18 July 2017 ~ 0 Comments

Transformers 5 Disappoints: What Next For Hasbro?

TRANSFORMERS 5 DISAPPOINTS (?)…WHAT NEXT FOR HASBRO?

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It has been widely reported that Hasbro & their movie studio partners have a 10 year map for the Transformers franchise. This includes numerous additional Transformers films, plus an array of spin off movies. This should not be surprising, as this is increasingly the way blockbuster movies are going – extended franchises going ever deeper into each character’s story/background. X Men would be the most obvious example – with 10 (big box office earning) movies in the franchise since 2000, total box office gross of over $5bn, with a per movie average of over $500m.

According to media reports, Transformers 5 has been a major disappointment at the box office & in terms of critical reception. Yet the movie is still set to gross well in excess of $500m against a production budget of around $220m, and could even reach $600m at the global box office, putting it on a par with the franchise average of the X Men series. Admittedly this looks like being the lowest box office gross for the Transformers franchise since the 2007 movie, but $500-600m is hardly a disaster. It may be significantly less than expectations, and significantly less than the 2 previous movies which grossed over $2.2bn between them, but likely to be about on a par with X-Men Apocalypse, the last full ensemble X-Men movie which grossed c. $540m in 2016.

The question for Hasbro & their movie partners is whether Transformers 5 failing to live up to expectations is a reason to question the strategy/volume of movies & spinoffs planned going forward or not. As an acknowledged Hasbro expert (I worked for Hasbro for 6 years in the noughties & regularly advise investment companies on Hasbro’s prospects & outlook), I just can’t see how that would be the case for several reasons:

Hasbro & the movie people can’t afford for Transformers to fade from the movie scene, so you can be sure many of the top minds in the movie business will be on it to ensure future success.

While much has been made of Transformers 5 suffering from bad review/poor critical reception, the reality is that aside from the 1st in the modern franchise series in 2007, none of the Transformers movies have reviewed that well.

Spin offs allow franchises to have more frequent movies with less ‘franchise fatigue’ effect, as the story while being linked to the main narrative is different, the action is different, setting etc – for instance The Wolverine (2013) is a great example of a spin off which is unlikely to cause franchise fatigue – the setting in modern day Japan, the Yakuza, the particular ‘baddies’ etc. all significantly differentiate the movie from the main franchise, despite the lead character being one of the lead characters in the broader ensemble. So I would not expect the disappointment of Transformers 5 to have any impact on the forthcoming Bumblebee spin off (aside from much scrutiny from those at the top) to ensure the movie is a hit.

Licensing & merchandising is the big profit driver with this kind of franchise – the reality is that the movie has as much space on shelf as any other brand around the launch date. While this is outside Q4 peak season for toy sales, that means the licensed products almost sell themselves due to the noise around the release & the very prominent in store presence. Maybe this will wane more quickly in the run up to peak season than it might have done if Transformers 5 had been a $1bn grossing movie, but nevetheless, a disappointing movie doesn’t stop kids loving the concept, the characters and the past movies (these past installments of a franchise have never been more accessible with Netflix & other content platforms prevalent today). For sure, there’s likely to be a few less kids recruited into the franchise from Transformers 5, which has to be a concern, as kids are generally in the toy space for this kind of franchise for around 3-4 years max before moving on…yet there is the Bumblebee spin off movie in 2018, which is likely to do at least $300-500m at the box office, meaning the cumulative audience for both Transformers 5 & Bumblebee should be not far off the past smash hit sequels in the franchise. Therefore I see any financial impact as being short term – the franchise will keep going strong.

So, in conclusion, Transformers 5 may have disappointed based on sky high expectations, but $500m-600m is hardly a disaster, and still puts this movie on a par with the X Men series average box office.

N.B. All box office numbers quoted in this article are taken from: www.the-numbers.com

 

by Steve Reece, CEO of Kids Brand Insight www.KidsBrandInsight.com,  a leading toy expert consultancy to toy companies around the world, which helps people & companies to get ahead in the toy industry, find the right toy & game factories and to consumer research test their products with kids and parents. Steve is an acknowledged Hasbro expert, and regularly advises investment firms on Hasbro’s strategy & outlook via leading expert networks including Gerson Lehman & others.

 

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