Hasbro 2013 Annual Report Download - page 17

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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, or in certain situations, to utilize them for toy products where we consider the out-licensing of brands
to be more effective.
Our digital gaming business seeks to promote our brands through the out-licensing of our intellectual
properties to a number of partners who develop and offer digital games for play on mobile devices, personal
computers, and video game consoles based on those brands. Our agreement with Electronic Arts Inc. (“EA”),
grants exclusive worldwide rights to create mobile games based on a number of our intellectual properties,
including MONOPOLY, SCRABBLE, YAHTZEE and GAME OF LIFE. We also have agreements with
Activision for digital games based on the TRANSFORMERS brand, DeNA for mobile games based on the
TRANSFORMERS brand, GameLoft for mobile games based on MY LITTLE PONY and LITTLEST PET
SHOP brands, Jagex for an online TRANSFORMERS game for Western Markets, and Ubisoft for console games
based on MONOPOLY, SCRABBLE, TRIVIAL PURSUIT and others. We also license our brands to third
parties engaged in other forms of gaming, including Scientific Games Corporation. Furthermore, in July 2013,
we acquired a 70% majority stake in Backflip, a mobile game developer whose mobile gaming product offerings
include DRAGONVALE, NINJUMP and PAPER TOSS. In 2014 and beyond, Backflip intends to focus on its
existing product lines and launching new games, including those based on Hasbro brands.
To support our strategic objective of further developing our brands through television entertainment, we
operate a wholly-owned television studio, Hasbro Studios, which produces television programming primarily
based on our brands, which is distributed on a global basis. In addition, Hasbro Studios has a coordinated
development process which aligns with our 50% interest in a joint venture with Discovery that operates Hub
Network, a cable television network in the United States. Hub Network is dedicated to providing high-quality
children’s and family entertainment.
In addition to the above, we also seek to promote and leverage our brands through major motion pictures. In
June 2014, TRANSFORMERS: AGE OF EXTINCTION, the fourth major motion picture based on the
TRANSFORMERS brand, is scheduled to be released by Paramount Pictures. In 2013, G.I. JOE:
RETALIATION, the second major motion picture based on the G.I. JOE brand, was released. In May 2012,
BATTLESHIP was released by Universal Pictures.
Major motion pictures and television programming based on our owned and controlled brands provide our
consumers with the ability to experience these properties 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 toy and game 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 which predominantly produce game products. Sourcing of our other production is done
through unrelated third party manufacturers in various Far East countries, principally China, using a Hong Kong
based wholly-owned subsidiary operation for quality control and order coordination purposes. See
“Manufacturing and Importing” below for more details concerning overseas manufacturing and sourcing.
Other Information
To further extend our range of products in the various segments of our business, we sell a portion of our toy
and game products to retailers on a direct import basis from the Far East. These sales are reflected in the revenue
of the related segment where the customer is located.
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