Hasbro spent almost 25 years as the #2 toymaker in the US behind Mattel, before overtaking its longtime and hard-pressed rival for the top spot during 2017. It lacks the iconic brand power of Mattel's Barbie or its Danish rival's Lego bricks, although the huge success of a series of movies based around Hasbro's Transformers toy range have substantially boosted global sales of that particular brand. In general, Hasbro is stronger than Mattel in the boy's sector, and its other brands include GI Joe and his international counterpart Action Man. It also has a much larger portfolio of traditional board games, including perennial classics Monopoly and Trivial Pursuit. Other recent successes have been licensed products based on Marvel and Star Wars characters and My Little Pony and Littlest Pet Shop animal figures. Encouraged by the success of Transformers, and its own past forays into entertainment content development, the group launched its own cable TV channel in the US in 2010, The Hub, a joint venture with Discovery. That experiment didn't work out and was reshaped in 2014, but the group still runs its own inhouse TV and movie production division.
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Adbrands Weekly Update 8th Feb 2018: Hasbro has officially overtaken Mattel to become the world's biggest toymaker by annual sales, despite unexpected weakness in 4Q caused by a decline in the popularity of Star Wars tie-ins and disruption from the bankruptcy of Toys R Us. Revenues for the final quarter slipped 2%, but for the year, Hasbro delivered sales of $5.2bn, up 4%. By contrast, Mattel suffered another grim quarter, prompting an 11% slide in full year revenues to $4.88bn, the first time in nearly 15 years they have fallen below $5bn. The biggest problem for Mattel was a dramatic decline in performance in its smaller divisions. Sales of Barbie declined only 2% year-on-year but some other units performed far worse, with Fisher-Price down 11%, American Girl down 21% and Construction Toys by 29%. Girls Toys excluding Barbie plunged by a shocking 37%. The only positive note came from the Entertainment division housing Thomas The Tank Engine and other characters, where revenues rose 12% year-on-year. There was a similar disparity between the two companies on the bottom line. Tax reforms prompted a near-$300m charge for Hasbro in the final quarter, resulting in a 26% slide in net earnings to $397m. However EBITDA excluding exceptionals was up 12% year-on-year. Mattel also took took a big hit from tax reforms and Toys R Us, but even without those factors gross profit margin was slashed by almost 50%, resulting in a net loss of over $1.05bn. Even without exceptionals the company reported negative EBITDA, after a strong positive the year before.
Adbrands Weekly Update 16th Nov 2017: Oh, the indignity of it. One-time leader in the global toy industry Mattel has received a takeover approach from US rival Hasbro, which has risen from third place to the current #1. Mattel's performance has been in steep decline over the past two years as sales of long-time cornerstone Barbie slump, with the result that its market cap of $5bn is now less than half Hasbro's $11.4bn. No details of the talks were disclosed, and any deal would be subjected to considerable regulatory scrutiny. However, the toy landscape has changed dramatically since the last time such a merger was discussed two decades ago. Mattel offered to acquire then-struggling Hasbro in the 1990s, but was rebuffed. Since then, with the notable exception of LEGO, most traditional toymakers have seen a sharp decline in their sales as kids have transferred their affections to high-tech products like computer games and smartphones. Manufacturers' woes have been exacerbated by the decline of specialist retailers, such as Toys R Us, which filed for bankruptcy earlier this year. Mattel now risks losing part or all of the $135m it is owed by Toys R Us, while Hasbro's debt is less than half that sum. A combined Hasbro-Mattel would pose an challenge for regulators, nonetheless, with around a third of the highly fragmented US market in traditional toys. In three segments of model vehicles, dolls and action figures it would have more than 50% share. We shall see how this plays out.
Adbrands Weekly Update 27th Apr 2017: In a shock turnaround, Mattel was overtaken as the world's biggest toymaker by longtime rival Hasbro following a grim set of results for 1Q. Mattel's sales fell by 15% to $815m, with declines across all divisions, even at constant exchange rates. Sales of key brands Barbie and Fisher-Price fell by 13% and 9% respectively, while Entertainment and Other Girls' Toys plunged by more than a quarter and more than a third. The newly created Construction and Arts & Craft division - designed to compete with Lego - suffered a shock 38% drop. That resulted in a net loss for the quarter of $113m. By contrast, Hasbro's revenues for the quarter were up by 2% to $850m as a result of strong gains in entertainment toys and board games.
Adbrands Weekly Update 23rd Mar 2017: Hasbro outraged some Monopoly purists (and delighted others) with an update of the player tokens for new editions of the hugely popular game. From August this year, the thimble and boot tokens used since the game first launched in 1935 will disappear, along with the wheelbarrow, introduced in 1950. In their place will be a rubber ducky, a penguin and a T-Rex dinosaur. These were selected by consumers in an online poll across 146 countries. Players were asked to vote for their favourites from a selection of existing pieces and potential new contenders. A total of 4.3m votes were cast. The existing Scottie dog got more votes than any other piece, with the new T-Rex not far behind.
Adbrands Weekly Update 9th February 2017: In a reversal of fortunes that would once have seemed impossible, America's traditional #2 toymaker could be on course to unseat arch-rival Mattel. Boosted by its capture of the prized Disney Princesses franchise from the larger company, Hasbro's revenues soared by 13% in 2016, topping $5.0bn for the first time in the company's history. Meanwhile Mattel slumped 4% to a seven-year low of $5.5bn. Similar performance in the current year would give Hasbro the lead. That's already happened on the bottom line, with Hasbro's net income up 11% to $533m, against Mattel's $318m. Hasbro's performance in 2017 will depend not just on the continued growth of Disney Princesses, but also another sizeable boost from the forthcoming Transformers movie, for which the company holds toy rights.
As one of the world's three biggest manufacturers of toys and games, Hasbro competes with Mattel and LEGO across many different sectors. However, its particular strengths are in boy's toys, and board and card games. Since the 1990s, though, all the world's major toymakers have been stuck in 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.
For several years, Hasbro's most consistent best-sellers were its Star Wars toys, but the lion's share of profits from these were paid out to then-owner George Lucas. As a result, the company has set about establishing partnerships to develop it own core brands. None has been more successful than its production partnership with Paramount's Dreamworks film studio, that has spawned five (and counting) massively successful movies based on Hasbro's Transformers toy range, and sold millions of action figures in their wake. Transformers is one of seven "franchise brands" in the portfolio which together generate a little under half the group's combined sales. The others are Littlest Pet Shop, Magic: The Gathering, Monopoly, My Little Pony, Nerf and Play-Doh. Combined sales for 2017 were $2.57bn.
Hasbro's products fall broadly into six main categories of boys' toys, girls' toys, games and puzzles, preschool toys, creative play, and electronic toys. Boys' toys, traditionally Hasbro's biggest division, suffered dramatic declines in both 2012 and 2013 as a result of the lack of a new Transformers movie release. Revenues for 2013 alone slumped by 22% to a low of $1.24bn, before bouncing back the following year with the release of a fourth movie. The boys portfolio 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. However, the real lift-off came from the more recent Paramount and DreamWorks movie adaptations, each of which featured among the top two or three movies of the year in 2007, 2009, 2011 and 2014, and have boosted sales even more dramatically. A fifth Transformers movie arrived in 2017, with two more slated for 2018 and 2019.
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 that year. A second Paramount GI Joe movie was released in 2013, but failed to give anything more than a half-hearted lift to related toy sales. Outside the US, Hasbro markets a different version of GI Joe as Action Man, as well as action figures under the Dr Who license.
There was a separate partnership for several years with Universal to develop films based on board games from Hasbro's portfolio. However the first of these, Battleship, released in 2012, was widely regarded as a flop. Plans to develop the Clue (or Cluedo) and Monopoly brands as movies have also been in development for several years without success. That partnership eventually expired and was replaced in 2017 by a wider cooperation agreement with Paramount. The main benefit of these movie spin-offs is not the revenue they generate directly in terms of royalties (only around $100m to $125m to Hasbro from each of the billion-dollar Transformers hits) but the accompanying boost to associated toy sales.
Buoyed by the success of Transformers, Hasbro has developed several strategies to develop entertainment based on its own products, rather than on other people's. The group agreed a master license agreement in 2007 with EA under which the software company can develop games based on Hasbro's products. (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. In 2013, Hasbro itself acquired a 70% stake in another games developer, Backflip, which produces games for mobile devices. A series of digital apps have been released in recent years, either from third-party developers or produced inhouse by Backflip.
Another major diversification has been into self-produced TV programming. In 2009 Hasbro acquired a 50% shareholding in the Discovery Kids cable channel for around $300m. Under this partnership with Discovery Communications, the partners agreed to work together to develop programming based on Hasbro's brands, with production duties managed by a newly created inhouse unit, Hasbro Studios. The Discovery Kids channel relaunched in 2010 under the new name of The Hub, with a range of shows based on brands as diverse as Transformers, My Little Pony, Pound Puppies and GI Joe, and the Clue, Game of Life, Scrabble and other boardgames. The programming created inhouse by Hasbro Studios is also sold around the world to other networks. However The Hub didn't attract a sizeable audience and was overhauled in 2014, with Discovery taking back majority control and repositioning the service as Discovery Family. However, Hasbro Studios continues to produce hundreds of hours of TV programming each year based around the company's own brands, for Discovery Family, but also for Cartoon network and for sale or streaming. The production operation was expanded in 2014 with the launch of a new movie arm, AllSpark Pictures. Its first release, Jem & The Holograms, emerged in 2015 to disappointing box office. It was followed by the rather less family friendly Ouija: Origin of Evil in 2016 and the My Little Pony movie of 2017.
The group also operates numerous licenses to develop toys based on characters owned by other companies, most notably Disney. For years it had 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 what was then assumed to be the final movie in the series, and were maintained by various TV spin-offs including the Star Wars: The Clone Wars series. The relaunch of the movie series, following its acquisition by Disney, generated another tidal wave of sales in the final quarter of 2015, in which revenues from boys' toys soared by as much as 35% in 4Q.
In 2001 the group also won the much-prized entertainments license for new Disney animated 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 deal with Marvel to make toys, games and action figures based on all its characters including Spider-man, Iron-man, Thor, Fantastic Four and X-Men, all of which tie in with new film releases. These products were among Hasbro's strongest performers in 2012 as a result of the Avengers and Spider-man movies. Hasbro guaranteed Marvel royalty payments totalling at least $205m a year.
Ironically, all three of these licenses - Star Wars, Disney movies and Marvel - are all now owned by the Walt Disney Company. A new agreement with Disney in 2013 extended Hasbro's Marvel and Star Wars rights by a further two years to 2020. In 2015, Hasbro also took over control of the enormously popular Disney Princesses character franchise, including the Frozen movie, from Mattel. Under Mattel, that key product range was worth between $450m and $500m in annual sales. The group also has rights to develop toys based on the Angry Birds mobile game developed by Rovio, and has selected other partnerships with other movie producers. Despite its relationship with Disney Pixar, it also produced tie-ins for Paramount DreamWorks rival movie Trolls in 2017.
A lesser-known aspect of Hasbro's licensing strategy is its long-established relationship with Japanese manufacturer Takara-Tomy. That group actually owns original rights to the Transformers concept, and was also responsible for developing other products such as Beyblade and Furby, which Hasbro markets globally. In recent years, Hasbro has spent sharply increasing annual sums on royalties relating to licensed products. That figure reached a new high of $409m in 2016. By contrast the royalties earned by Hasbro from licensing of its own brands is somewhat lower, though in 2016 it reached a record $286m. All these products fall under the heading of Partner Brands. However, an unexpected weakening in the popularity of Star Wars tie-ins towards the end of 2017 caused combined sales to slip 10% to $1.27bn.
As the cooling off of Star Wars fever in 2017 indicated, sales of individual brands remain extraordinarily mercurial, rising and falling with alarming speed. In 2009, for example, the year of the second Transformers movie, that brand was far and away Hasbro's top-seller, accounting for revenues of more than $590m or almost 15% of group sales. Yet a year later, sales had plunged by a third or more (precise figures are not published) with the result that the group's single best-selling product for 2010 was the Nerf range of action sports water and dart guns, sales of which reached almost $415m without the benefit of any million dollar entertainment tie-in. The Nerf and SuperSoaker action toys remain one of the group's most consistently popular boys' toys have proved less lasting. Another comparatively long-running hit is Beyblade, a line of spinning tops which were a substantial worldwide hit for the first time in 2003, contributing more than 10% of group sales that year. They were relaunched worldwide in 2010. For 2011, Transformers' sales soared once more in the wake of the latest movie, hitting $483m. Beyblade wasn't far behind at $477m. Nerf has experienced a sharp rise in sales in 2012 and 2013 from the launch of the Nerf Rebelle longbow product, aimed at girls, and tieing in neatly (though not explicitly) with the hugely successful Hunger Games movies. Combined sales from Boys' Toys rose 4% in 2016 to $1.85bn.
The Games & Puzzles 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. The company has also overhauled the traditional selection of player tokens, phasing out more old-fashioned items like the thimble, boot and wheelbarrow in favour of a T-Rex, a penguin and a rubber ducky.
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). An innovative new launch in 2017 was Dropmix, a combination between a traditional board game, a role-playing card game and a digital app for smartphones, co-produced with software developer Harmonix. Players have to compile their own DJ set from cards representing hit tracks from widely known music acts.
Hasbro's girls' toys portfolio is less extensive, but has grown dramatically in recent years. The most significant development was the addition of the Disney Princesses franchise, which caused sales to soar by 50% in 2016 to $1.19bn. 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 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, and again with even greater success in 2012 with a version that links to iPhone and other mobile devices. 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). 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. From 2011, the group has rights to develop preschool toys based on the Sesame Street characters, including Elmo and Big Bird.
In 2017, Hasbro launched its first family-oriented HASCON fan convention celebrating all the company's brands. There will be no event in 2018, and the next convention is scheduled for 2019.
The group's revenues were flat for several years at around the $4bn level. They peaked in 1999 at over $4.2bn before slumping during the early 2000s to below $3bn. After several years of weak performance, there was a lift in 2007 and 2008 back to $4bn, partly as a result of the first Transformers movie. In 2011, however, they broke out of that range, rising 7% to $4.29bn. Another decline in 2012, partly as a result of exchange rate fluctuation, took the figure back down to $4.09bn, and net earnings slumped 13% to $336m. For 2013, revenues slipped back marginally to $4.08bn. A big increase in amortisation charges as well as royalties prompted a 15% slide in net earnings to $286m.
For 2014, revenues grew 4% to $4.28bn, slightly below their 2011 record. However earnings soared by 45% to a best-ever $416m. North America and International each contributed revenues of $2.02bn, with Entertainment & Licensing income providing the remaininder of sales. Hasbro finally notched up a new record sales figure in 2015, with revenues rising to $4.45bn, even after the effects of currencies. At constant rates the increase would have been 13%. Net earnings rose 8% to $452m.
Performance was even stronger in 2016, boosted by the contribution from the Disney Princesses franchise won from Mattel. Group revenues topped $5bn for the first time at $5.02bn, up 13% despite currency headwinds, while net income was up 11% to $533m.
A surprise decline in sales in 4Q, as interest in Star Wars tie-ins cooled, was enough to prevent a 4% increase in full year revenues to $5.21bn, overtaking Mattel for the first time in almost 25 years. Tax reforms prompted a near-$300m charge in the final quarter, resulting in a 26% slide in net earnings to $397m. However, EBITDA excluding exceptional charges was up 12% year-on-year. North America contributed revenues of $2.69bn, with another $2.33bn from international, and $286m in entertainment royalty income. Europe accounted for 26% of total revenues, Latin America for 9%.
Walmart alone accounted for 18% of global revenues in 2016; and an even higher percentage in the US. The next two most significant customers are Toys R Us and Target each at 9% of sales. The bankruptcy of Toys R Us in 2017 presented Hasbro (and other toymakers) with a significant bad debt risk.
Brian Goldner is chairman & CEO. John Frascotti was appointed as preident in early 2017. Other senior officers include Deborah Thomas (SVP & CFO), Duncan Billing (EVP & chief strategy officer), Wiebe Tinga (EVP & chief commercial officer), Tom Courtney (EVP, global operations) and Stephen Davis (EVP & chief content officer). Alan Hassenfeld, a grandson of one of the founders of the company and its former chairman & CEO, remains a director of the company, and retains a 6% shareholding. Leo Burnett North America CEO Richard Stoddart is also a director, along with Hershey chief growth officer Mary Beth West.
Eric Nyman is general manager for Hasbro USA. Other marketers include Simon Waters (SVP, entertainment & licensing), Victor Lee (SVP, digital marketing), Maureen Smith (SVP, marketing), David Henderson (SVP, consumer products North America), Jonathan Berkowitz (SVP, Hasbro gaming), Kimberley Willis Boyd (VP, US marketing), Jeff Taylor (VP, sales & customer strategic marketing), Mark Blecher (SVP, digital gaming & corporate development), Michelle Paolino (SVP, global brand marketing & strategy), Sarah Handley (VP, global brand strategy & marketing), Greg Lombardo (VP, global brand strategy & marketing), Derryl DePriest (VP, global brand management, boys' toys).
Hasbro Inc was originally 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 Barbie doll five years earlier, but it was the arrival of the accompanying Ken figure in 1963 that really spurred Hasbro into action to create a figure of their own. It quickly found a ready audience in the US, and Hasbro soon began licensing the concept to international toymakers under the less nation-specific name of Action Man. UK company Palitoy (later acquired by Hasbro) launched Action man in 1966. In 1968, Hasbro 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 10th January 2018
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