The recent announcement that Hasbro are to acquire Entertainment One in a $multi-billion deal brings a number of benefits to Hasbro. The acquisition of further expertise and capacity for content production and management can only help Hasbro’s ongoing journey from pure toy maker to entertainment brand owner. Above all though, this deal brings Hasbro yet another major global ‘toyetic’ brand – Peppa Pig.
Toy companies that don’t have strong brands of their own tend to either have to fight very hard to secure listings at retail and to drive product off the shelf into the hands of consumers and/or have to license other people’s brands to build an attractive toy product line.
Above all, the toy industry is about brands. Such a large amount of toy sales globally are driven by known brands which parents and kids know, love and trust. As a toy company then, why wouldn’t you want to build up your own brands instead of paying a 10-14% royalty to use someone else’s brands under license?
The challenge of course is that it takes time, money and resources to build up your own brands. It is much harder to persuade retailers and consumers to buy unknown brands, so in the end the process of building successful long term toy brands is part creative inspiration and even larger part sheer grind and ‘elbow grease’.
It takes organisational committment to build brands. Maybe you will be one of the lucky few who manage to create a massive global brand without a great deal of effort or time, but that isn’t likely! In the end a toy company needs to decide if they are willing to commit to building their own brands and paying the appropriate cost in terms of resources, effort and investment versus the quick (but transient) win of licensing someone else’s brands.
The benefits of having your own brands are many, but the major ones are firstly the tangible asset value, as evidenced in the Hasbro – Entertainment One deal, established brands with global presence can be worth $billions in hard cash! Secondly though, and perhaps this should be of more interest to toy companies who want to continue to trade is the stability created by having your own established brands. If you are reliant on licenses you inevitably end up on a vicious hamster wheel where you spin your wheels frantically to try to stay on the ride, but every so often due to a poor movie or a gap in licenses you end up getting spat out & taking a major hit in topline revenue. Most of us in this business have seen or experienced this effect of the downside of a major sales boost from a hit license then dying off leaving a massive sales gap to fill. This can often lead to redundancies and other turmoil which we would all choose to avoid where possible.
It isn’t just the major global players though who can build their own brands. All these companies started somewhere, in the shape of just one or two individuals who built a business from scratch. Smaller less established businesses of course can and do build major brands, and should be constantly striving to build the next new brand which can catapult them onto the next level.
Our Consultancy business offers a brand and product management service to toy companies. We have worked with $20bn global brand companies through to start ups. For more information on what we do and how we help toy companies around the world build brands, just click here to find out more: http://www.kidsbrandinsight.com/services/