Toy Industry Evolution: Transitioning from Traditional to Digital

Current Market Trends in the Toy Industry

The toy industry is experiencing a mid-single-digit decline but shows potential growth in categories like building blocks. Digital integration is crucial, with significant investments in digital partnerships and studio capacity. Efforts focus on profitability and market share growth, leveraging generational brands and innovations in core properties like Beyblade and Transformers.

"We're factoring in both the exited businesses what we think will be a toy industry, which will be down kind of in that mid-single digit range, but starting to hopefully improve a bit in the back half and the category tailwinds we saw in building blocks and TPG, potentially growing a bit for more categories." --- (HAS, earning call, 2024/Q2)

"And as we look at the business of play, it's clear that digital is here to stay in a bigger factor than ever and how successful toy and game companies will grow and strengthen their brands. We're years ahead of our peers, having already spent hundreds of millions of dollars building out our own studio capacity and expanding our brands through digital partnerships, games like Baldur's Gate 3 show us what the future looks like." --- (HAS, earning call, 2024/Q2)

"And then all of the efforts that we're making on the toy turnaround. Our focus there is really on getting back to profitability and getting back to growing share in the categories with where we're competing as a I think we're -- our IP, our business and our brands are set up very well for where we're headed. Arpine Kocharyan: Thank you both. Very helpful." --- (HAS, earning call, 2024/Q2)

"Hasbro is very lucky in that, while I think most people think of us as a toy company, our brands and most of our profit and frankly, majority of our revenue comes from consumers over the age of 13. We already have brands that span generations and" --- (HAS, conference, 2024/05/20)

"After a strong launch in Japan, we've begun rolling out Beyblade globally. We've seen positive early demand with fans liking the streamlined brand assembly and new accelerator rail stadium that creates epic collisions. And in this year, wider entertainment content as rose well positioned with the biggest movie for toys coming to theaters this September, TRANSFORMERS 1 with our partners at Paramount. We have strong retail alignment and healthy early demand for our fan SKUs to celebrate the brand's 40th anniversary. You can expect renewed innovations in some of our core toy properties as we head into back-to-school." --- (HAS, earning call, 2024/Q2)

Technological Impact on Toy Evolution

Technological advancements are significantly shaping the toy industry, with companies like Hasbro integrating digital elements such as Baldur's Gate and Lord of the Rings into their offerings. Additionally, advancements in gaming technology, supported by powerful engines and hardware like Apple Silicon, are enhancing the digital gaming experience, further driving the evolution of toys.

"So in Q2, we're going to still have that deleverage happening with toy in Q3, though, remember, there's the impact last year that we had in all of the digital with Baldur's Gate, Lord of the Rings, there was a lot of favorability coming into Q3 last year that we begin the comps." --- (HAS, earning call, 2024/Q1)

"Intricately detailed scenes like this are possible, thanks to our next generation Anvil engine supporting the latest advancements in metal, enabling us to leverage the full power of Apple Silicon with a gaming experience that delivers blistering frame rates and high resolutions." --- (AAPL, Service Launch, 2024/06/10)

"has been. Why not raise that guidance today and could you talk about sort of your visibility on that because it's clearly -- at least seasonally, it's not a toy business, right, it's sort of digital games where you probably have a little bit more to say in terms of visibility?" --- (HAS, earning call, 2024/Q1)

Consumer Behavior: Digital vs. Traditional Toys

Consumers are increasingly favoring digital toys, driven by their familiarity with internet, app-based, and AI-driven experiences. Companies like Hasbro and Disney are adapting by shifting to digital marketing and forming strong e-commerce partnerships, reflecting the growing momentum in digital consumer products.

"FredWightman: Makes sense. And then given the momentum in digital, given the momentum with some of the lower cost price points you've talked about in Consumer Products, can you just give us an update on how you view some of the bigger licenses in the consumer space being a part of the Hasbro story going forward?" --- (HAS, earning call, 2024/Q2)

"part, a good consumer proposition economically. But in today's consumer, used to both basically the Internet and app based experiences and ultimately AI driven experiences, wants much more than that." --- (DIS, conference, 2024/05/15)

"We also are seeing solid progress in revamping our approach to marketing, significantly shifting our mix to digital, driving stronger than ever partnerships with our e-commerce and multi-channel partners like our just completed birthday shop execution with Walmart and are seeing improved return on advertising spend as a result." --- (HAS, earning call, 2024/Q1)

"But in today's consumer, used to both basically the Internet and app based experiences and ultimately AI driven experiences, wants much more than that." --- (DIS, conference, 2024/05/15)

"Great. So turning to the consumer product side, I guess, how would you characterize their current environment for toys?" --- (HAS, conference, 2024/05/20)

Strategic Responses to Digital Shift

Hasbro is strategically focusing on digital experiences and video games, expecting consistent growth trends as they shift towards digital. Industry shifts are seen as opportunities to innovate with new products and technologies, further transforming the business.

"So we expect there to be another kind of growing quarter. And then on the bottom line, again, just given the mix that we're seeing within the business and the shift towards digital, we'll see consistent trends there." --- (HAS, earning call, 2024/Q1)

"Each industry shift is an opportunity to conceive new products, new technologies, or new ideas that can further transform the industry and our business." --- (MSFT, sec filing, 2024/Q4)

"John's addition marks a significant step in Hasbro's strategic focus on digital experiences and video games." --- (HAS, press release, 2024/07/18)

Competitive Landscape in the Digital Toy Market

Hasbro's competitive edge in the digital toy market is bolstered by strategic leadership and successful digital products like Baldur's Gate 3 and MONOPOLY GO!, driving significant revenue growth in their digital gaming segment.

"Dan's retail background, sophisticated understanding of the digital landscape, and strong people leadership experience make him a welcome addition to the Hasbro team." --- (HAS, press release, 2024/07/11)

"The net revenue increase in the Wizards of the Coast and Digital Gaming segment during the first six months of 2024 was primarily attributable to revenue contributions from higher digital licensing of Baldur's Gate 3, the DUNGEONS & DRAGONS-based role-playing video game released during the third quarter 2023, and MONOPOLY GO!" --- (HAS, sec filing, 2024/Q2)

"The net revenue increase in the Wizards of the Coast and Digital Gaming segment during the first quarter of 2024 was primarily attributable to revenue contributions from higher digital licensing of Baldur's Gate 3, the DUNGEONS & DRAGONS-based role-playing video game released during the third quarter 2023, and the continued success of MONOPOLY GO!" --- (HAS, sec filing, 2024/Q1)