Hasbro 2009 Annual Report Download - page 13

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International
The International segment engages in the marketing and sale of our product categories to retailers and
wholesalers in most countries in Europe, Asia Pacific and Latin and South America and through distributors in
those countries where we have no direct presence. In addition to growing core brands and leveraging
opportunistic toy lines and licenses, we seek to grow our international business by continuing to expand into
Eastern Europe and emerging markets in Asia and Latin and South America. In recent years, we expanded our
operations in Brazil, China, Russia, the Czech Republic, Romania and Korea. We will continue to expand
operations in emerging markets in future years through the establishment of subsidiaries or increased involvement
with our existing distributors. Key international brands for 2009 included TRANSFORMERS, LITTLEST PET
SHOP, MONOPOLY, TRIVIAL PURSUIT, STAR WARS, PLAYSKOOL and MY LITTLE PONY.
Entertainment and Licensing
Our Entertainment and Licensing segment includes our lifestyle licensing, digital licensing, movie,
television and online entertainment operations. Our lifestyle licensing category seeks to promote our brands
through the out-licensing of our intellectual properties to third parties for promotional and merchandising uses
in businesses which do not compete directly with our own product offerings, such as apparel, publishing, home
goods and electronics.
Our digital licensing category seeks to promote our brands through the out-licensing of our intellectual
properties in the digital area, such as for applications on mobile phones, personal computers, and video game
consoles. This is primarily done through our long-term strategic alliance with Electronic Arts Inc. (“EA”),
which provides EA with the exclusive worldwide rights to create digital games for all of these major platforms
based on most of our toy and game intellectual properties.
As noted above, in 2009, we purchased a 50% interest in a joint venture with Discovery that operates a
television network in the United States. This network is dedicated to providing high-quality children’s and
family entertainment and educational programming. The network is expected to have approximately 60 million
subscribers at relaunch. The rebranded network, THE HUB, is expected to launch in the fall of 2010. To
support this venture, we established a virtual television studio that will produce programming for the network
as well as distribute this programming internationally. The programming will primarily be based on our
brands, but will also include third-party branded content. The studio will have a coordinated development
process that aligns with the network.
In addition to the above, we also seek to promote and leverage our brands through major motion pictures.
In 2009, TRANSFORMERS: REVENGE OF THE FALLEN and G.I. JOE: THE RISE OF COBRA were released
based on our brands. We also have a long-term strategic relationship with Universal Pictures to produce at
least three motion pictures based on certain of our core brands, with an option to produce two additional
movies. The first movie under this relationship is expected to be released in 2012.
Promotion of our brands through major motion pictures and television programming provides our
consumers with the ability to experience our brands in a different format which we believe can result in
increased product sales, royalty revenues, and overall brand awareness. To a lesser extent, we can also earn
revenue from our participation in the financial results of motion pictures and related DVD releases and through
the distribution of television programming. Revenue from product sales is a component of the U.S. and
Canada and International segments, while royalty revenues, including revenues earned from movies and
television programming, is included in the Entertainment and Licensing segment.
Global Operations
In our Global Operations segment, we manufacture and source production of substantially all of our toy
and game products. The Company owns and operates manufacturing facilities in East Longmeadow,
Massachusetts and Waterford, Ireland. Sourcing of our other production is done through unrelated manufactur-
ers in various Far East countries, principally China, using a Hong Kong based wholly-owned subsidiary
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