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Amidst Rocky 2017 Performance, Toycos Boosted by Licensing

The NPD Group’s latest report shows the toy industry grew by 1% in 12 global markets in 2017, with global sales reaching $20.7 billion. The top growth-drivers, according to the research group, were fidget toys, slime, dolls, and collectibles. According to NPD, 2017′s top three-selling toy properties globally were Star Wars, Nerf, and Barbie. In the U.S. alone, Nerf captured the number one spot, followed by Star Wars and Barbie.

With full-year financial results avilable from the two biggest toyco manufacturers, all initial indicators point to overall retail sales of licensed toys and games being quite flat—with proprietary brands eating into previously strong sales. However, certain licensed brands buyoued performance and kept margins solid.

Mattel blamed its poor performance, in part, on certain underperforming brands and short-term disruption from the Toys “R” Us bankruptcy filing. Overall, Mattel reported depressed sales overall for 2017—net sales were down 11% thanks to poor performance in North America, where net sales were down 17% from 2016. That loss was partially offset with a flat net sales internationally.

According to Mattel’s internal analysis, consumer takeaway at retail for Barbie was up high-single digits; Hot Wheels was up mid-single digits; Fisher-Price was down low-single digits; and Thomas & Friends was down double digits. While poor performance of core merchandise (not licensed out but manufactured by the licensor directly) tends to indicate poor performance of licensed goods, this wasn’t necessarily the case for Mattel in 2017.

Hasbro reported net revenues of $5.21 billion, or an increase of 4%, in 2017. North American sales were up 5% and up 2% internationally.

Hasbro’s owned-brands saw a large boost, with its franchise brands up 10% to $2.57 billion. Revenue growth was driven by Transformers, Nerf, Monopoly, and My Little Pony. In its final accounting, Hasbro grouped all of its gaming brands together, which include Magic: The Gathering and Monopoly, to report an 8% jump in revenue to reach $1.50 billion in 2017 from the previous year. Factoring out the franchise brands, Hasbro’s gaming segment revenues (including new social games like Speak Out and Toilet Trouble) grew 10% to $893.0 million.

While the entertainment and licensing segment was up by 8% overall, that didn’t translate into an overall boost to licensed brands. Partner Brand net revenues decreased 10% to $1.27 billion with both the U.S./Canada and international segments recording declines. Growth was observed in Beyblade, Marvel, and Sesame Street and declines in Star Wars and (to a lesser extent) Yo-Kai Watch and Frozen.

M&A & Partnerships

Toy and novelty company Basic Fun! has acquired the assets of Pennsylvania-based construction toy company K’Nex.

German games publisher Asmodee buys Lookout Games, the outfit responsible for titles such as Agricola, a Euro-style board game. Lookout will remain an independent studio within Asmodee. In related news, Mayfair Games announces its withdrawal from games publishing and enters into an agreement with Asmodee to assume all their current IP.

After five years, GennComm officially spins off a new division called ImaGENNation—founded by Genna Rosenberg—which is focused on delivering strategic IP and brand development, creative marketing and content services, unique business models, and powerhouse partnerships to catapult opportunity for a wide range of clients. Its first program, an ImaGENNation-owned and developed plush feature licensed to Beverly Hills Teddy Bear, launches in retaill this spring. ImaGENNation also represents third-party IP incl. a suite of patents from former North American Bear Co. owner Barbara Isenberg and Cozy Wingz from Epiphany Schwarz, which it licensed to direct response leader, Jay at Play. The company expects to launch Cozy Wingz on TV this spring, and then at retail later in the year.

Dentsu Aegis Network acquires San Francisco-based branding and design agency Character. Character will retain its leadership team, which will report to Nick Brien, CEO Americas for Dentsu.

Gentle Giant/3D Systems launches a new division, Gentle Giant Toys, dedicated to lower price-point collectible toy lines. It is branding itself independently from it parentco with a new logo, website, and social media handles.


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