The latest buzz on Wall Street is that toy maker Hasbro might acquire Dreamworks Animation, the company behind Shrek and Kung Fu Panda.
Neither company has commented on the rumor and, according to reports, talks could still fall apart.
The possible acquisition reflects the modern big business of selling toys. Once upon a time, toys were, well, just toys. You built stuff with Legos and played make-believe with Transformers.
But that’s changed, says Chris Byrne, a toy analyst at TTPM. Popular toys are now considered entertainment “properties.” For example, Hasbro’s Transformers and even its Ouija board are now the stars of movies.
Bryne says the question is now, “‘How do we think about this property in all the ways in which kids encounter that entertainment?’ So that could be toys, that could be TV, that could be movies, that could be video games.”
The shift reflects the way kids are buying toys, says Sean McGowan, analyst at Needham and Co. Children’s entertainment used to focus on toys and cartoons, but today, McGowan says, “the claims on kids’ time and attention and money are growing. So you see them using their smart devices.”
Featuring toys as movie stars has helped, but overall, toy sales have remained flat for more than a decade, McGowan says.
Paul Sweeney, an analyst at Bloomberg Intelligence, says the fact that movie studios have also grown bullish on featuring toys also drives the trend.
“What’s happening in Hollywood, [is] the studios are really looking for tried-and-true already proven franchises, if you will, either stories or characters,” Sweeney says.
Sweeney says this deal would make sense on some levels – but the list of companies that have lost fortunes trying to make it in Hollywood is a long one.
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