Hasbro Inc., has surpassed Mattel as the world’s largest toymaker (Exhibit 1). Hasbro took brands like Transformers and My Little Pony, which were basically dead until about a decade ago, and reinvigorated them with feature films and television shows. This has led to some flops at the box office, but the company was able to establish what it calls a “brand footprint,” and now Hasbro is confident that almost any property can be revived. Mattel, meanwhile, has experienced little success with its digital content and mobile games.
With four years of declining sales and profit, the pressure’s on for Mattel to show it can navigate heightened competition and win back kids’ attention from YouTube, Netflix and social media. It’s also contending with smaller toymakers that have broken through with runaway hits such as Spin Master Corp.’s Hatchimals and WowWee Group Ltd.’s Fingerlings.
Last but not least, Mattel is facing retail disruption, with Toys “R” Us Inc., the world’s largest toy chain, in bankruptcy and closing stores. Mattel’s stock has fallen about 40 percent in the past year, even as it got a temporary boost from news reports that Hasbro and Mattel were in talks about a merger.