Yahoo Finance Why Hasbro has been so successful at selling toys
Hasbro (HAS), the maker Transformers and My Little Pony, soared 8% on Monday after a blow-out quarter, with net revenue up 14% and growth across its categories.
The latest quarter merely builds on momentum for the company that has well-outperformed its peers and the market this year.
Chairman and CEO Brian Goldner told Yahoo Finance that the company’s success draws largely from its transformational focus on content.
“We began to surround our consumers with stories and characters around our brands and began to tell those stories, which enabled us to engage with consumers to build more innovative product lines,” he said.
Understanding what creates joy in children
Goldner explained that the company has invested in better understanding what motivates toy purchases.
In fact, Hasbro has partnered with Harvard to do pediatric studies to understand what brings children joy, according to Goldner.
“A lot of what we wanted to understand was creating that innate desire for play, understanding why play is so essential to young children,” Goldner said. “We went out with Harvard to look at this increasing array of media choices for children and what kind of play is most beneficial … We want to be a great purveyor of stories and content in that new media era.”
Goldner added that the company wants to be focused on the right kind of entertainment.
“We’ve talked about entering this new era of unprecedented entertainment,” he said. “Over the next several years, we see more entertainment coming from Marvel, Star Wars and Princess than ever before.”
In this vein, Goldner explained Hasbro has focused on storytelling and building characters around content. About 30% of Hasbro sales come from characters from the Avengers, Star Wars, and Marvel—all franchises which have grown since being acquired by Disney (DIS).
Piper Jaffray’s Stephanie Wissink credits the company’s success to Goldner’s efforts to shift the company’s focus from being an industrial manufacturer of “things” to being a brand manager.
“The company has sold factories and hired talent for brand development commercializing, something you would see at Disney or an ad agency,” Wissink said.
This strategy has contrasted with competitor Mattel (MAT), according to Wissink, that operates more like typical consumer packaged goods companies like Proctor (PG), Unilever (UN), and Clorox (CLX).
“Hasbro’s model is starting to prove its merit—cyclicality is waning and the durability of the brand development versus item strategies is catering to continuous years of portfolio strength,” she added.
Shifting gender roles: the “Modern Girl”
Hasbro won the Disney princess business from Mattel starting this year and has already shown outsized success.
In the third quarter, the company’s girls’ business grew 60%, with Disney Princess outperforming its plan.
Goldner attributes this to building a connection with girls around authentic characters and has engaged in a “Modern Girl” study to make sure to correctly align with what girls want.
“We began a conversation with Disney using our proprietary consumer insights looking at modern girls and how modern girls want to be empowered and that really reflected on the way we developed the Princess line,” Goldner said. “What’s wonderful about them is they’re different doorways into this wonderful room of empowerment and fantasy and royalty. But all of them have their own authentic being.”
Hasbro’s character development contrasts with Mattel’s historical approach with Barbie, according to Wissink. The company plans to further build on character development, especially with several upcoming drivers for Disney princesses, including Moana, Beauty & the Beast Live Action and Frozen 2.
And while Hasbro does break its business into boys’ and girls’ categories, Goldner added that the company is looking at a way to report numbers differently. He explained, for example, that one-third of the audience for My Little Pony globally is boys.
“The delineation of girls and boys is a bit antiquated, and we at the company are looking at a way to report our numbers differently but still make it understandable to our investors,” he said. “We’re seeing and developing more product than ever before for anybody—putting aside gender.”
Hasbro has made a point to connect with its core consumer—which includes teenage and adult fans as well that make up 20% of revenue.
And no doubt, research and development surrounding content versus pure products remains the core focus.
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