Hasbro’s 2013 Investor Day

Hasbro’s 2013 Investor Day was just nowish.

Below the break, I’ve compiled a few insights from the recording (or rather the Seeking Alpha transcript) and the slides. The data on Pony is rarely neatly separated from that on their other brands, so you’ll have to bear with Debbie Hancock, Brian Goldner, John Frascotti, et al. if they prefer to elucidate details on their Pony plans by juxtaposition to Transformers or Littlest Pet Shop.

We start with Brian Goldner.

Now I’d like to walk you through an example using Transformers. So let’s walk through this. From 2006 to 2012, which were both non-movie years for the brand, the brand grew by nearly 2x. If you look at Transformers before the first movie in ’06, you can see how just dramatically there has been an impact based on the Brand Blueprint. In 2006, 100% of our toys were core and not entertainment based. Last year, 27% were core. In 2006, we had $0 coming from digital; last year, 4%. The same is true with immersive entertainment experiences. That went from 0% to 11%. And finally, our lifestyle licensing business has grown from 1% to 6% last year. Finally, when you look at Transformers geographically, you’ll see that in 2006, 73% of the business was U.S. based with limited business in the emerging markets; and in 2012, 42% of the business was U.S. based with 37% in Europe and 21% in emerging markets.Now we are just beginning this process with My Little Pony. We increased revenues 65% from 2010 to 2012, turning around a brand that was on the decline. And our TV entertainment strategy that we implemented in 2010 is the key driver of this turnaround. Through the first half of the year, Pony revenues are up 50%.

To accelerate our growth and ensure a focus on our most important brand, we’re moving to franchise management against our 3 critical brands: Transformers, My Little Pony and Littlest Pet Shop. And our other franchise brands will follow.

Somehow my impression is that they’ve come to recognize international fans more over the last two years, but for better or worse, that may be just some form of cognitive bias.

Our series continue to drive ratings on the networks of our global broadcast partners. I’m pleased that the rollout of our newest series, Littlest Pet Shop, is already in a virtual ratings tie with the #1 show on The Hub, My Little Pony. In Germany, we’ve seen 54% audience growth for Transformers Prime. In Brazil, My Little Pony is the #1 show for girls.

Having all screen strategy means that we have to be multi-platform in our distribution approach. And we’re very proud of the fact that for 3 conservative quarters, My Little Pony has remained one of the most popular stream shows for girls on Netflix.

Or rather consecutive? Hopefully…

We have taken the momentum in My Little Pony, that brand, and expanded its reach by creating My Little Pony Equestria Girls, a fully integrated and content and retail strategy, which extends the brand. In its theatrical launch on 360 screens in the U.S., My Little Pony Equestria Girls the movie, our first full-length animated film that was in theaters this summer, has generated over 21 million impressions. We’ve also made more than — we made back more than our initial investment already in the Equestria Girls feature, and Deb is going to take you through the economics very shortly.

After a presentation, Brian Goldner mentioned some licensed games of various brands before it was again Deborah Thomas’s turn with a longer segment on My Little Pony.

So let’s begin with a case study on one of our franchise brands, My Little Pony. As you’ve heard today, My Little Pony is a brand which has benefited from entertainment and delivered several years of very strong growth. And it’s really just getting started. Samantha will speak this afternoon about the work the global brand team has done on My Little Pony in an all new IP, Equestria Girls. However, from a financial standpoint, it is an interesting case study on how to cost effectively leverage entertainment.

As part of the plan for expansion of the brand, Hasbro Studios and the global brand team embarked on its first venture in film, creating a full-length movie based on an integrated content and retail strategy. And that content has been embraced by fans. Let’s look at the trailer for the movie.

Isn’t that great? The development of the film was a small investment captured within our existing program development budget. The film was distributed through home entertainment and a theatrical deal with Screenvision. These 2 distribution agreements more than covered our production investment. We then sold the film through our global television distribution network, including the Hub Network in the U.S., where it helped drive a nice increase in ratings, on international networks and through digital streaming partners. Most importantly, this launched an all-new IP for Hasbro which is driving incremental merchandise revenues. In the end, we anticipate our total return to be 16x our initial investment in 2013.

This is a model that potentially makes a lot of sense for a number of other brand initiatives. So let’s take a look at the TV commercial currently running in this exciting new IP.

Next up, John Frascotti.

My Little Pony is one of the fastest-growing brands in the market today. Our television show continues to enjoy great ratings around the world. We’re now shown in 180 markets. Our mobile game from Gameloft is approaching 15 million downloads, and our over 200 licensees globally have taken full advantage of the popularity of the My Little Pony brand. And as Deb just showed you, our latest new introduction, Equestria Girls is off to a fantastic start. So this brand is hitting on all cylinders.

Then Samantha Lomow took over with another longer presentation on Pony.

So let’s start with My Little Pony. We have incredible momentum. This year, it’s on track to be our best year since the relaunch of the pony business in 2010. And it’s because we’ve executed the brand’s blueprint, with outstanding entertainment from Hasbro Studios, exceptional execution at retail around the world, a great selection of products from licensees, compelling digital gaming from our partner Gameloft, and innovative marketing. The My Little Pony brand is resonating with a broad demographic of fans around the world. It’s a global brand, and half of our business is driven outside the U.S. Fans aged 2 to 52 are really embracing their inner pony in a truly aspirational way.

I want to share a few examples of just how pervasive this brand has become. First, our comic book partner, IDW, is about to hit its 1 millionth comic copies sold, making comic book history, even outselling traditional heritage boy-targeted comic book titles and effectively bringing girls back to the comic book business. At Build-A-Bear, where we launched My Little Pony in the first week of April, it’s been a top-performing program. And recently, Build-A-Bear announced that TWILIGHT SPARKLE and SPIKE will become a new this fall. And over our 200 licensees around the world in 17 categories across all tiers of retail are taking full advantage of the brand’s popularity. And we continue to expand our pony footprint with new partners, adding new brand expressions for our core consumer to keep up with varied experiences we know girls want.

We continue to deliver break-frame marketing and PR programs, such as the My Little Pony themed window display at the fashionable Selfridges department stores in the U.K. this spring. And at Colette, one of the most credible fashion boutiques in the world, and My Little Pony will be there with a signature line of clothing in Paris this September.

And since the heart of our brand is all about friendship, we continue to spread the word and ponify fans one friend at a time. Our ponification stations, where fans get ponified with colored hair, nails and even My Little Pony cutie marks have become prominent in events at places like our pop-up shops, comic cons, L.A. Film Festival and even at trade events like toy fair and licensing show.

As part of our fourth season, TWILIGHT SPARKLE becomes a princess and grows wings. Let’s take a look at a spot from our fall TV campaign and our product line that ties directly into the Crystal Princess Celebrations Fantasy.

Another great example of how we are continuing to express the brand in new ways and infuse it with fluidity, allowing girls to experience their favorite brand in a whole new way is with the launch of Equestria Girls. This summer, we took our core cast, Pinkie Pie, Rainbow Dash, Applejack, Rarity and Fluttershy to a parallel universe where they all exist as teenage girls.We expanded the world in a way that stayed true to our brand essence and story. Our characters and values of friendship are so strong that fans of all ages have embraced the Equestria Girls. We launched this summer with a limited theatrical release at the L.A. Film Festival and had great support by celebrities and their kids, all pony fans in their own rights. The movie, distributed by Screenvision in the U.S., exceeded expectations with packed houses and numerous sellouts by exhibitors in major markets, leading partners to add even more showings of the 70-minute film.

And early reads of our DVD sales distributed by Shout! Factory are very strong. As of last week, Equestria Girls movie was #2 in kids, and #20 overall on iTunes movies, ahead of several major releases this year.

You heard from John how digital has become a more significant part of our marketing. We’re also investing in digital media to deliver a Equestria Girls to our audience where they are online.

For our launch campaign, we have developed a long form music video, an anthem song and even a signature Equestria Girls dance, the EG stomp. The music video was directed by John Scott, director on the series Glee. Let’s take a look at the music video from our campaign.

And our doll sales are off to a great start. We look forward to a strong holiday season. We’ve also provided you with some product to take home, and even some My Little Pony accessories, so you can join the movement, too.

“Fans aged 2 to 52 are really embracing their inner pony in a truly aspirational way.” :-)

Then there was also an interesting question in the Q & A part.

Sean P. McGowan – Needham & Company, LLC, Research Division

I’m Sean McGowan from Needham. I have a couple of questions. … For Samantha, it may sound silly but I think it’s interesting good question, there’s some reason why none of the main characters in Pony are male, must’ve been some thoughts here as to whether or now that would help sales a lot of other girl’s properties have female and male characters some of the newer properties that are out there, so just some thoughts behind that.

Samantha Lomow

Yes, I love it. It’s a great question. So we’ve relaunched the business since 2010 and the entertainment has been a great catalyst for growth, and part of that has really been building out the layers of the IP with hundreds of characters in lure that has really been embraced by the fans. And in that, you find all sorts of characters. There are plenty of male of ponies in the lure. If you’re interested you can read Elements of Harmony. It’s a book that has all other different characters listed out and it goes up episode by episode. It’s actually a great fan read. And even last year, just kind of reinforced our male pony heritage, we’ve had a big royal wedding celebration and offered that both male and female ponies as part of that storyline and also in product and did really well for us. So they’re not part of the Core 6 main characters, but they are throughout all of our stories and throughout the fantasy overall. So I think that’s probably the best.

Many thanks again to Seeking Alpha for the transcript.

Here also the presentation slides for your perusal. (Alternatively, you can open them in a lightbox.)

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