Hasbro’s Sales Awaken

Earlier this week the teaser trailer for “Star Wars: The Force Awakens” created a large buzz in social media as fans dissected the limited content in the trailer. Along with the fans, Hasbro welcomed the debut of the trailer because it has a long-standing contract for the license for Star Wars toys. When Disney closed the deal to acquire Lucasfilm in 2012 it once again sold the licensing rights to Hasbro, which has held the license since the last 1990s,  until 2020. In most cases, the royalty rates for a movie fall between 10-15%, but Hasbro agreed to a rate of over 20% to secure the lucrative deal.
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For Hasbro, the agreement is one of many that are driving up sales. The toy giant also inked deals to create toys for “Frozen” and the Marvel movies, and analysts predict its fourth quarter sales to rise 16%. When the first of the Star Wars films debuts in 2015 it is expected to lead to even larger increases in sales. Of course, costs will increase as the films approach because Hasbro is required to increase advertising for the toys, which makes the licensing deals a classic bundling story.

As Hasbro’s sales steadily climb, Mattel’s sales have been falling since the end of last year. While Mattel remains the largest North American toy-maker, Hasbro has secured rights to several of Mattel’s long-held products, such as Disney Princess. Because of Hasbro’s recent deals, many analysts view it as the future leader in the US toy industry. With a long line of Marvel movies and the Star Wars movies on the horizon the future looks bright for Hasbro.

2 thoughts on “Hasbro’s Sales Awaken

  1. OK, but then there are TV shows. Has Star Wars made it to the cartoon world? There certainly are piles of Star Wars novels that can provide story lines….
     
    Now a second question: if the royalty they pay is higher, will it be profitable? Or are they aiming for economies of scope (scale), that having a few core, stable products lets them book enough advertising to lock in cheaper rates overall?

  2. I’d be interested to see how cartoon based toys sell relative to those with real actors. Cartoons are cheaper and faster to produce, and if they offer the same returns on toys, it would seem that Hasbro would be better off making cartoons. Consumer oriented (children), cheaper to produce (and therefore market), with comparable sales? Perhaps investing in a more high quality cartoon might even provide greater margins.

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