This exclusive report examines the strategic initiatives that have transformed Hasbro from a leading toy company into a franchise and content driven entertainment leader as exemplified by the growth of My Little Pony and its other iconic brands.
|Stephen Davis, president, Hasbro Studios, global entertainment and licensing, Hasbro|
When Brian Goldner took the helm of Hasbro six years ago as chief executive officer with a mission to change the persona of the venerable toy company into a global branded entertainment company, the risk was high, but so were the rewards.
Today, the Pawtucket, R.I.-based corporation is a reflection of Goldner's vision and mantra–"Reinvent, reignite and re-imagine." It is a very different type of company than it was when the "Master Transformer" (see sidebar on page 101) set out to re-invent branded play.
The transformation has been an ongoing strategy, and not just a quick cosmetic change like the bot character Optimus Prime makes in the popular Transformers movies and series. The results have produced significant changes to the structure, operations and financials of the company that now includes Hasbro Studios, its entertainment production division; the Hub Network, its TV partnership with Discovery Communications; Hasbro Digital, which includes the recent acquisition of Backflip, a mobile gaming studio; and Hasbro Publishing; as well as a new strategic approach to its franchise structure and content development.
|Simon Waters, senior vice president, global brand licensing and publishing, Hasbro|
|Samantha Lomow, senior vice president, global marketing, Hasbro|
|Donna Tobin, vice president, franchise leader, My Little Pony, Hasbro|
Hasbro appears to be operating on all cylinders as its core franchise brands–Transformers, My Little Pony, Littlest Pet Shop, Monopoly, Nerf, Play-Doh and Magic: The Gathering–grew 15 percent in 2013, representing 44 percent of total revenues, up from 38 percent in 2008. More importantly, each of its brands are poised for additional growth and expansion over the next several years.
"Hasbro has always been about great characters and great storytelling," says Stephen Davis, president, Hasbro Studios, global entertainment and licensing, Hasbro, who is now the master of integration. "We recognize that we need to bring our brands to life more fully through entertainment and content. Our storytelling and character development extend beyond film and television. We also tell stories at retail, we tell stories on digital platforms and we tell stories through licensing."
For 2013, Hasbro reported $4.4 billion in retail sales of licensed merchandise worldwide, according to License! Global's annual Top 150 Global Licensors report. The company ranked No. 11 among the world's largest licensors.
According to Davis, the ultimate goal is to provide consumers the opportunity to engage with Hasbro's brands on multiple platforms.
"Storytelling provides tremendous tools for licensees to work with by creating a dialogue between storytellers, studio, category managers and licensees," says Davis. "We have been able to influence publishing, apparel and hardlines to help shape their respective product lines by integrating all aspects of the process."
One of the best examples of the success of its new strategic branded play approach is the My Little Pony franchise, which was re-launched in 2010 and has grown to represent $650 million in retail sales in 2013.
In fact, Hasbro's girls' properties led all categories with 26 percent revenue growth in 2013, according to Davis, and reached $1 billion in retail sales for the first time in the company's history, increasing from $300 million 10 years ago.
According to Davis, Hasbro "re-imagined" My Little Pony in 2010 through the Friendship is Magic theme, creating and adding a television series on the Hub Network, which now has distribution in 180 territories. Davis says that the licensee base was also expanded to more than 200 licensees across 17 categories. In addition, the My Little Pony brand has added numerous global retail partners, from mass to class, that have exposed the property to entirely new audiences. In fact, My Little Pony, which was founded in 1983, has become a global pop culture phenomenon and has far exceeded any executive's expectations or financial goals.
"My Little Pony is the perfect example of how we drove innovation across all that we do for the brand, where entertainment has been a tremendous catalyst for engagement with the consumer," says Davis.
My Little Pony has been a marketer's dream considering its global popularity, reach and engaged audience.
"The backbone is the episodic series 'Friendship is Magic' that planted the seed for a much bigger story that we wanted to tell about the characters and their world. We extended it into all licensed categories including publishing and apparel and drove a more robust toy business," points out Samantha Lomow, senior vice president, global marketing, Hasbro. "The socially relevant messages of acceptance and friendship appeal to parents and fans of all ages. The brand has a retro/nostalgia factor that appeals to moms who grew up with My Little Pony, as well as trendy tweens and teens."
Another key aspect to the overall licensing strategy, according to Simon Waters, senior vice president, global brand licensing and publishing, Hasbro, is the strength of its licensee partnerships.
"We created the style guide, and we worked very hard to ensure that all the assets we created either spoke to the key themes or we incorporated licensees into the start of the process, so we were able to have a much better and more integrated product that really spoke to the overall franchise rather than having it look odd or be out of place," says Waters.
Waters emphasizes how important the partnerships with licensees are that have enhanced not only the product design, but placement at retail as well.
"There are three key words for licensees–innovation, responsiveness and collaboration," says Waters. "We always challenge ourselves to innovate, to be as responsive as possible to our partners and sales force and to collaborate on the business plan. It's a two way street.
"There is a mutual respect with our partners," Waters adds. "They are our sales and marketing force at retail and have helped us to have greater product integrity and do things faster and quicker–we go to retail with one voice."
The key My Little Pony global retail partnerships, which Hasbro executives view as further extensions of storytelling, include the following, as well as several additional direct-to-retail deals:
- Benetton Group–Launched in spring, this fashion collection featured apparel, footwear and accessories for kids and newborns at its stores in 42 countries.
- Topshop–The My Little Pony by Alice Vandy collection launched at Topshop's flagship store in London's Oxford Circus in October.
- Soho Fashions–With MLP kiosks in 40 malls across the U.S., products feature hair extensions and accessories for girls to "pony-fy" themselves.
- Build-A-Bear Workshop–This partnership offered consumers the opportunity to create specific characters such as Pinkie Pie, Rainbow Dash, Princess Twilight Sparkle and Fluttershy to their collection with various outfits and accessories.
- Colette–This Paris-based specialty retailer celebrated the 30th anniversary of the brand last fall with an exclusive, limited edition Andrea Crews collection.
"My Little Pony has an appeal to a multi-generational consumer base and transcends age and gender with our socially relevant messages of friendship. Because of that, we have been able to increase consumers and expand product offerings," explains Donna Tobin, vice president, franchise leader, My Little Pony.
In addition, My Little Pony POP will launch later this year and will be based on allowing girls the ability to do their own thing with the product.
"Girls are looking for more ways to experience their favorite brand; they want to customize and personalize with trendy, fun looking accessories," Tobin says.
My Little Pony Equestria Girls was introduced last year to appeal to a slightly older age group.
"The launch of our new IP Equestria Girls delivers hip and trendy teenage girl versions of the popular pony characters that so many fans around the globe already know and love, while staying grounded in the basic premise of friendship," says Tobin.
"[Equestria Girls is] how we created an extension of the My Little Pony franchise for an older girl that really played on fashion," says Waters. "Working earlier with the studio and licensees has enabled us to go to retail quicker."
The underlying approach that has greatly expanded My Little Pony will be applied to the other Hasbro franchises as well.
"The wonderful thing about My Little Pony is that we have created a brand that now spans a broad demographic–it's a brand that appeals to consumers of all ages," says Davis. "My Little Pony has been the catalyst in that respect, and now we can apply those learnings to some of our other brands."
First, the My Little Pony model is being applied to Hasbro's Littlest Pet Shop property, which will see a variety of new applications and products over the next several months that will include McDonald's Happy Meal promotions, customizable play sets and figures based on the series and an integrated app that will allow fans' pets to come to life within the game. In addition, IDW will launch a series of comic books. The entertainment and storytelling will continue with the roll out of season two of the TV series of the same name across Europe, Asia and Latin America. Season three will be available at the end of the year.
Ouija, the theatrical movie based on the long-standing Hasbro game brand, is set to release in October.
"We are looking at a long-term strategy of how we can create new ways to engage with that brand over the next few years," says Davis.
Another example of how Hasbro is using content and storytelling to enhance play patterns is the re-invention and re-launch of Furby, which was a dormant brand in Hasbro's vast portfolio that consists of more than 1,500 properties.
"We leveraged our consumer insights, our innovation and our ability to storytell in a different format, not episodic television, but digital app integration," says Lomow.
Monopoly is another great example of how Hasbro developed a story around its licensing through innovative products such as apparel and accessories based on parts of the board game.
"We spun off marketing of Monopoly's rags to riches story, using the great icons and creating some editorial around it that's relative to the time," says Waters.
Other applications for the Monopoly brand include McDonald's Happy Meal programs in multiple countries; expansion of a loyalty program in Albertsons grocery stores; the Minnesota lottery launched the first Monopoly- and Hasbro-branded electronic instant lottery tickets in the U.S.; continued partnerships with casino promotions; and a new national premium game, Monopoly Millionaires' Club, which will be introduced later this year by the Multi-State Lottery Association.
The fundamental blueprint and branded play global strategy, which Goldner initiated in 2008, will continue in the foreseeable future as the core franchises are expanded and new brands are launched.
"The magic is our ability to tell a story effectively irrespective of what the medium or platform is," says Davis. "We will continue to look for new ways to influence both entertainment and licensing, driving innovation and stimulating the organization to think differently and out of the box. We will always remain deeply rooted to the values of friendship and look for partners who can help us create the quality of products in multiple categories across the globe that continuously appeal to fans of all ages and keep in sync with our entertainment."
Davis continues: "We will continue to re-define what engagement means to our brands, and that's the heart of what our 'revolution in play' is all about–continued innovation, film and TV playing an important role, driving personalization and making branded play more relevant with individual consumers, rather than a one-size-fits-all philosophy that some other companies have. We will see the company do groundbreaking integrated execution that will be fun and exciting, and at the heart of it all is our great storytelling capability."
DTRs Drive Category Sales
Hasbro has signed several direct-to-retail deals in major territories including Brazil, Chile, Colombia, Peru and Central America for My Little Pony, Transformers and Littlest Pet Shop licensed lifestyle goods across key categories such as apparel, housewares and sporting goods.
"Through these agreements with leading retailers, we continue to strategically extend the reach of our brands in fresh, innovative ways that resonate with its global fan base," says Hasbro.
Key DTR deals include:
- Ripley (Chile and Peru)–My Little Pony, Transformers and Littlest Pet Shop apparel and sporting goods.
- La Polar (Chile)–My Little Pony apparel.
- Empresas Hites (Chile)–Transformers apparel.
- Grupo Exito (Colombia)–My Little Pony and Transformers apparel and home goods.
- St. Jack's (Panama)–My Little Pony, Transformers and Littlest Pet Shop apparel.
- Grupo Wong (Peru)–Transformers apparel and home goods.
- Leader (Brazil)–My Little Pony, Transformers and Littlest Pet Shop.
- Riachuelo (Brazil)–My Little Pony.
- C&A (Brazil)–Transformers and Littlest Pet Shop.
According to Hasbro, the licensor also has several DTR programs in place in Asia, Europe and North America, and will continue to seek additional programs across multiple brands and territories in 2014 and beyond.
Hasbro: Then and Now
When License! Global profiled Hasbro in February 2009 ("Master Transformer"), the company was just beginning to implement its chief executive officer's initiatives to transform into an entertainment-driven company. There was one Transformers movie (circa 2007) and the franchise was celebrating its 25th anniversary at the time, but there was very little other content.
Five years later, the company owns a major studio for creative development, is a partner in a kids' TV network, owns a mobile game developer and has expanded its publishing initiatives significantly. This month, the fourth Transformers franchise film, Transformers: Age of Extinction, will hit the big screen, Ouija is scheduled for October release, G.I. Joe 3 is being developed and Hasbro Studios has produced hundreds of TV episodes for various franchise brands.
Goldner's vision to transform the company into an entertainment entity has been accomplished on multiple fronts and it still continues to evolve.
Another key component of Goldner's vision in 2008 was global expansion.
"We have been increasing our investments in a number of new markets including opening offices in Brazil, Russia and China...and as we increase our presence around the globe, we expect to grow our emerging market business significantly over the next few years," Goldner told License! Global.
And emerging markets continue to be an important component of Hasbro's growth. In 2013, Goldner reported that emerging market business "continued to deliver double-digit revenue growth. Emerging market revenue grew by 25 percent to $575 million or 14 percent of Hasbro's revenues globally. Profitability in emerging markets increased by 40 percent year-over-year, increasing to 10.1 percent operating profit margin versus 8.9 percent in 2012."
Hasbro now has 20 offices around the globe.
Hasbro Publishing Tells a Great Story
While storytelling is key to the overall Hasbro franchise-driven strategy, Hasbro Publishing has its own story to tell, and that story is about innovative content and strong performance for all of its print products including comics, chapter books and other specialty titles.
Michael Kelly, director, global publishing, Hasbro
At a time when traditional print publishing is being seriously challenged by various digital formats, Hasbro Publishing is selling more books than ever before.
"We give kids and consumers the opportunity to relive the story, but what sets us apart is that we are not quite interested in telling you what happened in a particular episode, but more interested in telling you what happened between episodes," explains Michael Kelly, director of global publishing, Hasbro. "When the TV goes off and the movie theater goes dark, those characters are alive in your imagination. We build that story out and give you stories that happen in between the episodes and movies.
"A big part of our success is, from a content standpoint, that we deliver not just an interpretation or adaptation, but provide original content that is expanding that universe and giving a different experience of characters," he adds.
According to Kelly, every comic book from IDW is an original story about the My Little Pony characters. Hasbro has sold more than 1.2 million comic books to-date of its 28 editions.
Kelly says anecdotally that comic book store owners tell him that young girls are coming in to buy comic books for the first time and that "they have never had an 11-year-old girl walk though the door."
Hasbro Publishing is planning a special edition for San Diego's Comic-Con International in July, and will release a My Little Pony boxed set adventure collection from Little, Brown in October, which he points out are "the books that Rainbow Dash has on her bookshelf in the show."
The Little, Brown Books for Young Readers include leveled readers, hardcover and paperback storybooks and a chapter book series. Titles include The Elements of Harmony guidebook to the My Little Pony TV show, "My Little Pony: Friendship is Magic," and the Mini Pony Collector's Guide.
In addition to print, Kelly says Hasbro Publishing has a robust digital program that releases at the same time as print products.
"We have not seen any attrition on the print, so either we have a new audience because of digital or people are buying both," he says.
According to Kelly, Hasbro Publishing is quickly expanding the Littlest Pet Shop property's publishing initiatives through 2015. A comic book series from IDW was launched in May along with middle reader chapter books from Scholastic.
"Our franchises have been around for 30 years because they are not just simply great toys, but because they are great stories that resonate across generations and become part of a child's life," says Kelly.
Transformers Celebrates 30 Years
The mega Hasbro franchise will kick into high gear this month as the film Transformers: Age of Extinction premieres in theaters with new characters and a multitude of new products and partnerships. The iconic brand, which posted record growth globally in 2013, is also celebrating its 30th anniversary this year. And once again Hasbro is offering "more than meets the eye."
According to Hasbro, more than 100 promotional relationships will support the launch of the movie along with an additional 200-plus licensees across all major categories including apparel, bedding, publishing and footwear. Almost 20 new retail programs, including eight new direct-to-retail deals and 14 fashion collections across multiple territories, have been rolling out throughout the year.
As part of its corporate mantra (and similar to the My Little Pony approach of franchise integration), Hasbro will support the property across all gaming platforms with games from Activision, DeNA and Jagex Games Studio, which will debut later this year.
Last month, Hasbro featured Cybertron Monday, a global online sales event marking the official launch of the new Transformers toys, action figures and licensed products. Participating online retailers included Amazon, Target, Toys 'R' Us and Toys 'R' Us Asia, Walmart, K-mart, Tesco, Argos, Ripley, Tmall.com and HasbroToyShop.com.
The new film introduces a new cast of human characters too including Mark Wahlberg as Cade Yeager and Transformers robot characters such as Grimlock and the Dinobots.
In honor of the year-long celebration, Hasbro is releasing a record 73 Transformers Generations figures featuring classic conversions and "the most detailed and accurate action figures of characters from the new movie and throughout the brand's history," according to company.
Additionally, a non-movie Transformers Generations line features the launch of a new scale, Generations Leader Class; and a Transformers Generations deluxe scale line will include the fan-built bot character, Windblade, and be the 30th figure in the Thrilling 30 collectibles program, which features 30 limited edition figures.