{"id":8446,"date":"2018-04-30T13:54:39","date_gmt":"2018-04-30T17:54:39","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-digit\/submission\/hasbro-how-to-take-advantage-of-strong-ip-in-the-digital-age\/"},"modified":"2018-04-30T13:54:40","modified_gmt":"2018-04-30T17:54:40","slug":"hasbro-how-to-take-advantage-of-strong-ip-in-the-digital-age","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/hasbro-how-to-take-advantage-of-strong-ip-in-the-digital-age\/","title":{"rendered":"Hasbro \u2013 How to take advantage of strong IP in the digital age?"},"content":{"rendered":"

Background<\/strong><\/p>\n

Incorporated in 1926 by three Jewish brothers from Poland, Hasbro (originally Hassenfeld Brothers) did not make its first toy until 1952. Mr. Potato Head was a smash hit and the first toy to be featured on a television commercial. [1] Now with a market cap of over $11 billion, Hasbro is the largest toy and board game company in the world. [2] This is partially due to the acquisition of Milton Bradley and Parker Brothers, two of the largest board game companies of their time.<\/p>\n

For years the company was able to capitalize on its multiple lines of successful toys. The company produced its own toys and also set up licensing agreements to produce toys based on IP owned by other companies, such as Star Wars<\/em>, Power Rangers<\/em>, and Pok\u00e9mon. <\/em>Hasbro continues to produce legacy board games such as Monopoly<\/em>, Operation<\/em>, Scrabble, Risk, <\/em>and Battleship<\/em> and also owns Magic: The Gathering<\/em> creator Wizards of the Coast.<\/p>\n

From Toys to Pixels and Back<\/strong><\/p>\n

In the 1980s, Hasbro made a big push to get its IP onto television screens across the country. TV programs were created for IP like G.I. Joe<\/em> and Dungeons & Dragons<\/em>. During this time the company also leveraged the power of television and film to make toys based on successful TV shows and movies such as Jurassic Park<\/em> and Barney<\/em>, which it did not own.<\/em> These efforts helped drive toy sales and Hasbro generated sales of over $1.4 billion in 1989. [3]<\/p>\n

Despite the success of the Transformer<\/em> film series and television programs such as My Little Pony<\/em>, Hasbro still considers itself a toy company. The movies and TV shows, though revenue generating, are seen more as ways to sell more toys and keep franchises relevant and on the shelves. Hasbro doesn\u2019t break down revenue sources too much in it\u2019s annual reports, but the CEO has been quoted saying selling toys for partner brands (such as Disney) make up 25-28 percent of annual revenue. [4]<\/p>\n

Early Digital Efforts<\/strong><\/p>\n

Success in leveraging television and film to sell toys led Hasbro to explore a new media \u2013 video games. In 1995, the company created Hasbro Interactive, which published video games based on existing Hasbro IP. As early as 1997, Hasbro Interactive games Frogger<\/em> and Tonka 性视界<\/em> cracked the top 10. [5] Hasbro Interactive was acquiring IP from legacy video games such as Atari and making the titles available on modern consoles, such as the Playstation.<\/p>\n

Hasbro Interactive grew rapidly in the first few years of its existence, with rumors of it being poised to reach $1 billion in sales. However, despite the fast growth and high expectations, the Interactive division was not profitable. Thanks in part to declines from the dot-com bubble collapse, Hasbro decided to sell off the Interactive division, including the digital rights to most Hasbro games. Hasbro eventually repurchased these assets in 2005, but digital games have not been as much of a priority for Hasbro in the years since.<\/p>\n

Missing the Gaming Gold Mine<\/strong><\/p>\n

Hasbro acquired Wizards of the Coast for $325 million in 1999. This brought in a card game with a broad and intense fanbase. The game survived and maintained popularity despite newer card games with different themes (Pok\u00e9mon<\/em>, sports, etc.). A 2015 report estimates that there were still 20 million active players at the time, and the most valuable card can fetch upwards of $20,000 on internet trading sites. [6a] [6b] Magic<\/em> has been a cash cow for the game maker, but a recent entrant to the market has capitalized on the transformation from physical to digital and put Magic<\/em> on its heels.<\/p>\n

Hearthstone<\/em>, released by Blizzard entertainment in 2014 (who also own the related World of Warcraft<\/em>) has taken the world by storm. The game is an online-only direct competitor to Magic<\/em>. Hearthstone<\/em> generated $394.6 million in 2016, compared to Magic: The Gathering Online<\/em> generating just over $20 million. SuperData, a research firm, estimates that the market for digital card games will have reached $1.7 billion in 2017. [7]<\/p>\n

These digital card games, unlike the original Magic<\/em>, are free-to-play. As a result, the userbase for Hearthstone<\/em> is enormous. According to gamesindustry.biz, there were 70 million active users in March 2017. [8] This presents a significant advantage to Blizzard, who can (and does) offer limited time events, cards, and other bonuses to fine-tune gameplay and increase user engagement. Additionally, users can purchase digital packs of cards to build their decks more rapidly. Though only 7.6 percent of users do so, they (clearly) tend to spend quite a bit of money. [9]<\/p>\n

Hasbro has had Magic<\/em> online in some form as early as 2002, but clearly failed to see the market potential of a well-developed product. The game\u2019s loyal fanbase might facilitate some market share capture should Hasbro decide to make a bigger push into the online card game space, but it will be difficult to offset the dominant position of Hearthstone<\/em>, especially where there are clear direct network effects at play \u2013 the more players on the webserver make it easier for a user to quickly find a game at the appropriate skill level and increase the value of any rare cards he or she may already have.<\/p>\n

What to do?<\/strong><\/p>\n

Traditional board games have been having somewhat of a renaissance lately, with new titles like Settlers of Catan<\/em>, Ticket to <\/em>Ride, and Pandemic<\/em> in Amazon\u2019s top sellers alongside stalwarts Monopoly, Scrabble, <\/em>and Guess Who?<\/em> These games may be selling well and even make some inroads in mobile app stores, but the clear direction of \u201cmega hits\u201d indicates that true earthshattering success will come from internet-connected digital games. Riot Games is reported to have made over $1.6 billion in revenue in 2016 from its popular title League of Legends<\/em>. [10]<\/p>\n

Hasbro doesn\u2019t have the capabilities to develop a full-feature game like League of Legends<\/em> or Blizzard\u2019s Overwatch<\/em>, but it must find a way to innovate in the digital game space. The company owns a significant amount of valuable IP and it may be worthwhile to build games based off of familiar characters. Recruiting executives from competitors who have demonstrated success in building these games may be very beneficial to Hasbro.<\/p>\n

Other Avenues?<\/strong><\/p>\n

Hasbro has gotten a lot of help recently from money generated from the Transformer<\/em> films, and has considered increasing its efforts in filmmaking. When asked if Hasbro was considering the purchase of a film studio, CEO Brian Goldner responded, \u201cOwning and controlling the calendarization of your properties, the storytelling and the economics of the engagement of a global audience and consumer are all very compelling.\u201d [11] Just like with games, there appears to be a lot of revenue to be unlocked from better capitalizing on Hasbro\u2019s strong IP portfolio.<\/p>\n

 <\/p>\n

 <\/p>\n

 <\/p>\n

[1] http:\/\/www.fundinguniverse.com\/company-histories\/hasbro-inc-history\/<\/p>\n

[2] Google Finance<\/p>\n

[3] Company Documents<\/p>\n

[4] Hasbro CEO on ‘Transformers’ Future and Marketing ‘My Little Pony’ to Boys. Hollywood Reporter<\/em>. https:\/\/www.hollywoodreporter.com\/news\/hasbro-ceo-transformers-future-marketing-my-little-pony-boys-1012852<\/a><\/p>\n

[5] \u201cHasbro Interactive.\u201d Tuck School of Business Case. http:\/\/mba.tuck.dartmouth.edu\/pages\/faculty\/chris.trimble\/osi\/downloads\/20021_hasbro.pdf<\/a><\/p>\n

[6a] \u201cThe number of Magic Players Worldwide by Year.\u201d Echomtg.<\/em> https:\/\/www.echomtg.com\/blog\/post\/45\/the-number-of-magic-players-worldwide-by-year\/<\/a><\/p>\n

[6b] http:\/\/www.mtgprice.com\/sets\/Alpha\/Black_Lotus<\/a><\/p>\n

[7] \u201cSuperData: Hearthstone trumps all comers in card market that will hit $1.4 billion in 2017.\u201d VentureBeat<\/em>. https:\/\/venturebeat.com\/2017\/01\/28\/superdata-hearthstone-trumps-all-comers-in-card-market-that-will-hit-1-4-billion-in-2017\/?bt_ee_preview=vEG6q2rPi\/hdftf7RlU5hgjpX654Ftp\/3WM7U94SyMbCfCcwfsJW8cgMM6ab5h6J&bt_ts_preview=1502318500916<\/a><\/p>\n

[8] https:\/\/www.statista.com\/statistics\/323239\/number-gamers-hearthstone-heroes-warcraft-worldwide\/<\/a><\/p>\n

[9] \u201cSuperData: Hearthstone trumps all comers in card market that will hit $1.4 billion in 2017.\u201d VentureBeat<\/em>. https:\/\/venturebeat.com\/2017\/01\/28\/superdata-hearthstone-trumps-all-comers-in-card-market-that-will-hit-1-4-billion-in-2017\/?bt_ee_preview=vEG6q2rPi\/hdftf7RlU5hgjpX654Ftp\/3WM7U94SyMbCfCcwfsJW8cgMM6ab5h6J&bt_ts_preview=1502318500916<\/a><\/p>\n

[10] \u201cReport: League of Legends made $1.6 billion in revenue last year.\u201d DOT Esports<\/em>. https:\/\/dotesports.com\/league-of-legends\/news\/league-of-legends-2015-revenue-2839<\/a><\/p>\n

[11] Hasbro CEO on ‘Transformers’ Future and Marketing ‘My Little Pony’ to Boys. Hollywood Reporter<\/em>. https:\/\/www.hollywoodreporter.com\/news\/hasbro-ceo-transformers-future-marketing-my-little-pony-boys-1012852<\/a><\/p>\n

 <\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

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