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Hasbro Enters the Movies

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This presentation explores the strategy of Hasbro putting its brands on the big screen. We will cover the company's history, past strategies, and the terms of the deal.

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Hasbro Enters the Movies

  1. 1. Marco BoassoRyan HuelsmannTim Stewart
  2. 2.  Company Background Management Competitors Financial Highlights Alternatives Decision Making How Hasbro Entered the Movies Hasbro’s Role Results
  3. 3.  Founded in Providence Rhode Island in 1923  Hassenfeld brothers – Polish immigrants  Company first operated as textile remnant business  Started making school supplies  “Transformed” into making toys from 1930s to 1960  1952 Mr. Potato Head (first toy to advertise on TV)  1964 G.I. Joe – in 2 years it accounted for 2/3 of company sales - $40 million
  4. 4.  1968 went public 1975 discontinued G.I. Joe Company in poor financial situation by 1979 1982 G.I. Joe returned 1984 Transformers toy line is launched as well as cartoon 1980s and 1990s major acquisitions took place ▪ GLENCO – infant products ▪ Knickerbocker Toy Company – Raggedy Ann and Andy dolls
  5. 5. ▪ Milton Bradley – 1984▪ Coleco Industries – Cabbage Patch Dolls▪ Tonka Corporation and Tonka’s Parker Brothers unit, the maker of Monopoly▪ Kenner Products – Batman figures and Strawberry Shortcake doll▪ 1991 - Established operations in Greece, Hungary, Mexico▪ Nomura Toys – Japanese toymaker
  6. 6.  1995 Mattel approached Hasbro for merger ▪ Hasbro board turned it down due to fear of antitrust issues 1997 Hasbro purchased license for Star Wars $600 Million and gave 7.4% stake of company Steep losses from drop offs in Star Wars toys and Pokemon cards in late 20th century and early 21st 21st Century - Company started refocusing on traditional toy lines – G.I. Joe, Monopoly, Mr. Potato Head
  7. 7.  Alfred J. Verrecchia ▪ President and CEO ▪ COO from 2001 to 2003 Brian Goldner ▪ Chief Operating Officer ▪ Executive Producer of the first Transformer movie ▪ Chief Architect of brand drive movies David D.R. Hargreaves ▪ Chief Financial Officer
  8. 8.  Mattel ▪ Barbie ▪ Hot Wheels ▪ Fisher Price ▪ American Girl JAKKS Pacific ▪ Club Penguin ▪ Hello Kitty
  9. 9. HASBRO (In thousands) 2000 2001 2002 2003 2004 2005Net Rev $3,787,215 $2,856,339 $2,816,230 $3,138,657 $2,997,510 $3,087,627OpProfit ($104,277) $211,330 $219,291 $344,616 $293,012 $310,521Margin (.2%) 7.4% 7.8% 11% 9.8% 10.1% MATTEL (In millions) 2000 2001 2002 2003 2004 2005Net Rev $4,565.5 $4,687.9 $4885.3 $4,969.1 $5,102.8 $5,179.0Op Profit $370.6 $579.3 $733.6 $785.7 $730.8 $664.5Margin 8.1% 12.4% 15% 15.8% 14.3% 12.8%
  10. 10.  Hasbro has a history of purchasing companies and their brands  Milton Bradley (1984)  Tonka Corporation with Parker Brothers and Kenner Brothers (1991)  Wizards of The Coast (1999)
  11. 11.  Pros  More product brands for a diversified brand portfolio  Expand their limitations with Hasbro’s capital/knowledge Cons  Costly  Underperforming brands
  12. 12.  Entering into Licensing agreements  LucasFilms’s Star Wars  Marvel’s Avengers  Sesame Street Workshop
  13. 13.  Pros  Cons  Have access to  The shows/movies may successful brands not be successful thus  Focus on creating the product lines will toys/games instead of falter as result creating new brands and  Product line can still brand identities falter despite success of  Cost effective brand. Remember Lego and Harry Potter  Limited supply of brands available to be licensed
  14. 14.  In the 80’s, Hasbro had two animated series and comic books showcasing : G.I. Joe A Real American Hero (1984) and Transformers (1984) In addition, spinoffs of these series were created during the 90’s & early 00’s showcase on various television networks, animated movies and comic books. TRANSFORMERS 80S THEME On 10/10/10, the Hub was launched. A joint venture between Hasbro and Discovery Communications to launch more programs showcasing its various brands.
  15. 15.  Pros  Cons  Successful strategy that  Limited control over worked in the past networks such as time slots  Variety of animation styles  Show could get cancelled  Best example would be product line will not Transformers spinoff succeed. G.I. Joe Sigma Six Transformers: lasted 14 episodes. Beast Wars  Lots of competition (96-99) against other networks TV programming
  16. 16.  Building off the brands’ successes from the past, Hasbro now enters the realm of featured films to extend these brands to new heights Transformers Trailer Aligning with certain studios that will respect the brands such as Paramount/DreamWorks and directors that can deliver such as Steven Spielberg or Michael Bay
  17. 17.  Pros  Cons  Expanding market share  Cost  New technology in movies  New area for Hasbro by vs. the anime from the 80’s going into this venture  Revive/create new product  Not finding the right lines creative talent who will  Semi-familiar with the respect the brand or entertainment industry deliver an exciting movie through TV programs  Die hard fans disappointed  Don’t have to worry about or upset with the movie networks competing against TV programs
  18. 18.  Brian Goldner Joins Hasbro in 2000 Success of Spider Man movie reinforces idea of brand name could resonate as a motion price Goldner vision “re-invent, re-ignite, and re-imagine core brands to create new experiences for consumer
  19. 19.  Studios rejects Hasbro Transformers concept In 2003, Goldner contacts Bonaventura of Paramount Pictures about using GI Joe brand Producers Don Murphy and Tony DeSanto optioned the film rights and began writing a Treatment for Transformers Steven Spielberg signs on as Executive Producer DreamWorks Studios sold to Paramount’s Parent company Viacom
  20. 20.  Spielberg recruits Michael Bay as director Bay travels to RI and meets with Goldner to learn: ▪ What Transformer brand is about ▪ Stories that had to be told ▪ Family tree of characters and how they relate with each other
  21. 21.  Movie released and becomes blockbuster hit during summer of 2007 Grosses more than $700 million worldwide Spurned 2 sequels that debuted in 2009 and 2011 Laid the groundwork for other Hasbro brands to enter the big screen Re-sparked the brand on a massive scale that other brands like Kre-O work solely adjunct to the Transformers brand
  22. 22. Movie Domestic Foreign Gross Total Opening Awards Gross ($) ($) Worldwide Weekend ($) Gross ($)Transformers 319,246,193 390,463,587 709,709,780 70,502,384 Nominate(2007) with #1 in for 3 4,011 theaters OscarsTransformers: 402,111,870 434,191,823 836,303,693 108,966,307 NominateRevenge of the with #1 in for 1Fallen (2009) 4,234 theaters OscarG.I. Joe Rise of 150,200,000 151,800,000 302,000,000 54,700,000 NoneCobra (2010)Transformers: 352,390,543 770,805,646 1,123,196,189 97,852,865 N/ADark of the with #1 inMoon (2011) 4,088 theaters
  23. 23.  GI Joe 2 Retaliation  Risk Battleship  Stretch Armstrong Ouija  Candyland Monopoly  Micronauts Clue
  24. 24.  No money from box office revenue Revenues from movie tied to product sales:  Transformer toy sales for 2007: $470 Million  up from $30 million when Goldner joined in 2000
  25. 25. 2006 2007 2008 2009 2010Net Revenues $3,151,480 $3,837,557 $4,021,520 $4,067,947 $4,002,161Operating $376,363 $519,350 $494,296 $588,598 $587,859ProfitOperating 11.9% 13.5% 12.3% 14.5% 14.7%Profit MarginNet Earnings $230,055 $333,003 $306,766 $374,930 $397,752EPS (Diluted) $1.29 $1.97 $2.00 $2.48 $2.74Cash & Cash $715,400 $774,458 $630,390 $636,045 $727,796EquivalentsLong-term $494, 917 $845,071 $709,723 $1,131,998 $1,397,681Debt (currentportions)

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