Disney + will fuel Hasbro’s profits long after the pandemic is over

Hasbro proves it doesn’t need movie theaters to sell Star Wars toys.

While the Rhode Island-based company saw sales of its licensed content from entertainment studios drop by 12% to $ 1.08 billion for the full year, Star Wars sales grew 70% over that period.

Last year marked the first time since 2014 that Disney didn’t release a Star Wars movie in theaters, but sales of Grogu – the kid formerly known as Baby Yoda – and toy lightsabers contributed to the growth of the toy franchise.

Cinemas don’t have Hollywood content due to the pandemic, but Disney + is making up for that loss with shows like ‘The Mandalorian’.

“What was great for our company is that streaming content is now enjoyed by so many people that it has really hit a tipping point,” CEO Brian Goldner said on CNBC’s “Squawk on the Street” Monday. “And that tipping point means that tens of millions of people are viewing a piece of content during a certain early period, allowing us to ‘eventize’.”

Earlier Monday, Hasbro said fourth-quarter earnings fell to $ 105.2 million, or 76 cents a share, from $ 267.3, or $ 2.01 a share, a year earlier. But after item exclusions, Hasbro earned $ 1.27 per share, which was better than the $ 1.14 per share analysts expected.

Fourth quarter revenue grew 21% to $ 1.72 billion during the quarter, reaching Refinitiv’s estimate of $ 1.69 billion, helped by strong sales from games such as Jenga, Scrabble and Dungeons & Dragons.

Hasbro’s stock initially rallied on the news, but stock fell about 2.6% earlier in the afternoon as investors were concerned about investments the company is making in new video content and advertising.

The company is also facing increased costs due to supply problems, including delays due to port congestion. Hasbro has had trouble keeping certain items in stock, including those with Grogu.

When the character was introduced in 2019, Hasbro was unable to take full advantage of his popularity. Showrunners Jon Favreau and Dave Filoni were so eager to spoil Grogu’s performance in “The Mandalorian” that they didn’t share reference photos with toy makers.

Hasbro, along with other toy and retail manufacturers, had to scramble to meet consumer demand for goods with the little green alien. For season two, which launched in late 2020, Hasbro was able to tease new products and include Grogu goods in its holiday releases.

Disney + also has more than “The Mandalorian.” In the coming years, the streaming service will debut at least nine more Star Wars shows. These include series with popular characters such as Ahsoka Tano, Lando Calrissian, Obi-Wan Kenobi and Boba Fett.

These shows will keep Star Wars fans and Hasbro toy makers busy until 2023, when Patty Jenkins’ “Rogue Squadron” will hit theaters.

Outside of the Star Wars universe, Disney + also has nearly a dozen Marvel series in the works. Already “WandaVision” is streaming on the service and “The Falcon and the Winter Soldier” and “Loki” will be launched before the middle of the year.

“We see the rapid growth in subscription numbers, the globalization of Disney + and access to Disney content to new audiences as an important catalyst driving demand for consumer products,” said Stephanie Wissink, managing director at Jefferies. “Hasbro is one of Disney’s largest strategic partners in enabling fans of all ages to engage with the brands in the form of physical goods.”

Hasbro extended its Star Wars and Marvel partnerships with Disney in early 2020. It’s unclear how long the new contract will last, but the last time the toymaker renegotiated its master toy licenses for those franchises was in 2013.

Hasbro has long benefited from its relationship with Disney. In 2019, Hasbro’s partner brands’ revenue grew 24% to $ 1.22 billion. The company pointed to strong sales of the “Frozen 2,” “Avengers,” “Spider-Man” and “Star Wars” lines for the rise.

The toy company’s licensed content is likely to recover in 2021 as coronavirus vaccines roll out to more Americans and moviegoers can return to theaters in greater numbers. However, Hasbro did not provide a specific profit forecast.

Disney’s Marvel Studios released four films this year: “Black Widow”, “Shang-Chi and the Legend of the Ten Rings”, “Eternals” and a third “Spider-Man” film made in collaboration with Sony.

“Plans to have approximately 5 TV shows for Marvel content on Disney + this year, combined with anticipated movie releases, will create year-round programming opportunities for Hasbro with an ongoing offering of product offerings,” said Eric Handler, media director and entertainment. research at MKM Partners.