Wednesday, October 4

The Hollywood Reporter.

Ynon Kreiz, the newly appointed CEO of Mattel, revamped the toy company’s Hollywood ambitions in September 2018 and established a films division that would focus on licensing and partnerships with studios after failing to secure major titles, such as the Barbie movie adaptation featuring Anne Hathaway.

After a year, Hasbro, its competitor, decided to expand and produce their own movies by rebranding themselves as Marvel Studios and having ties to Warner Bros. International, which is owned by the company. This led to the acquisition of Entertainment One for $3.8 billion in August 2019.

The year 2016 has seen a divergence of perspectives on content creation, licensing, and production. Toy manufacturers have either embraced partnerships or abandoned them, while Mattel’s approach to licensing and working with major studios has been adopted by Hasbro.

Mattel’s Barbie, produced by Warner Bros., has surpassed the $1 billion mark at the summer box office. Meanwhile, Hasbro sold eOne for $500 million, which is several billion less than its original purchase of the producer, after its own attempts to become Marvel failed.

After acquiring eOne, Hasbro’s strategy with longtime CEO Brian Goldner involved collaborating with Paramount Pictures to create and distribute film and TV content related to Hasbre toy brands like Transformers, G.I. Joe, and My Little Pony. Dungeons & Dragons: Honor Among Thieves was a disappointment, grossing only $208 million globally after its release in March, while the next installment of the Transformer series, based on the Toy Story franchise, has earned $433 million worldwide, including the sequels that financed the original movie Based

Prior to the eOne sale, Hasbro had a 6,500-title library that it could use for licensing revenue from noncore IP.

After the death of Goldner in 2021, Chris Cocks took over as Hasbro’s CEO and aimed to transform the company into a digital gaming powerhouse, while eOne was considered largely noncore. This led to Hasbra focusing on its toy businesses and listing it for auction before Lionsgate revealed its acquisition with $500 million in cash.

The focus of Hasbro’s current strategy is to convert legacy tabletop games from traditional franchises like Magic: The Gathering and Dungeons & Dragons into digital video games. This approach has led to the creation of films inspired by toy franchise movies that were unsuccessful at the box office, thanks to its eOne sale and subsequent expansion into virtual gaming.

Hasbro’s strategy is being influenced by Mattel, which seeks to manage franchises with major studios.

The toy companies have been subject to a change in expectations from Wall Street.

The eOne deal was also praised by Stifel analyst Drew Crum, who noted that management had to lower their entertainment outlook due to the planned divestment and adoption of an asset light model for entertainment. He described the deal as “addition by subtraction” because of the weaker entertainment perspective.

The Hollywood Reporter reports that Hasbro’s plan to own and operate film and TV production and distribution businesses, based on the vision of former CEO Goldner, was an entertainment strategy that could have worked, but it came with significant risks. This included operating eOne beyond its core competencies, which necessitated greater financial investment while using up cash flow in a subpar business.

It was no wonder that doubts arose, as an activist investor urged Hasbro to spin off its Wizards of the Coast and Digital Gaming division to gain shareholder value. This was followed by rumors that the COVID-19 pandemic had contributed to the damage done to Hollywood’s ambitions through production and cinema closures, leading Wall Street to favor the Mattel model for making X factor 1 films into mainstream success.

Following the success of the Barbie movie, Mattel is banking on its two-decade partnership with Warner Bros. to create products for fans. The toy giant has renewed its licensing deal with Discovery Global Consumer Products, which grants exclusivity to over 50 WBD brands and franchises by providing toys, dolls, vehicles, and games.

Mattel designs toys that are based on WBD brands, including DC Comics and the Harry Potter franchise, as well as programs like Ted Lasso, Friends, and Seinfeld.

The CEO of Mattel, Kreiz, highlighted the company’s approach to Hollywood following the release of Barbie during their earnings call in late July.

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