Hasbro 2014 Annual Report Download - page 19

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distributors in those countries where we have no direct presence. We have offices in more than 35 countries
contributing to sales in more than 120 countries. In addition to growing brands and leveraging opportunistic toy
lines and licenses, we seek to grow our international business by continuing to expand into emerging markets in
Eastern Europe, Asia and Latin and South America. Emerging markets are an area of high priority for Hasbro as
they offer greater opportunities for revenue growth than developed markets. Key emerging markets include
Russia, Brazil and the People’s Republic of China (“China”). In 2014, 2013 and 2012, net revenues in emerging
markets grew 20%, 25% and 16%, respectively, from the prior years and represented more than 15% of our total
consolidated net revenues in 2014.
Entertainment and Licensing
Our Entertainment and Licensing segment includes our lifestyle licensing, digital gaming, television and
movie 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, 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 largely 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. In support of this strategy, in 2013, the Company
acquired a 70% majority ownership in Backflip Studios, LLC (“Backflip”), a mobile game developer based in
Boulder, Colorado, as we seek to complement out-licensing of certain of our brands with the development of
internal digital gaming resources. Backflip’s product offerings include games for tablets and mobile devices
including DRAGONVALE, NINJUMP and PAPER TOSS. New game brands released during 2014 include
DWARVEN DEN, PLUNDERNAUTS, SPELLFALL and SEABEARD. Backflip also introduced two game
brands under Hasbro brands, specifically NERFHOOPS and TWISTER TAP. In 2015 and beyond, Backflip
intends to continue focusing on its existing game titles, particularly DRAGONVALE, and to launch new games,
including more game offerings based on Hasbro brands. To further extend its brands into digital media and
gaming, the Company also out-licenses its 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 several 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 and with
Ubisoft under which Ubisoft offers console games based on MONOPOLY, SCRABBLE, TRIVIAL PURSUIT
and others. Lastly, we also license our brands to third parties engaged in other forms of gaming, including
Scientific Games Corporation.
To support our strategic objective of further developing our brands through television entertainment, we
operate a wholly-owned studio, Hasbro Studios, which produces storytelling across mediums. This includes
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 40% interest in a joint venture with
Discovery that operates Discovery Family Channel, a cable television network in the United States. Discovery
Family Channel 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
October 2015, the Company plans to re-ignite an archived brand with the expected release of JEM AND THE
HOLOGRAMS by Hasbro’s own, recently established film label, Allspark Pictures, in partnership with Universal
Studios. In 2014, Paramount Pictures released the fourth major motion picture based on the TRANSFORMERS
brand, TRANSFORMERS: AGE OF EXTINCTION, and Universal Pictures released a second motion picture
based on a games brand, OUIJA. In 2013, G.I. JOE: RETALIATION, the second major motion picture based on
the G.I. JOE brand, was released by Paramount Pictures. In May 2012, BATTLESHIP was released by Universal
Pictures.
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