Hasbro 2013 Annual Report Download - page 41

and allow the Company to offer innovative products based on movie, television, music and other entertainment
properties owned by third parties. The Company’s primary licenses include its agreements with Marvel
Characters B.V. (“Marvel”) for characters in the Marvel universe, including SPIDER-MAN and THE
AVENGERS; Lucas Licensing, Ltd. (“Lucas”), related to the STAR WARS brand; Sesame Workshop, related to
the SESAME STREET characters and Rovio Entertainment Ltd. related to the ANGRY BIRDS brand. Both
Marvel and Lucas are owned by The Walt Disney Company (“Disney”). Sales of MARVEL products are
dependent upon the number and type of theatrical releases in any given year. In 2013, the Company and Disney
amended both the Marvel and Lucas agreements which extended the term of the license for Marvel characters
through 2020 and provides additional guaranteed royalty payments with respect to both MARVEL and STAR
WARS products in anticipation of expected future motion pictures and other related entertainment through 2020.
In 2013, the Company had sales of MARVEL products related to the May 2013 release of IRON MAN 3;
however, these sales were not as significant as those sales of products in 2012 related to the theatrical releases of
MARVEL’S THE AVENGERS and THE AMAZING SPIDER-MAN. During 2014 the Company will market
products related to three planned theatrical motion picture releases based on MARVEL properties, CAPTAIN
AMERICA: THE WINTER SOLDIER, THE AMAZING SPIDER-MAN 2, and GUARDIANS OF THE GALAXY.
The Company re-introduced BEYBLADE products, another licensed entertainment property, during the second
half of 2010 and had significant sales in both 2011 and 2012. Sales of BEYBLADE products experienced an
expected decline in 2013. In addition to offering products based on licensed entertainment properties, the
Company also offers products which are licensed from outside inventors.
The Company also seeks to build all-encompassing brand experiences and drive product-related revenues by
increasing the visibility of its brands through entertainment such as motion pictures and television programming.
Since 2007, the Company has had a number of motion pictures based on its brands released by major motion
picture studios including three motion pictures based on its TRANSFORMERS brand, two motion picture based
on its G.I. JOE brand and one motion picture based on its gaming mega brand, BATTLESHIP. The Company
developed and marketed product lines based on these motion pictures. The next motion picture,
TRANSFORMERS: AGE OF EXTINCTION, based on the Company’s TRANSFORMERS brand is scheduled to
be released in June of 2014 by Paramount Pictures.
In addition to using motion pictures to provide entertainment experiences for its brands, the Company has
an internal wholly-owned production studio, Hasbro Studios, which is responsible for the creation and
development of television programming based primarily on Hasbro’s brands. This programming is currently
aired in markets throughout the world. The Company is a 50% partner in a joint venture with Discovery
Communications, Inc. (“Discovery”) which runs Hub Television Network, LLC (“Hub Network”), a cable
television network in the United States dedicated to high-quality children’s and family entertainment.
Programming on Hub Network includes content based on Hasbro’s brands as well as programming acquired from
third parties. Hasbro Studios programming is distributed domestically to Hub Network, internationally to
broadcasters and cable networks and on various digital platforms including Netflix and iTunes. The Company’s
television initiatives support its strategy of growing its brands well beyond traditional toys and games and
providing entertainment experiences for consumers of all ages in any form or format.
The Company’s strategic blueprint and brand architecture also focus on extending its brands further into
digital media and gaming, including through the licensing of the Company’s properties to a number of partners
who develop and offer digital games and other gaming experiences based on those brands. One example of these
digital gaming relationships is the Company’s agreement with Electronic Arts Inc. (“EA”) under which EA has
the rights to develop eight of Hasbro’s best-selling gaming brands for mobile platforms globally. Similarly, the
Company has an agreement with Activision under which Activision offers digital games based on the
TRANSFORMERS brand, as well as with other third-party digital gaming companies, including DeNA and
GameLoft.
Furthermore, on July 8, 2013, the Company acquired a 70% majority stake in Backflip Studios, LLC
(“Backflip”), a mobile game developer based in Boulder, Colorado. Backflip’s product offerings include games for
tablets and mobile devices including DRAGONVALE, NINJUMP and PAPER TOSS. In 2014 and beyond, Backflip
intends to focus on its existing product lines and launch new games, including those based on Hasbro brands.
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