Cinderella, Elsa and their friends move back to Barbie.
has won the license to produce toys based on Walt Disney Co.
princess lineup and from the latest blockbuster “Frozen” franchise that distorts the properties back from its rival Hasbro Inc.,
according to Mattel executives.
The deal reunites the characters with their former home. Mattel lost its license to Hasbro in 2016, an economic and symbolic setback that triggered a period of four CEOs at Mattel and complicated challenges as they tried to fill the $ 440 million gap from losing the company.
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Much has changed since then. Mattel CEO Ynon Kreiz, who took office in 2018, has stabilized operations with over $ 1 billion in cost savings, overtaken leadership, revived key brands like Barbie and rebuilt relationships with Hollywood studios. Since the day the Disney properties disappeared, Mattel executives have promised to win them back.
“It was an important priority, and it’s something we’ve worked hard to win,” he said. Cross. Mattel showed it could handle evergreen brands that are not dependent on big movies, he said.
Mattel will start selling new Disney toys in 2023, and the business will be run by the same group that has been monitoring Barbie’s comeback. The financial terms of the deal were not disclosed.
For Hasbro, the change comes as the maker of Nerf weapons and monopoly games is switching to a new CEO following the death of longtime leader Brian Goldner last year. Under his supervision, Hasbro Mattel surpassed in annual sales and made an unsuccessful approach to take over its rival.
Hasbro declined to comment on losing the Disney princess and the “Frozen” series, but said it recently renewed its Star Wars license and will soon begin making Indiana Jones toys as well. Both are properties owned by Lucasfilm, which is owned by Disney.
Mattel’s shares rose about 8% in early morning trading after The Wall Street Journal reported on the trade. Shares in Hasbro fell around 2.5 per cent.
Mattel’s loss of the Disney license originally represented a high-profile breach of a relationship between one of the largest toy manufacturers and one of the most powerful entertainment companies. It was a rare dust-up between companies whose founders worked together since the 1950s, when Mattel announced toys during the “Mickey Mouse Club” show.
In the early 2010s, Barbie was about to fall, and sales fell for several years. Mattel spent several resources on strengthening its tent properties. Disney’s princess dolls, meanwhile, were managed by a separate team in a competing unit.
Then, in 2013, Mattel came up with a toy series called Ever After High, which featured dolls based on children of classic fairy tale characters, including Cinderella, Sleeping Beauty and Snow White. It flew too close to Disney’s princess orbit. The following year, Disney announced to Mattel that it was going to Hasbro. (Mattel no longer sells Ever After High toys.)
“Losing the franchise was not just a financial challenge for us, but a real emotional challenge,” said Mattel’s President and Chief Operating Officer, Richard Dickson, who rejoined Mattel for another term, months before Disney made its decision. “It was a wake-up call for Mattel.”
The fallout started shortly after. In early 2015, Mattel CEO fired Bryan Stockton. His successor, Chris Sinclair, focused on covering revenue lost from the license with a range of items without endurance, which added complexity and extra costs to the operation. Another CEO, former Google CEO Margo Georgiadis, lasted about a year before leaving.
Mr. Kreiz has brought stability to the top job at Mattel. The former TV boss shut down a third of the jobs and closed several factories to stem ongoing losses. He helped patch up Mattel’s broken relationships with retailers and Hollywood studios. Key brands like Barbie and Hot Wheels responded to new marketing and new items. Fisher-Price has also stabilized.
Although sales are still below their peak of $ 6.5 billion in 2013, according to analysts, Mattel is on the move with more than $ 5.3 billion in revenue in 2021, an increase of more than 15% over 2020. Projections for a Net income of $ 789 million is the highest since 2013. Analysts expect Hasbro to bring in more than $ 6 billion in 2021 sales, according to FactSet estimates.
A slight restructuring of the companies allowed Mattel to present a stronger argument to Disney that the properties would receive appropriate attention, Mr Kreiz said. Instead of organizing its business around boys, girls and infant products, Mattel is now structured around categories such as dolls, vehicles and action figures. The Disney characters will slip into the puppet department and be led by the same group that has been monitoring Barbie’s comeback.
Barbie has a more open play pattern than the Disney characters, whose stories are imprinted on movies and in books. “Side by side, we know we can exponentially create more value, more play and more business by complementing the narrative instead of competing with it,” said Mr. Dickson.
The transition raises some questions for Hasbro, which aimed to use the Disney Princess and Frozen license to build its catalog of toys aimed at girls. But the property faltered a bit under its new owner, people in the toy industry said.
Jim Silver, CEO of TTPM, an online toy review site, estimates that the Disney property is about half the size it was when it left Mattel, in part due to a lack of new content to increase consumer interest in the ratings. The Disney deal did not reach the levels Hasbro hoped to achieve, he said.
Mr. Silver said Hasbro has other toys for girls on the rise, including My Little Pony toys, augmented by a recent Netflix movie, so the change to the Disney license may not be as dramatic as it was when Mattel lost it. . “I think Mattel will do very well with that, and for Hasbro, I don’t think the economy made sense,” he said.
UBS analyst Arpiné Kocharyan estimates that the Disney Princess and Frozen license could bring in about $ 300 million in a non-movie year. Even after paying royalties to Disney, it could still produce a higher profit margin for Mattel than it did at Hasbro, she said, because Mattel owns much of its doll production, making it more economical to produce incremental devices.
Ms. Kocharyan said Hasbro’s addition of the Indiana Jones license, with a feature film coming out in 2023, could offset more than half of the revenue lost. Hasbro also holds the Disney license for Marvel characters.
Write to Paul Ziobro at Paul.Ziobro@wsj.com
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