Hasbro reported on Monday that its International and Entertainment and Licensing segments were up, as well as Girls and Games categories. Net revenues for the third quarter 2013 increased 2% to $1.37 billion compared to $1.35 billion in 2012. Hasbro Chief Executive Officer, President, Director and Member of Executive Committee Brian Goldner emphasized innovation as part of Hasbro's success this quarter:
Our focus on innovation is driving our brands. Many of our new initiatives are performing well. Nerf Rebelle, My Little Pony Equestria Girls, TELEPODS, Furby and Big Hugs Elmo are all off to a great start. In total, our franchise brands grew 19% in the third quarter, with gains in My Little Pony, Magic: The Gathering, Nerf, Transformers and Play-Doh.
While the Boys segment was down in the U.S. due to "challenging Boys comparisons" (presumably, other forms of entertainment competing for boys' attention), the Girls segment was up 29%, particularly My Little Pony:
My Little Pony Equestria Girls was developed from the core values and insights behind the global success of My Little Pony. We launched this entertainment in theaters in the U.S. And it is now available across all screens globally, with strong viewership. My Little Pony Equestria Girls products launched in major markets in August and have been selling extremely well, with additional markets still to launch.
Games were up too. Goldner explained Hasbro's transmedia approach to its properties:
We've talked about marrying up the digital and analog experiences across brands. You're seeing that in Magic, you're seeing that in TELEPODS and you're also seeing it across brands as classic as Monopoly and others, where you're getting both the online, smartphone, mobile opportunities to game, as well as playing face-to-face on a board game or off the board games. So I think our team is really focused on looking at innovation across all the different play spaces.
Despite the cross-channel approach Wizards of the Coast has taken with its own licenses, the company doesn't seem to be too keen on launching My Little Pony games. Of particular note is the importance of hobby stores in selling Magic: The Gathering. Goldner explained why:
As the brand expands, you will see more of the brand at mass retail, but still the vast preponderance of the brand is still where we don't count POS and we don't have NPD data because, again, the hobby shop -- census of hobby shops and hobby shop playing has increased as well during this period. So effectively, we're still roughly 80% of the business, not counted within any of our data, albeit on an expanding pie.
Where Magic: The Gathering goes, so goes Wizards of the Coast. Although Goldner's comments were restricted to the card game, it could easily be applied to Hasbro's approach to Dungeons & Dragons:
...we continue to invest, to build the capability of Magic Online. And that's really about allowing for more simultaneous play experiences. As you know, we allow -- give players the opportunity to play a great distance from one another and play in that virtual online space. We want to be able to host more gaming sessions. And that's what the team is working on, to expand the ability to host more simultaneous gaming sessions. That allows for people who have been more latent or lapsed users to get back into the brand. And then, of course, the team is also working on the analog business globally, which allows for lots of play sessions face-to-face in people's hometowns around the world, at hobby shops, tournaments that allow people to play more competitively. So there's an array of really hands-on, as well as virtual experiences, that we're developing for that brand. In many ways, Magic was the early indication for us how we're going to execute our Games business going forward...
Of interest was Goldner's response to the aging population of gamers:
...I think our team at Wizards of the Coast has done a very good job of continuing to bring great, new innovation, characters and, frankly, great storytelling to that brand. And they've done that across multiple different platforms. I think they're spending a lot of time listening to the player, listening to that audience. You're right, it is not a brand that's really in the toy space. It's a brand that is played by an older audience. And I think the team has really reflected that in their thought process of why we've invested in our online capabilities for more simultaneous play sessions globally. And the effort that we're making around the world to bring Magic: The Gathering face-to-face games to consumers in many areas is really just beginning. And so I think that it's more about the storytelling, the game play, the richness of the immersive content, which is emblematic of our overall blueprint strategy. And they've led the charge for the last couple of years. And you now see the rest of the Games business catching up to what they began.
This bodes well for Dungeons & Dragons. For the full transcript, see Seeking Alpha.
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