Hasbro transforms to attract movie money

In a separate note, Johnson said he expects Transformers sales could drop off next year due to the lack of a new movie in 2008.

The Transformers movie has made about $700 million worldwide since it was released this summer and about $316 million domestically. Hasbro does not share significantly in the box office — something Goldner says it agreed to forgo because it didn't invest in the movie's production cost. But it shares in the success in other ways.

It made money by licensing about 230 Transformers products, including cell phone games, video games, even a jacket that transforms to a backpack and a pillow and sells for about $500.

Goldner wouldn't comment specifically on sales of Transformers toys ahead of the earnings report. But Jim Silver, editor-in-chief of the trade magazine Toy Wishes, said retailers tell him Transformers sell out as soon as they're put on the shelf.

"These toys, the way they transform and the things that they do, they're really fun," Silver said. "It's the hottest thing in the boys' category."

A new Transformers animated series is scheduled for TV this spring, the Transformers movie DVD hit stores this week, and Hasbro is again working with DreamWorks-Paramount on a sequel, tentatively scheduled to be released in June 2009, Goldner said.

Also in development for a tentative 2009 release is a G.I. Joe movie, based on the 1980s comic books and animation series and pitting the G.I. Joe team against the evil forces of Cobra, Goldner said. Stephen Sommers, of "The Mummy" movies, signed up to direct, along with Stuart Beattie, who wrote the first "Pirates of the Caribbean" movie.

As with the Transformers movies, Hasbro would not share significantly in the box office, Goldner said. The company said it will make new toys based on the G.I. Joe movie, but would not give details.

Silver said he was excited to see how Hasbro updates the toy line.

"I'm sure G.I. Joe's going to have a lot of cool accessories," he said.

Sean McGowan, an analyst with Wedbush Morgan Securities, said Hasbro is right to avoid the risk of a box office bomb but should be sharing more directly in the success of a movie based on its properties. He said Hasbro has the right idea in an agreement reached this year with Electronic Arts Inc.

The Redwood City, Calif.-based video game maker now has the right to make Hasbro games for PCs, video game consoles and cell phones. The licensing deal keeps Hasbro from having to get into the video games business itself, and also allows it to do what it does best — make traditional games and toys based on EA's existing video games.

"I don't want to see them get into the business of producing TV shows," McGowan said. "But if they're able to work with the producers to use the intellectual property they have, they should do that."

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