Hasbro 2014 Annual Report Download - page 27

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• Any product’s life cycle or sales quantities will be sufficient to permit us to profitably recover our
development, manufacturing, marketing, royalties (including royalty advances and guarantees) and other
costs of producing, marketing and selling the product.
Entertainment is an increasingly important success factor for our brand awareness, storytelling and brand
building.
Entertainment media, in forms such as television, motion pictures, digital products, digital shorts, DVD
releases and other media, have become increasingly important platforms for consumers to experience our brands
and our partners’ brands and the success, or lack of success, of such media efforts can significantly impact the
demand for our products and our financial success. We spend considerable resources in designing and developing
products in conjunction with planned media releases, both by our partners and our own 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 2015 we are developing and marketing significant product lines tied to the scheduled motion picture
releases by key partners of AVENGERS:AGE OF ULTRON,JURASSIC WORLD and STAR WARS: THE FORCE
AWAKENS. Those motion pictures are all being developed and released by our partners and our partners control
the content and schedule for such motion pictures. Similarly, we are developing and marketing products for
entertainment we play a more active role in developing or develop ourselves. If those motion pictures, or any
other key entertainment content for which we develop and market products are not as successful as we and our
partners anticipate, our revenues and earnings will be reduced.
The ultimate timing and success of such projects is critically dependent on the efforts and schedules of our
licensors, and studio and media partners. We do not fully control when or if any particular motion picture
projects will be greenlit, developed or released, and our licensors or media partners may change their plans with
respect to projects and release dates or cancel development all together. This can make it difficult for us to get
feature films developed, plan future entertainment slates and to successfully develop and market products in
conjunction with future motion picture and other media 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.
Lack of sufficient consumer interest in entertainment media for which we offer products can harm our
business.
Motion pictures, television, digital products or other media for which we develop products may not be as
popular with consumers as we 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 and properties 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.
Discovery Family Channel, our cable television joint venture with Discovery Communications, Inc. in the
United States, competes with a number of other children’s television networks for viewers, advertising revenue
and distribution fees. There is no guarantee that Discovery Family Channel will be successful. Similarly, Hasbro
Studios’ programming distributed internationally and Backflip Studio’s digital products compete with content
from many other parties. Lack of consumer interest in and acceptance of content developed by Hasbro Studios
and Backflip Studios, or other content appearing on Discovery Family Channel, and products related to that
content, could significantly harm our business. Similarly, our business could be harmed by greater than expected
costs, or unexpected delays or difficulties, associated with our investment in Discovery Family Channel, such as
difficulties in increasing subscribers to the network or in building advertising revenues for Discovery Family
Channel. During 2014 the Company spent $31,424 for programming developed by Hasbro Studios and
anticipates that it will continue spending at comparable levels in 2015 and future years.
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