Is the iPhone killing playtime? One might think so, based on some alarming reports that children are tossing toys for tablets. But toymaker Hasbro’s success tells a different story. This year Play-Doh turned 60 and had its best year ever. And sales of Nerf foam toys and water guns grew 13% in 2015. Whether you’re 6 or 60, Hasbro (HAS) CEO Brian Goldner says the notion that playtime has transported online isn’t quite right.
Yahoo Finance got a peek into Hasbro’s vast portfolio of 1,500 brands at the Toy Fair exhibition in New York this week (the two-story playground would make any adult giddy).
The undeniable bright spot last quarter was its “Star Wars” swag, including an $80 Kylo Ren voice-changing helmet and 12 kinds of lightsabers. The company sold $500 million worth of Disney’s (DIS) “Star Wars” toys in 2015. And Goldner says Hasbro will keep the momentum going -- for another year at least -- with “Star Wars: Episode VIII,” which is set for a 2017 release. “There’s more “Star Wars” entertainment coming in the next five years than there’s been over the past 30 years,” he says. He emphasizes that shelves are now stocked with lightsabers and Nerf Blasters based on Daisy Ridley’s character, Rey (you might remember the outrage that ensued when she was noticeably absent from all the offerings).
Playtime 2.0?
But at a time when kids are reaching for smartphones before they can say their first words, how is Hasbro staying relevant? More than a third of children under the age of 1 have used a touch screen device, according to a study by the Pediatric Academic Societies. And 26% of 2-year-olds use devices for at least an hour. Still, Goldner says the company’s healthy quarter is a clear indicator that toys are still topping wish lists -- in fact, traditional toys, games and arts and crafts are still the number one play for young children, according to Goldner.
“Hasbro has effectively experienced a baptism in innovation,” says Stephanie Wissink, senior research analyst at Piper Jaffray. “Brian [Goldner] has been a shepherd of a new way of thinking and is focusing on brand and value maximization.”
The company is adapting to the new gadget-obsessed world by integrating technology into their classic products. “We’re not against the idea of doing technology-oriented things or being on screens, but the traditional play is so important, and kids really love it and are still doing it as the number one activity,” Goldner says.
One example: Since taking a 70% stake in gaming company Backflip Studios in 2013, Hasbro has helped develop mobile apps that piggyback off its household-name franchises like Play-Doh Jam, Scrabble Pics and GI Joe: Strike, to compete with popular games like Angry Birds and Words with Friends.
Another example of Hasbro’s attempt to get the consumer at multiple touchpoints is original children’s programming. The company’s My Little Pony franchise has a new line called “Guardians of Harmony,” based on Discovery Family Channel’s “My Little Pony” series. Hasbro holds a 40% stake in the channel and created several other programs including, “Transformers” and “G.I. Joe.”
Hasbro’s only real publicly traded competitor is Mattel (MAT), though Wissink notes the two companies are very different, from their ideology to strategy. “Mattel is a manufacturing company that is focused on making big, splashy product changes. Hasbro is a story-driven brand. If you’re telling a story in chapters, you’ve already got consumers hooked.” Age is a differentiating factor too: Mattel has a narrow age band (its products target kids from birth to 10) with toys like Barbie and Hot Wheels, whereas Hasbro has a portfolio that caters to children and adults.
“If you had to hang your hat on a single idea, you want to be aligned with a company like Hasbro,” she says.
Bricks AND clicks
Hasbro’s products are still predominantly purchased in-store, with just 10% of global sales done online. But online sales are growing three times faster than in-store sales, according to Goldner.
He recognizes that consumers need immersive shopping experiences to woo them into physical stores. To that end, the company sets up interactive displays and showrooms (akin to the Toy Fair) where customers can get a fully hands-on experience like shoot Nerf blasters or mold Play-Doh on tables, outside the U.S. in particular. “Online sales are going to grow quickly as the digitally engaged consumer gets more and more savvy,” says Goldner. “But the more that happens, the more kids desire those tactile, traditional, analog play experiences. People still want to get together.”
Take, for example, a game like Monopoly -- it exists in countless iterations in its classic, tabletop version. But now you can play on your phone or at a slot machine. “All of a sudden you see Monopoly as a brand instead of a boxed game on a shelf,” Wissink says.
Nostalgia with a twist
Yahoo Finance had a chance to play with Hasbro’s new renditions of old-school toys -- like Bop-It, which now has features like “selfie it” and “cradle it.” There’s also a new game called Pie Face, which got a lot of buzz after a YouTube video of a grandfather and grandson went viral. The game consists of you and a partner putting whipped cream on a plastic hand and dialing a knob hoping you’re not the one who gets splat in the face first.
Though games like Pie Face have been wildly popular, Goldner says he’s betting on Hasbro’s classic franchises because of the nostalgia factor. “People grew up with these brands around the world. You have all of these adult fans who now want to share [a part of their childhood] with their kids, nieces and nephews.”
As older millennials start to settle down and start families, they are starting to buy their children the same toys that they once played with and are getting a chance to relive their youth in the process. “Our brand has a second life as people pass it along,” Goldner says.
And Goldner’s bet on the classics is paying off. Shares of Hasbro are up 17% over the past year and with a steady revenue stream, it’s been able to take risks and innovate. But perhaps the biggest risk of all would be to get swept up in the noise of technology instead of sticking with its enduring brands. After all, it’s impossible to outgrow Nerf wars (watch the video to see me slay Brian).