Why toymaker Hasbro could buy DreamWorks Animation

Stan Alcorn Nov 13, 2014
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Why toymaker Hasbro could buy DreamWorks Animation

Stan Alcorn Nov 13, 2014
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Deadline Hollywood reported this week that Hasbrothe second-largest toy maker in the United Statesis in talks to acquire DreamWorks Animation. 

DreamWorks Animation has been looking to get acquireda deal with Japanese SoftBank fell apart just last month. And Hasbro has been looking to get more involved in the movie business. 

But why? 

For DreamWorks Animation, part of it is a need to diversify beyond a marketplace for movie ticket sales that is increasingly challenging, especially for computer animated films.

“Like any technology, it’s become easier, cheaper and faster,” says Phil Contrino, chief analyst at BoxOffice.com. “So what that means is there’s more competitors than in 1995, when Toy Story came out.”

Now, DreamWorks Animation competes not only with Toy Story’s Pixar, but with Sony and Universal, with its “Despicable Me” franchise. 

As DreamWorks Animation has sought more revenue elsewhere, it has, in part, turned to merchandise. This is a business where Hasbro has excelled, with profits bouyed by toys based on the Star Wars movies and those of Marvel comic books, like Spiderman and Iron Man. 

But it also works the other way around. Hasbro has profited off games and toys that have turned into movies: GI Joe, Ouija andmost of allTransformers. 

“The Transformer movies have been very lucrative not just because of the toy side but also because the toy side provided the [intellectual property] to make movies which did very well at the box office,” says Martin Brochstein, senior vice president of industry relations and information at the International Licensing Industry Merchandisers’ Association.

This trend can be seen throughout the toy industry. “Mattel, Hasbro, Lego have kind of turned on to the fact that they have this asset that can be mined,” says Brochstein. 

In other words: Toys are the new comic books.

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