Hasbro 2011 Annual Report Download - page 21

The children’s and family entertainment industry is highly competitive and there are low barriers to entry.
If we are unable to compete effectively with existing or new competitors our sales, market share and
profitability could decline.
The children’s and family entertainment industry is, and will continue to be, highly competitive. We
compete domestically and internationally with a wide array of large and small manufacturers, marketers, and
sellers of toys, games, video games, digital media and other entertainment and consumer products, as well as
with retailers. We face competitors who are constantly monitoring and attempting to anticipate consumer tastes
and trends, seeking ideas which will appeal to consumers and introducing new products that compete with our
products for consumer purchasing.
In addition to existing competitors, the barriers to entry for new participants in the children’s and family
entertainment industry are low, and the increasing importance of digital media, and the heightened connection
between digital media and consumer interest, has further increased the ability for new participants to enter our
markets. New participants with a popular product idea or entertainment property can gain access to consumers
and become a significant source of competition for our products in a very short period of time. These existing
and new competitors may be able to respond more rapidly than us to changes in consumer preferences. In some
cases our competitors’ products may achieve greater market acceptance than our products and potentially reduce
demand for our products, lower our sales and lower our profitability.
Delays or increased costs associated with the development and offering of entertainment media based upon
or related to our brands, or lack of sufficient consumer interest in such entertainment media, can harm our
business and profitability.
As part of our strategy of offering immersive branded play experiences, we look to offer consumers the
ability to enjoy our brands in as many different forms and formats as possible. Entertainment media, in forms
such as motion pictures and television, can provide popular platforms for consumers to experience our brands
and the success, or lack of success, of such media efforts can significantly impact the demand for our products
and our financial success.
The success of our products is often dependent on the timelines and effectiveness of media efforts by us and
our partners. Television programming, motion picture and DVD releases, comic book releases, and other media
efforts are often critical in generating interest in our products and brands and we spend considerable amounts of
time and sums of money in designing and developing products in conjunction with planned media releases. Not
only our efforts, but the efforts of third parties, heavily impact the timing of media development, release dates
and the ultimate consumer interest in and success of these media efforts.
For example, development and release of motion pictures based on our brands involves working extremely
closely with our studio partners in indentifying projects, developing them, and scheduling them for release. The
ultimate timing and success of such projects is critically dependent on the efforts and schedules of our studio
partners. We do not fully control when or if any particular motion picture projects will be greenlit or released.
This can make it difficult for us to plan our future movie slates and to successfully develop and market products
in conjunction with future motion picture releases, given the lengthy lead times involved in product development
and successful marketing efforts.
When we say that products or brands will be supported by certain media releases, those statements are based
on our current plans and expectations. Unforeseen factors may increase the cost of these releases, delay these
media releases or even lead to their cancellation. Any delay or cancellation of planned product development
work, introductions, or media support may decrease the number of products we sell and harm our business.
Even when motion pictures, television or other media is developed and released, consumers may not be as
interested in that media, and in any associated products, as we had anticipated. While it is difficult to anticipate
what products may be sought after by consumers, it can be even more difficult to properly predict the popularity
of media efforts, given the broad array of competing offerings. If our and our partners’ media efforts fail to
garner sufficient consumer interest and acceptance, our revenues and the financial return from such efforts will
be harmed.
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