on the thread associated with this news post. Relevant slides are also attached. Check it all out, after the jump.
Mr. Goldner is very happy with the success of Hasbro’s Franchise Brands:
“It begins with our franchise brands at the center of that strategy. There are seven brands. They represent about 50% of our revenues. Our franchise brands are owned and operated brands of our company. Brands like Transformers, Magic: The Gathering, Nerf and My Little Pony. These brands enjoy operating profit margins of 20% or better, which is ahead of our company’s average operating margin about 15.6%. These brands have grown considerably over time.”
Mr. Goldner talked briefly about their partnership with Paramount Pictures. The same slide which was on display at their Toy Fair Investor Day was featured here as well:
“More recently we announced a new arrangement with Paramount Pictures where we’re more involved in storytelling in the movie space. In fact over the next few years, you’ll see new movies come from us. Micronauts was a comic book brand. It was owned by neither Warners or Marvel. In fact we bought that brand a few years ago and we’re now developing that for the storytelling space that will become the future enterprise of the company. You know Dungeons & Dragons. We’re developing that for entertainment and it goes on into the future.” During the Q&A Session, Brian elaborated further: “We have brands that will benefit from storytelling and so we announce this relationship with Paramount where we will be able to fund up a minority of the production budgets of each of the films that we would produce, but at varying levels. We obviously have the right to lay off whatever investment to some strategic parties that we have.“
Boulder Media Studio and its animation initiatives were also mentioned:
“We have industry leading storytelling across a number of dimensions. We now own an Irish animation studio that is world class. We’re developing a raft of television [programs] anywhere from 4 to 6 shows a year on average. And from 2020 and beyond, I would expect to see one animated feature film per year. Having had a successful first My Little Pony feature film last fall, we’re in the home entertainment window just now and is performing quite well. Both of those windows are incredibly important, so you’ll see us spending cash in terms of $100 to $125 million a year.”
He also mentioned that when handling the situation at Toys’R’Us, it’ll take a year for Hasbro to ‘rightsize’ the inventory completely. Hasbro will be catering more to online and brick-and-mortar shops to minimize the impact.
Additionally, Brian mentioned their upcoming projects in China. He stated that the company is looking forward to Nezha and the Transformers series which they hope to be a hit on Chinese prime time. The project is co-produced with China Central Television (CCTV) network.
Near the very end, a question was asked whether Hasbro is planning for a Transformers Amusement Park. Though a direct answer was not given, it was implied that no such plans have been made.
There was something for the Power Rangers fans as well:
“Let’s start with the consumer and the child in them. First of all, 20% of Hasbro’s revenues are for people who are teenagers and older. So, while kids may be ‘getting older younger’, adults want to ‘stay younger longer’. And so both of those dynamics are important to us. People want to play at every age. The other important thing is: kids getting older younger just means they get to be more ‘decisional younger’. They’re actually expressing their own desires for the things they want to play with. It’s not to say they don’t play with play-things, it’s just instead of thinking about at a non-branded play-thing, they want a brand that’s associated with the character that’s most beloved. That’s why we recently brought on the Power Rangers. And the Power Rangers will now become part of our portfolio because it’s a very young-skewing brand and we know through our research that young children express a preference at a younger age. We want to be with characters and stories that are meaningful to them.”
Music
Damn, looks like Prime got an exclusive discount pass to the local tattoo parlor.
Negativedark
How I interpret some of that stuff about kids deciding young is the idea that they decide what characters/stories/franchises at a young age, and then return to it when they are older. I mean most of us developed our love for Transformers at a young age.
unicronic
I wonder what industry they're thinking about?
deathzero23
\"Industry-Leading Story Telling\"….
They better justify the mess in The Last Knight…
TFXProtector
None of this was compelling or even sounded like a good thing.
It was basically "We cater to whomever is opening their wallet at the time. Whatever age."
Followed by "We made all of our core brands grow by cutting corners everywhere and making them "look" fancier."
Followed by "Yep. We got tired of Michael Bay, too. Now, we're going to dictate some things and if it fails we can give the majority of the blame to the studio. Win win!"
Followed by "We're going to push more product, like drug dealers, to the brick and mortar stores, as well as online, because let's face it…. We've really dropped the ball, here. Heck, some people are still looking for Hot Rod and Cogman from TLK. Wave 2 POTP? Hah! No."
Going where the money goes is a good plan in the short term, it builds the business and keeps it afloat, but it burns bridges with long term customers because you're making it clear they're not doing it enough for you.
Don't get me wrong, I'm glad that China isn't entirely a 3rd world country anymore and the citizens are finally starting to catch up, at least to some degree, that's great it really is! But why, oh why, are they being catered to in such a fashion? Europe received Japanese molds in the 80s and 90s, but that was it. The US got nothing after Action Masters failed. South America? Hah. Forget it.
Some of the world's biggest markets and no special treatment was given to them, but China gets Hasbro Asia and Year Of The (fill in the blank) exclusives while the US, the UK and ALL of South America get your run of the mill stuff, nothing else, worst case scenario… Cyberverse. I love that Cyberverse is affordable and aimed at low income families/markets, but it's not enough.
Core brand growth is great for the investors and the company, but what about the consumers? Okay, Studio Series is a step in the right direction, it really is, but basically they're telling us "Okay, so you know how you've been buying movie toys and you're in pursuit of the most accurate scale? You know, you bought our stuff, knock offs, 3rd party, etc. Well, now we're here to tell you that you've done it all wrong all along. So, here are new toys that we should've done from the get go. Thanks for rebuying them all!" That's how their growth has happened.
As for their involvement with Paramount… Eh, we've already seen what too many cooks in the kitchen leads to. A toy company isn't going to be all that worried about solid stories if the toys are already selling. Look at Spin Master and Paw Patrol as an example.
And finally, the working with retailers thing? "We know Toys R Us is going to close, so we'll be going with Target, soon. Walmart doesn't want to play ball, but we still have to suck theirs. BBTS? Bish, pls." So, I'll have to stalk stores (which I hate doing at my age, I'm tired, doggone it!) keep hope alive that online retailers will finally get stuff in, but all it boils down to is "We're going to make promises, we just won't keep them. Want it? eBay it!"
Deadend
"Brick and Mortar" means physical stores. Like Target, Walmart, and other retail outlet stores you can walk into and buy your goods at. That's why the term "brick and mortar" because it means a built physical location, and in the old days those were built out of brick and mortar.
This also includes Walgreens now, and their push to get more into various discount chains as well. Any kind of store that has a physical presence that a consumer can walk into and see a product and then pick it up.
SPLIT LIP
*rubs hands together and scoots towards the computer*
Oh boy, Hasbro investor meeting reports! Time for dozens of armchair nerds to claim how they could do better despite not knowing a God damned thing.
GizmoTron
The vast majority of both of those demographics have no idea what a 3P Transformer is.
DecepticusPrime
Probably mainly Wal-Mart and target online shops.
Deadend
Everything Goldner said sounds promising!
Really looking forward to increased profits for years to come for them which means more and more and better merchandise for us too!
bellpeppers
"So, while kids may be ‘getting older younger’, adults want to ‘stay younger longer’. And so both of those dynamics are important to us. People want to play at every age. The other important thing is: kids getting older younger just means they get to be more ‘decisional younger’."
See? They want to produce for both the "getting older youngers" and "staying younger olders" because those people get to be more "decisional younger".
I myself am more successful at meaning what I saying, rather than being able to say what I mean.
"It’s not to say they don’t play with play-things, it’s just instead of thinking about at a non-branded play-thing, they want a brand that’s associated with the character that’s most beloved."
Or turn to 3P for a better version of that character…
Caminus Prime
"Brick and mortar"………What???? Are they talking about third party shops or something????
User_136440
I have no idea about business and profit margins, but I do wonder if they upped the quality by applying more paint, and covering over hollow sections etc. whether they’d really be any worse off. I’d have thought that improved quality would result in more/faster sales, so though the percentage would be reduced, the actual profit made could be larger. I know there are plenty of figures I wouldn’t have hesitated to buy had they just had that little more attention to detail. But, it’s just me pondering.
jestermon
I must be reading something different than you.
Those new leaders sure are tiny.
Calabask
Mr. Goldner is very happy with the success of Hasbro’s Franchise Brands:
“It begins with our franchise brands at the center of that strategy. There are seven brands. They represent about 50% of our revenues. Our franchise brands are owned and operated brands of our company. Brands like Transformers, Magic: The Gathering, Nerf and My Little Pony. These brands enjoy operating profit margins of 20% or better, which is ahead of our company’s average operating margin about 15.6%. These brands have grown considerably over time.”
By reducing the quality of everything, even the directions, and raising the price while lowering the size for everything. Look at us screwing everyone and them thanking us for it!
SilverOptimus
There was more actually. But it's hard to write them down since he was talking really fast. But that's the summary of the whole thing. He said that the first 90 days of the announcement was a hard blow. They did some planning to rightsize the inventory. It'll take a year to correct the matter. Hasbro will be catering to online and brick-and-mortar shops more to minimize the impact of TRU situation.
POSSESSED_DIGIT
Didn’t really touch on the “Toys R Us” situation as much as I would’ve liked…
Novaburnhilde
Ah, I was thinking something like that too. Hopefully it's for Cyberverse because it looks super cool.
SilverOptimus
Can't say for sure, but it looks like it's from Cyberverse. I initially though it was his mouth, but upon close inspection, it looks as though it's an opened zipper. Amusing placement for that though.