Wednesday, August 10, 2016

Hasbro Builds Its Business on the Disney Framework

A toy company imitates the Mouse.

Hasbro recently agreed to buy an animation studio. ...

The first takeaway here is that Hasbro has increasingly moved toward the Disney model in recent years. Essentially, it has been working to create brands around its toys that live in the toy aisle and in the media space via television and movies. Like Disney, this allows Hasbro to benefit from cross pollination.

From Hasbro's point of view, buying Boulder is a logical next step in the process. ... The only problem is that it sets up a potential conflict with key partners like Disney, as the toymaker increasingly moves toward being a media company of its own. It's clearly the right move for Hasbro to make in many ways, but it comes with complications.

... As Hasbro shifts its business model, both Hasbro and Disney will be increasingly forced to consider implications beyond dolls and action figures. The problem for Disney is that the list of major toymakers is pretty small and a key competitive advantage that Mattel and Hasbro have is distribution - that's something that isn't easy to replicate. In other words, they are pretty much the only game in town.

So the big question: Who does Disney turn to if it isn't pleased with Hasbro's business direction? ... As for Hasbro, how far can it move into media before a company like Disney starts to balk and, potentially, pull vital licensing agreements.

The Walt Disney Company's business model -- built on efficiently managing various brands, a la Berkshire Hathaway -- is too alluring for other entertainment companies to resist. Movies. Television. Cable systems. Super heroes. Amusement parks. Animation. And lots of merchandise tied to various brand names.

All of it is good, also reinforcing. Also highly, highly profitable.

Which hasn't been lost on the wider world.

DreamWorks Animation, prior to its acquisition by Comcast/Universal, imitated the Mouse's business model. And the conglomerate that gobbled up DWA certainly apes Disney's approach to entertainment. Warner Bros. has revitalized the Superman/Batman/Justice League name-plates, striving to exploit them the way Disney exploits its Marvel franchises.

So it shouldn't be a surprise that Hasbro has leapt into the pool, building out from its lines of toys, creating animated brands it can exploit with different toy-lines. The question is, will Diz Co. be flattered ... and receptive ... to the latest pretender to its throne elbowing in on Disney territory?

Wouldn't think so.


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