Hasbro banking on ‘Transformers’ hitting it big

Film based on hit toys, ‘sort of opens another chapter for us,’ executive says

Hasbro hopes the upcoming release of "Transformers" — based on the company's "robots in disguise" toys introduced in the 1980s — will herald a new era for the company that in the past few years has remade itself from a toy maker to an entertainment company.

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'Transformers'
Earth is caught in the middle of a battle of two alien races of robots in this sci-fi extravaganza.

Paramount Pictures

updated 2:58 p.m. ET June 18, 2007

PROVIDENCE, R.I. - Hasbro Inc. struggled when the toy company tied its fortunes too closely to toys based on movies.

But a movie based on its toys? That could be a different story.

Hasbro is banking that the July 4 release of the DreamWorks/Paramount movie “Transformers” — based on Hasbro’s “robots in disguise” toys introduced in the 1980s — will herald a new era for the company that in the past few years has been remaking itself from a toy maker to an entertainment company.

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“’Transformers’ sort of opens another chapter for us,” said Brian Goldner, Hasbro’s chief operating officer, who is listed as an executive producer on the movie. “In the past, I think that the company may have thought too narrowly about its brands as forms of entertainment.”

In 2000, the Pawtucket, R.I.-based company was struggling. The toy maker lost $144 million after fads for Pokemon trading cards and the electronic pet Furby faltered. It cut hundreds of jobs. Then-chief executive Alan Hassenfeld called it “a very painful year.”

Part of the problem was an over-reliance on movie-related toys, like tie-ins to the “Star Wars” franchise, said Sean McGowan, an analyst with Wedbush Morgan Securities.

“They would be hot for a while, then not hot,” McGowan said.

So Hasbro’s executives went back to basics. They turned their focus to time-tested “core brands,” names consumers knew and trusted: Playskool, Monopoly, My Little Pony, Transformers and others. They looked at the brand’s core idea and thought of ways to contemporize it and parlay it into new products that would turn the company around and keep it growing.

Since then, they’ve developed new versions of Monopoly, released a line of Playskool products for CVS drugstores, including diapers and baby bottles, created a “My Little Pony” live stage show — based on the toy — to name a few.
Image: Transformer boy
Morry Gash / AP
“In the past, I think that the company may have thought too narrowly about its brands as forms of entertainment,” Hasbro COO says.

While Hasbro still does its share of movie tie-ins — “Spider-Man 3” and “Star Wars,” for example — it still has a treasure trove of stable properties, McGowan said.

Another upside for Hasbro is that it owns the Transformer brand, so on most Transformers-related products it doesn’t have to pay royalties and can license the name. Hasbro signed up 230 licensees for “Transformers” the movie, items such as video games and cell phone games, Goldner said.

“The last couple years have been the best years they’ve had in a very long time,” said Jim Silver, editor-in-chief of Toy Wishes Magazine.

Hasbro started the year strong, reporting a profit of $32.9 million for the three months that ended April 1, versus a loss of $4.9 million in the year-ago period. The company credited core brands and strong sales of games, led by Monopoly. Shares surged to an eight-year high, but some analysts have since downgraded their projections, warning that the stock price already factors in the high expectations for “Transformers” and that sales could slow down next year.