Hasbro (US)

Hasbro is the world's #2 toymaker (after Mattel). It lacks the global brand power of its arch-rival's lead brand Barbie (although GI Joe/Action Man comes close), but has a broader portfolio that also comprises the world's best-known board games, including Monopoly and Trivial Pursuit, as well as Scrabble in North America. Like Mattel, the group restructured in 2000 after a disastrous foray into interactive games. Hasbro's biggest recent successes have been its Transformers and Marvel action figures, licensed Star Wars products and My Little Pony and Littlest Pet Shop animal figures.

Advertising: Click here for a listing of Hasbro Agency Account Assignments from Adbrands.net. Including unmeasured media, Hasbro declared advertising and promotional expenditure of $413m in 2009. In the UK, Nielsen Media Research/Marketing estimated measured media expenditure in 2008 of Ł16m.

Competitors: see Toys & Games Sector index for other companies

Hasbro Inc
1027 Newport Avenue
Pawtucket, Rhode Island 02862
United States
Tel: +1 401 431 8697

Brands & Activities: Since the 1990s, all the world's major toymakers have been stuck in what has become a fiercely competitive and exceptionally mercurial market, one that is heavily dependent on film or television-related licenses, and in which fashions change rapidly and almost without warning. This season's mega-hit is next season's has-been, and suppliers must be very fast on their feet to ensure they are not stuck with excess inventory once the current craze has passed. Hasbro has attempted to reduce over-dependence on fickle licenses and fads, and to strengthen performance in its core brands. Yet its Star Wars toys are still by far its most consistent sellers. It is one of the world's two biggest manufacturers of toys and games, competing with Mattel across many different sectors. Hasbro's particular strengths are in board and card games, boys' action figures and electronic toys. Like all toy manufacturers, the company is reliant on a comparatively small group of major retail customers, as well as an increasingly seasonal and constantly changing marketplace.

Hasbro's products fall broadly into six main categories of boys' toys, girls' toys, games and puzzles, preschool toys, creative play, and electronic toys. Of these, the boys' toys group is now the biggest, with revenues climbing to almost $1.5bn in 2009. It is led by perennial action figure favourites GI Joe and Transformers, both of which have enjoyed a new lease of life since 2007 as a result of movie adaptations. Transformers, originally introduced in 1985, experienced an 85% rise in worldwide sales in 2003 in the wake of a new range of licensed entertainment content including comics and a TV cartoon series. The hugely successful Paramount/DreamWorks movie adaptations, each among the top two or three movies of the year in 2007 and 2009 respectively, have boosted sales even more dramatically. GI Joe is also supported by an animated TV series, and earned its own big budget movie spin-off in 2009. It failed to reach the levels set by Transformers, but still ranked among the top 20 films at the US box office.

Outside the US, Hasbro markets a different version of GI Joe as Action Man, as well as action figures under the Dr Who license. The group also has a close relationship with Star Wars producer George Lucas, and in 2003 extended its exclusive worldwide license to rights for Star Wars action figures, vehicles and games until 2018. These products got a huge boost in 2005 from the release of the final movie in the series, and have been maintained by various TV spin-offs including the Star Wars: The Clone Wars series.

In 2001 the group also won the much-prized entertainments license for new Disney movies from Mattel, and has produced numerous action figures and other toys and games associated with Toy Story, Cars, The Incredibles and others. In 2006 the group signed a similar five-year deal with Marvel to make toys, games and action figures based on all its characters including Spider-man, Fantastic Four, X-Men, Hulk and Iron Man, all of which tie in with new film releases. Hasbro guaranteed Marvel royalty payments totalling at least $205,000 a year. In recent years, the group has spent well over $300,000 per year on royalties relating to licensed products. That figure reached a new high of over $330m in 2009.

Other successful boys' toys have proved less lasting. Beyblade spinning tops were a substantial worldwide hit in 2003, contributing more than 10% of group sales that year, making them the company's most lucrative toy since Pokemon in 2000. However sales dropped off sharply in 2004 and 2005. The boys' portfolio also houses action toys such as Koosh and Nerf balls and sports toys, and the SuperSoaker water-gun range. Later additions to the combined portfolio included B-Daman, a marble shooting toy that combines the features of trading card games, sports, and traditional action figures into one product.

Games & Puzzles, once Hasbro's biggest segment, is now the #2 with sales of over $1.3bn in 2009. Performance has remained stable for several years. The portfolio includes traditional board games, card games and electronic games and puzzles. Hasbro's portfolio contains many of the world's best known board game brands including the "Hasbro 30" list of classics such as Monopoly, Trivial Pursuit, Operation, Battleship, Jenga and others, as well as North American rights to the Scrabble and Pictionary board games. (Mattel has rights everywhere else. In a rare show of solidarity, Mattel and Hasbro joined forces in early 2008 to try to stop social networking site Facebook from offering an unauthorised software version of Scrabble to its users). Monopoly in particular remains a major contributor to revenues, an impressive achievement for a 70 year-old brand. The board game is available in a constantly changing range of different themed editions, ranging from Star Wars and Disney tie-ins to Lord Of The Rings, The Simpsons, Shrek, Spider-man and more. In 2006 the group launched a complete revamp of the product, asking customers in different countries to vote on an updated set of streets and utilities which better reflected modern life. A global version, under the banner Monopoly Here & Now, was launched in 2007 along with a version with electronic digital banking to replace the "old-fashioned" paper cash.

Trivial Pursuit also comes in numerous different editions, including DVD-enhanced and specialist versions. The group originally owned the licensed the brand, but acquired full control of the product in 2008. Newer board games include Candy Land and Trouble, and in 2005 the group acquired Wrebbit, a maker of innovative 3D puzzles. The Milton Bradley (or MB) games portfolio includes classics Yahtzee, Ker-Plunk, Mousetrap and Twister. Parker Brothers products include Risk and Clue (or Cluedo in the UK and other international markets). Pictureka is a brand new visual hide and seek game launched in 2008. In Europe, the group owns classic football game Subbuteo. At the end of 2007, Hasbro agreed to acquire privately held Cranium board games, toys and puzzles. Avalon Hill makes strategy-based board games, while Wizards of the Coast (acquired in 1999) develops trading and role-playing card games such as Pokemon and Dungeons & Dragons. Its biggest success has been the Magic: The Gathering, a hit in more than 75 countries worldwide since launch in 1993. The group has the games license for the Harry Potter movies (Mattel has the toys license).

The girls' toys portfolio is less extensive, but has grown dramatically in recent years. Sales have more than doubled since 2003, although they took a dip for the first time in several years for 2009, slipping to $791m. Currently, Hasbro's most successful product line in this segment is another resurrected 1980s invention, My Little Pony toy animals and accessories, again supported by an extensive licensing program in comics, videos, and other products. This range was expanded significantly in 2007 with the similarly themed Littlest Pet Shop line. Other products include Easy-Bake snack mixes and playsets. In 2009 the group introduced a line of toys based on the Strawberry Shortcake brand owned by American Greetings.

The group's collection of electronic toys, manufactured by subsidiary Tiger Electronics, appeals primarily to a "tweens" girls' audience. Hasbro has scored a series of successes in recent years with robotic interactive pets, ranging from the Furreal Friends range to Furby (a huge hit in 1998, reintroduced in 2005). Another old favourite, Baby Alive animatronic dolls, were reintroduced in 2006. The MP3 player add-ons I-Dog and I-Cat have also been very popular. The group also makes portable music products (Hit Clips) and lifestyle products (E.Chat communicators). Videonow portable video players were a big hit in 2004. Hasbro's most unusual diversification has been into oral care, with the launch of the Tooth Tunes musical toothbrush.

The pre-school toy portfolio includes a host of well-known and long-established brands now marketed mostly under the Playskool umbrella. They include Busy Basics infant toys and rattles, Mr Potato Head (its popularity revived by Disney/Pixar's Toy Story movies), Tinkertoy construction sets and Tonka trucks. Creative play products include Play-Doh modelling clay, and design toy Spirograph. Pre-school sales totalled $451m in 2009.

In addition to acquiring licenses to third-party brands, Hasbro has been working hard in recent years to develop spin-off entertainment based on its own products. The group agreed a master license agreement in 2007 with EA under which the software company can develop games based on Hasbro's products. Hasbro already has licensing agreements with several other developers, but these revert to EA as and when they expire. (However, Activision retains the license to produce games based on the Transformers action toy range.) Virtually all of Hasbro's main brands have now been adapted for console, PC or mobile phone games since 2008.

Having previously assigned movie rights to its brands on a project-by-project basis Hasbro announced a new strategy in 2008, following the huge success of the Transformers movie. A more wide-ranging deal was agreed with Universal Studios to develop a series of at least four movies based on key properties such as Monopoly and Clue. In 2009 Hasbro acquired a 50% shareholding in the Discovery Kids cable channel for around $300m. Under this partnership with Discovery Communications, the partners will work together to develop programming based on Hasbro's brands. The Discovery Kids channel will relaunch in October 2010 under the new name of The Hub.

After several years in which Hasbro struggled to regain stability, the group moved back into growth in 2003, with revenues rising for the first time since the late 1990s. The effects of currency fluctuation, however, led to a further decline in 2004 before a recovery the following year. For 2008, group revenues rose by 5% to $4.0bn, and then edged up by 1% in 2009 to almost $4.1bn (though still well below the company's 1999 peak of over $4.2bn). Net income jumped 22% in 2009 to a company record of $375m. North America contributed 60% of revenues, or $2.45bn. Almost half of Hasbro's total sales are generated by just three customers. Wal-Mart alone accounts for a quarter of sales, Target and Toys R Us combined account for almost another quarter.

Management: Al Verrecchia is chairman of Hasbro, with Brian Goldner as CEO. Other senior officers include David Hargreaves (COO & CFO), John Frascotti (global chief marketing officer), Duncan Billing (global chief development officer), Frank Bifulco (president, North Americas sales) and Simon Gardner (president, Europe). Lisa Licht was named as general manager, entertainment & licensing at the end of 2007; Bennett Schneir was appointed as SVP & managing director, motion pictures in 2008. Jerry Perez was named as SVP & global brand leader, preschool. Alan Hassenfeld, a grandson of one of the founders of the company and its former CEO, remains a director.

Background: Hasbro Inc was founded in 1923 by brothers Henry and Helal Hassenfeld, in Providence, Rhode Island. Known as Hassenfeld Brothers, the company originally sold textile remnants but later began to manufacture pencil boxes and school supplies. In 1943 Henry's son, Merrill, became president, and the company expanded its product line to include toys such as paint sets, wax crayons, and doctor and nurse kits. Sales boomed, increasing from $500,000 in 1939 to over $3m by the end of the decade.

In 1952, the company's newest product, Mr Potato Head, became the first toy to be advertised on television and was a huge seller. It was followed in 1964 by GI Joe, the first action figure for the boys' market. (Arch-rival Mattel had introduced their Ken doll for the girls' market a year earlier). In 1968, the business went public, changing its name to Hasbro Industries, and a year later acquired TV production company Romper Room. After Merrill Hassenfeld's death in 1980, the family argued over what to do with the business. In the end, the company split into two, with Harold Hassenfeld, Merrill's cousin, taking control of the school supplies business, which was renamed Empire Pencil Corporation.

Merrill's sons Stephen and Alan, who had joined the company during the 1960s, took control of the remaining Hasbro toy business, with Stephen succeeding his father as chairman-CEO. The 1980s saw the company embark on a major acquisition spree, including the purchase of Raggedy Ann and Raggedy Andy toys in 1982. In 1984 Stephen Hassenfeld engineered the takeover of what was then the world's largest game and puzzle maker, Milton Bradley, followed by Ideal Games in 1986. At the same time he sold off or stopped production of a huge number of low-selling or unprofitable products, and introduced the enormously successful line of Transformers action toys to the US after negotiating the license with Japanese developer Takara.

After Stephen's death in 1989, younger brother Alan Hassenfeld took over the running of the business, making further acquisitions including most of Coleco, which owned US rights to the adult board game Scrabble. (The game's inventors, New Yorkers Alfred Butts and James Brunot had sold the international rights separately to British company JW Spear in 1948). This was followed by the purchase of Tonka Corporation in 1991, which also included subsidiaries Kenner Products and Parker Brothers, respectively the makers of Play-doh (introduced 1956) and Monopoly (introduced in 1935). In 1992 the group bolstered its already large international division with Japan's Nomura Toy Company, and Asian distributor Palmyra; two years later it acquired US rights to Waddington's games Pictionary and Cluedo, and bought Larami Corporation, maker of the Super Soaker water gun, in 1995.

A year later, the long-running rivalry with Mattel erupted into all-out war. The two companies had already clashed several times, most recently in 1994. That year, Hasbro had come close to adding the international rights to Scrabble to its portfolio after agreeing to buy JW Spear. However Mattel intervened, outbidding Hasbro at the last minute to pick up world rights to the hotly contested spelling game. Two years later, Mattel launched a $5.2bn hostile takeover of Hasbro. However, the threat of a major anti-trust investigation forced the larger company to pull out.

Both companies were also beginning to compete in the fast-growing multimedia sector. Hasbro Interactive was formed in 1996 to adapt its board game titles for the CD market, and scored modest successes with computer game versions of Trivial Pursuit, Scrabble, Yahtzee, Battleship, Risk and Clue. In 1998, the group acquired a back catalogue of old Atari computer games, updating them for the new market, as well as games developer MicroProse. In what turned out to be an extraordinarily busy year, the group also acquired Cap Toys and OddzOn Products, makers of Koosh sports balls; paid more than $600m to win the licence for a new range of Star Wars merchandise and games; bought a licence from Nintendo to manufacture Pokemon toys; and acquired Tiger Electronics, makers of what became the toy craze of the year, the Furby, as well as Galoob, makers of Micro Machines toys and Pound Puppies dolls.

Not all of these moves proved successful. Hasbro was one of several companies which found it had hugely overpaid for Star Wars rights (not least granting Star Wars creator George Lucas share options which made him Hasbro's single-biggest non-family shareholder). Sales of merchandise were considerably lower than had been anticipated, despite the general success of the new Phantom Menace film. Meanwhile a slowdown in the games market left the Interactive division in desperate straits by 2000, with accumulated losses of over $200m. During that year the popularity of both Pokemon and Furby also waned dramatically. Sales of Pokemon products had accounted for some 15% of group sales in 2000, but fell by almost $500m a year later. The group announced a series of massive job cuts in 1998 and 1999, shedding more than 30% of its global workforce. Following a series of profit warnings and substantial restructuring costs, the group reported final results for 2000 that showed the company plunge into a net loss of $145m (from a $189m profit in 1999). At the end of 2000, the group agreed to sell its entire Interactive division, as well as internet portal Games.com to French software company Infogrames.

Despite the damage caused by the Star Wars licence, the group continued to bank on the success of licenses, tieing up with the Harry Potter and Jurassic Park III movies, as well as buying US rights to children's TV character Bob The Builder. The group also agreed to stick with the second Star Wars sequel, Attack of the Clones. Despite a substantial fall in revenues for 2001 as a result of the decline of Pokemon, Furby and Hasbro Interactive, the group clawed its way back into profit.

In 2002 the group was fined by the UK Office of Fair Trading for fixing prices of its products by preventing distributors from undercutting set prices, in violation of the local Competition Act. Also that year, the company extended its licensing agreement with George Lucas for Star Wars products by a further 10 years to 2018.

Last full revision 12th February 2010