Once again TFW2005 sat down to participate live on another Hasbro Financial Call. What’s so interesting about the call this time is the fact that we are now looking at the outcome of Transformers: The Last Knight, since 2017 Q2 was allocated to the revenue of the movie, toys and licensed merchandise. Hasbro CEO Brian Goldner and Hasbro Vice President Debbie Hancock joined with us today.
Despite the fact Hasbro had smooth sailing during the presentation, three journalists, back-to-back had one important question during the Q&A Session: “What Happened To Transformers: The Last Knight?”. We painstakingly transcripted all the info for you to read.
Question 1: There seems to be a narrative that movie properties did not performed to expectations during the quarter which seems to be at odds with your commentary on the Transformers franchise [see after the jump]. Could you address how you see the the company’s position for the second half in terms of inventory level, shelf space and retailers dedicate to your brand?
Brian Goldner: Entertainment continues to drive our business through and if you look at Transformers, we now have entertainment across multiple screens and in fact we are targeting and presenting stories to an infinite number of demographics around the brand. Certainly Transformers: The Last Knight products sold very well and POS was very strong. The brand is up considerably. And then of course we also have the Robots In Disguise products that’s around the television. We also have Universe product [he meant Generations] that’s focused on our fans. That is also selling incredibly well and there is of course preschool product Rescue Bots that is also selling quite well. So we are seeing a great sell-through around the brand, recognize that this is a brand that’s becoming Increasingly Global, Increasingly International. We’re seeing great growth in places like China around the brand and around our international market.
Question 2: Can we go back to Transformers [movie] for a moment Brian because you mentioned the strength of Global POS (Point Of Sales) that is up significantly year-over-year and against 2014 which was your last movie year. I’m just wondering if we could take those comments and translate them into absolute dollars. Would it be fair to assume that The Last Knight could generate revenue higher than the 2014 movie, which you said at the time was kind of in-line with the 2011 movie?
Brian Goldner: Yeah, I think Transformers is in fact it’s emblematic of what we’re doing across the company over the last three years; we have developed digital capabilities for stream content and putting content on a multitude of screens. That capability is really being born out in the Transformers business. So the overall [HUGE emphasis on the word] brand is performing at a much higher level than it was in 2014 in part that’s because the movie product is performing at a higher level than the prior year but also because we are seeing great growth in the Transformers: Generations products per fan-economy. And the Robots In Disguise product that’s been around the television. Television viewership is strong, our streaming on Netflix is very strong and then of course the fan oriented stream product that goes out on content that streams with Machinima. That’s how I look at it; as an expansion of storytelling. The brand did perform quite strongly in ’14 but also performed strongly in ’15 and ’16. This is clearly more in line with the movie year performance being up for the brand.
Follow-up question: To clearly understand: Movie-To-Movie it seems like this movie is better and then you layer on kind of everything you do with your brand blueprint and how you kind of expand brands and then kind of putting it all together. The franchise in general has grown but the movie also seems better?
Brian Goldner: Yeah, it is. The performance is good. Remember that that movie has continued to perform incredibly well globally outside the U. S. In China, we just surpassed 225 million dollars and the movie’s done more than 550 million dollars so far. It’s coming from a number of new areas of our capabilities that we’ve developed over the last three years.
A question was asked by a journalist regarding the delay of royalty revenue (timing is off by at least a quarter) compared to entertainment releases (Franchise Brands such as Transformers). Debbie Hancock replied “For entertainment and licensing… typically when we have consumer product sales, we work with external third party licensees who take that product and make the T-Shirts and Backpacks and all the great things that are sold around our brand. Their revenue at retail for example could be in the second quarter and they wouldn’t report that to us until early in the third quarter so generally what we see with that is it’s about a quarter in arrears from when the sales actually occur at retail. With our entertainment this year with Transformers coming out in June and we have are My Little Pony movie coming in October, we would expect to see some of that revenue in the fourth quarter.“
Additional Transformers related remarks from the Financial Call can be found after the jump. Several related slides are attached with this News Post as well.