Market commentary by eToro analyst for Romania, Bogdan Maioreanu
Tom Cruise rattled the box office flying high with his new film, Top Gun Maverick, earning 300 Million dollars worldwide in the first four days after debut. A good result for the movie producer Paramount (PARA). Related to the movie, one can buy a playset replica of the aircraft carrier from the movie, complete with Maverick’s fighter jet, produced by Matchbox, a brand owned by Mattel. A polish manufacturer, Cobi, is proposing construction sets and Revell is proposing buildable plastic scale models of the planes in the movie. All licensed.
This is not a fluke. Statistics from early 2021 show that toys based on movies are showing a 19-percent increase in revenue over 2019. Non-movie toys have only seen single-digit increases.
Disney (DIS) has capitalized on this trend already. With over 137 million subscribers worldwide on his streaming service Disney +, which will launch this month in Romania too, Disney movies and TV shows licensed toys are found almost in every toy store. And companies are fighting for the right to produce them. Mattel (MAT) and Hasbro (HAS) fought over the Disney Princess and Frozen license. Hasbro took the license in 2016 after Mattel had been making the toys for twenty years. But at the beginning of this year, Mattel won back the rights to make dolls based on Disney’s princess characters, including Frozen’s Elsa and Anna, Jasmine from “Aladdin” along with Snow White, Cinderella, Ariel, Moana and other Disney heroines.
Mattel’s Barbie is a fashion doll that was launched in 1959. But Barbie evolved into a movie tie-in doll too. There is a correlation between movies and TV shows based toys and sales. For example Netflix’s “Barbie Dreamhouse Adventures” and the sales of the Barbie Dreamhouse are related. As viewer hours of Barbie titles soared—nearly doubling between February and June 2020, sales of the Barbie Dreamhouse skyrocketed, too. It became one of the top 10 fastest selling toys in the US from March to September 2020.
In the latest earnings report Mattel announced that it is trying to develop more of its IP into new movies: a Hot Wheels movie produced by JJ Abrams company Bad Robot and a Barbie movie starring Margot Robbie to be launched in 2023.
Hasbro renewed its agreement with Disney’s Lucasfilm studio to make toys based on the Star Wars franchise but also Indiana Jones. Harrison Ford is returning to theaters as Indiana Jones for the fifth time in a new movie on June 30, 2023. The new toys will be available then.
Hasbro recently announced a 0.7 USD dividend on common shares. In Q1 2022 the company had revenues of 1.16 Billion dollars. The company’s has a portfolio of approximately 1,500 brands includes MONOPOLY, MAGIC: THE GATHERING, NERF, MY LITTLE PONY, TRANSFORMERS, PLAY-DOH, DUNGEONS & DRAGONS, POWER RANGERS, PEPPA PIG and premier partner brands. Consumer products sales increased 3% year on year but while the US increased 12%, Europe decreased 6% and Asia 19%.
In 2022, global toy sales are up 1% for the first four months of this year. Value sales across all countries tracked by NPD consulting company are above 2019 sales, so we’re selling more in terms of value sales than pre-COVID-19. Unit sales have declined 5%, while average selling price has increased 7%. In other words, we are still witnessing an elevated level of toy sales, driven by an increase in the average price.
Popular movies and TV shows franchises are fueling the increase of toys sales in another segment: collectibles. One out of every five toys sold globally this year has been a collectible, according to NPD.
Funko Inc. (FNKO) is capitalizing on this trend. Funko is a producer of licensed collectible figures and merchandise. Its Q1 2022 net sales increased 63% year on year with America showing 70% increase, Europe 43% and the other territories 48%, showing that it is a global trend. The number one franchise was Disney’s Star Wars TV series The Mandalorian, followed by Marvel, Five Nights at Freddy’s (a video game based figures), Pokemon and Harry Potter.
Bogdan Maioreanu, eToro analyst and markets commentator, has over 20 years of experience in financial services and investments and a strong background in journalism. He held different Corporate Banking management positions in both Raiffeisen Bank and OTP Bank, before moving to business consultancy roles working for IBM Romania among others. Bogdan is an Executive MBA from Asebuss and Washington University.
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