Placeholder Image

Subtitles section Play video

  • In turbulent times, parents turn to toys to keep their kids happy.

  • That has helped propel sales at some of the biggest toy makers in the U.S., including Hasbro,

  • the largest producer of board games.

  • Hasbro has over 1,500 brands, including Monopoly, Play-Doh and Transformers, and designs and

  • distributes toys for some of the biggest names in the entertainment world, such as Marvel and Star

  • Wars. It also makes TV shows, movies and digital games.

  • In the first quarter of 2021, Hasbro had a net revenue of $1.1 billion, a 1% increase from the

  • previous year. The toy maker's Consumer Products segment jumped 14% during that period.

  • "The toy industry actually put up one of the strongest growth years we've seen, at least in my

  • 20 year career tracking it.

  • And we've not seen double digit to mid teens, mid upper teens growth rates in the traditional toy

  • category in a long time."

  • "During the early days of the pandemic, we saw our games business accelerate very substantially.

  • And, you know, people were looking for ways to be together and to play together while they were at

  • their homes. We really also saw that creative play brands like Play-Doh performed incredibly

  • well."

  • And it's not just kids who Hasbro sells games to.

  • The toy maker has a roster of over 40 million competitors worldwide who play fantasy world

  • building games like Magic: The Gathering and Dungeons and Dragons.

  • In 2020, Hasbro's Wizards of the Coast studio had its biggest year ever, with revenue of $816

  • million dollars, a 24% increase from a year earlier.

  • But once the pandemic subsides, will family game night endure?

  • And what does the future of toys and games look like for Hasbro and its rivals Lego and

  • Mattel?

  • Hasbro traces its roots back to Providence, Rhode Island, in 1923.

  • Hillel and Henry Hassenfeld, brothers who emigrated to the U.S.

  • to escape persecution in what is now Poland, got their business chops selling rags and remnants

  • from the textile industry in New York's garment district.

  • The duo later moved into making wax crayons and pencil boxes for school children in New England.

  • "So they would buy wooden pencil boxes, line them with these remnants.

  • That was their innovation, and then put in them, you know, things like pencils and compasses and

  • whatever to sell them to parents for school kids.

  • And they became very popular."

  • At the beginning of the Second World War, the family run business made its first foray into the

  • toy industry, selling junior air raid warden kits and doctors and nurses kits to kids.

  • But it was the 1952 launch of Mr.

  • Potato Head that helped change the trajectory of the company and the toy industry.

  • Mr. Potato Head, the first toy advertised on TV and the first television commercial aimed directly

  • at children, sold a million units in its first year alone.

  • The original toy required a potato or similar-sized vegetable.

  • "The vegetable and potato and pepper thing didn't really work out, because kids would lose it under

  • the couch and then it would rot.

  • And that was considered wasteful.

  • And also kids began, you know, sort of stepping on these plastic parts and whatever.

  • So they again innovated.

  • And this has really been the story of Hasbro, innovation after innovation, by making it entirely

  • plastic."

  • About a decade later, the company had one of its first major flops.

  • In 1963, it launched Flubber, a gooey plastic putty.

  • After the product hit store shelves, reports of skin rashes, lawsuits and an FDA investigation led

  • to a company recall.

  • Reeling from the mistake, the toy maker was on the hunt for a new hit.

  • In 1964, it introduced the first action figure to rival the popular Barbie doll made by Mattel.

  • The 11.5 inch male figure wore a U.S.

  • military World War Two uniform and had 21 moving parts.

  • G.I. Joe turned out to be a blockbuster for Hasbro.

  • The company went on to produce a string of other hits, too, including 1983's My Little Pony and

  • 1984's Transformers.

  • And to broaden its consumer base even further, Hasbro was buying its competitors.

  • In 1984, it bought Chutes and Ladders maker Milton-Bradley for $360 million, and in 1991,

  • Hasbro took the top board game slot, buying Play-Doh maker, Tonka, including its Parker

  • Brothers division that makes Monopoly and Trivial Pursuit.

  • But in addition to the successes, there were also setbacks and headwinds.

  • "It was boom and bust.

  • And you would, you'd put all your money into market research and sales and advertising, and you

  • might get a hit. And oftentimes you didn't get a hit.

  • And that certainly was true for Hasbro in the 70s and 80s."

  • "It's one of the things in the toy business that always gave me a lot of anxiety as an analyst.

  • It was really a one shot on goal year.

  • Alright, you planned, you planned, you planned, and then you kind of cross your fingers, you hope

  • the consumer responded, and you put a lot of dollars behind these big key items to try to drive

  • the holiday season."

  • In the mid-2000s, Hasbro's Playskool division recalled more than 250,000 Team Talking Tool Bench

  • toys, following the death of two young children.

  • Around the same time, Hasbro Easy Bake Ovens were recalled after the company received 249 complaints

  • of children getting their hands or fingers caught in the oven's door.

  • There were 77 reports of burns and one report of a serious injury.

  • The toymaker faced a different kind of obstacle in 2018 when Toys R US announced plans to sell or

  • close all of its 885 U.S.

  • stores. Prior to the bankruptcy, Toys R US was Hasbro's third largest U.S.

  • customer and its second largest customer in Europe.

  • But the company quickly adapted, making new products and finding new markets for its toys and

  • games. By 2020, 59% of net revenue in the U.S.

  • and Canada was derived from just three customers: Wal-Mart, Amazon and Target.

  • Hasbro is one of the biggest toy makers in the U.S., with a May 12th, 2021 market cap of

  • $13.6 billion.

  • With people stuck at home and widespread lockdowns in place, U.S.

  • toy sales reached $25 billion in 2020, a 16% increase from the year earlier.

  • That gave a boost to some of the biggest toy makers, including Mattel, Lego, and of course,

  • Hasbro.

  • "In late March and early April last year in the U.S., when categories like construction or brands

  • like Lego, arts and crafts, games and puzzles, those categories really started to take off.

  • And we saw weekly sales numbers that were just unprecedented, even bigger, in some cases, than

  • the holiday season."

  • In the first quarter of 2021, Mattel had net sales of $874 million dollars, up 46% higher than a year

  • earlier, driven by growth of Barbie dolls and Hot Wheels.

  • In their latest earnings report, Lego said consumer sales surged 21% in 2020.

  • The Danish toymaker had revenue that year of about $7 billion dollars, up 13% from the year

  • prior. It was a similar story for Hasbro.

  • In the first quarter of 2021, Hasbro revenue was up 1% to $1.1 billion dollars from the year

  • earlier. Its Consumer Products segment, made up of games like Play-Doh, Jenga and NERF, rose 14%

  • and its Wizards of the Coast and digital gaming segment surged 15%.

  • "Hasbro is the largest producer of board games, traditional board games, and so they saw a lift to

  • their entire business.

  • But certainly we have to call up brands like Monopoly.

  • And the company has done an outstanding job of taking what was really a classic play pattern,

  • this idea of this around-the-table board game, competing for ownership of property, and they've

  • layered on licenses.

  • They've extended the brand."

  • "Parents were really just looking for great experiences.

  • And so, you know, our NERF business and their toys, were selling well, gave kids an opportunity

  • to have adventures outside to get outside the house, but in a, you know, safely in the

  • backyard."

  • In 2020, Hasbro had net revenue of almost $5.5 billion dollars, down 8% from the year earlier,

  • due to a decline in its Latin American and Asian markets and lower TV and film revenue, due to

  • Covid-19-related shutdowns.

  • Consumer products like toys and board games made up almost 67% of 2020 net revenue.

  • Wizards of the Coast and digital games made up 16.5%, and entertainment net revenue for movies

  • and TV made up almost 17%.

  • And while the company saw a drop in the sale of its licensed content for partner brands, like

  • Disney and Marvel, it did see a surge in growth from one blockbuster franchise.

  • Fueled by the sale of toy light sabers and baby Yodas, seen in The Mandalorian, sales of its Star

  • Wars products grew by 70% in 2020.

  • Another trend for toy makers in 2020 was the shift to online shopping.

  • According to analysts, e-commerce has given toy makers like Hasbro the ability to showcase their

  • brands in a whole new way.

  • And you're starting to see the convergence of content and entertainment and consumption.

  • This idea that I can go on to Wal-Mart.com and I can type in Transformers, and in addition to the

  • product, I might be able to see a little bit from the movie or the most recent animated series.

  • And so you're starting to see companies like Hasbro, with their own internal entertainment

  • capabilities, are saying, 'How do we now use this as a marketing vehicle?'"

  • With retail stores closed and consumer social distancing in place, Hasbro reported over a

  • billion dollars in e-commerce revenue in 2020, a 43% increase from the year prior, making up just

  • under 30% of global revenue.

  • For the superfans in 2019, Hasbro unveiled Pulse.

  • The direct-to-consumer site offers devotees and collectors exclusive products, some of which are

  • crowdfunded. For example, the 4-foot long Star Wars: The Vintage Collection Jabba's Sail Barge,

  • comes with a 64-page booklet containing set photos, as well as behind-the-scenes development

  • updates.

  • "The price points are really what the fans are looking for, and then they give us their

  • commitment, and in return, then we go and produce the product, and we take them along the journey.

  • We're offering them early booklets on the blueprints of the sail barge from Star Wars, and

  • then taking them along the journey, meeting the designers and developers of the product."

  • Hasbro is making moves in other parts of its business, too.

  • In 1999, the company acquired fantasy world-building business, Wizards of the Coast.

  • Wizards had its biggest year ever in 2020, generating revenue of $816 million, 24% higher

  • than the previous year. That growth was led by record-breaking years from Magic: The Gathering,

  • up 23% and Dungeons and Dragons, up 33%.

  • "This gaming area is just huge, and there's huge fandom, and it continues to grow very rapidly."

  • "For many years, these were analog businesses, where Magic: The Gathering was played as a trading

  • card game, was played face-to-face.

  • We would run on average in 2019, we ran nearly a million tournaments globally.

  • Now, some of those tournaments were literally "Friday Night Magic," as we call it, at your local

  • hobby shop with 15 people."

  • The game eventually went digital, moving to the PC, and in March 2021, went mobile.

  • "We have seen incredible success and millions of downloads.

  • People are playing Magic Arena about nine hours a week online, which is an amazing statistic.

  • And it's really building the whole 24-hour engagement with the brand."

  • And the toymaker might have even bigger plans for its own iconic properties on the big and small

  • screens. In February 2021, Hasbro announced plans for dozens of new films and television shows.

  • The projects include films based on Dungeons and Dragons and G.I.

  • Joe, scripted series based on Risk and Clue, and potentially unscripted TV shows based on Monopoly

  • and Play-Doh.

  • "The key is to start with strong brand, start with strong evergreen brands that are based on play

  • patterns that will always exist for children, and then build upon that with the storytelling and the

  • content in the media."

  • While Hasbro has been part of the entertainment industry for years, with blockbuster films like

  • its Transformers franchise, its $3.8 billion dollar acquisition of entertainmentOne is expected

  • to triple the number of its projects.

  • While a byproduct of the pandemic may have been a resurgence of traditional toys and games, analysts

  • think that Hasbro, with its diversified portfolio and storytelling capabilities, might have an edge

  • over its competitors as consumers seek out new forms of entertainment in an increasingly digital

  • world.

  • "I think what we're seeing now, particularly through Hasbro, is the de-seasonalization of their

  • business. You're bringing brands to life in the spring, you're bringing brands to life in the

  • summer, and you're really anchoring that around gaming experiences, digital experiences,

  • entertainment, and you're less and less reliant on that gift-giving season for children in the

  • holiday period."

In turbulent times, parents turn to toys to keep their kids happy.

Subtitles and vocabulary

Click the word to look it up Click the word to find further inforamtion about it