Hasbro 2014 Annual Report Download - page 7

and our partner brand SESAME STREET. In
Preschool, we are focused on Hasbro Franchise
Brands and story-led initiatives where we believe
we can dierentiate our oerings and deliver higher
profitability. While revenue has declined, today’s
revenue commands a higher margin, and our
Preschool category profitability is growing.
Storytelling
As evidenced by the success of MY LITTLE PONY,
TRANSFORMERS and MARVEL properties, it is clear
that stories are dierentiating brands, and industry
data supports this trend.
At Hasbro, we are using great stories and
great characters to drive innovation in all we
do. Entertainment and storytelling are integral
components of every brand. We invest in
entertainment across platforms, including digital
shorts, television, home entertainment and feature
films. Stories can be also be told through a mobile
game, on a tablet or online, or woven through
social media.
Hasbro Studios is developing much of this global
content for Hasbro brands. To date, the studio has
green-lit more than 1,250 half hours of original
programming, including hit and award-winning series
based on Hasbro brands, such as MY LITTLE PONY,
TRANSFORMERS and LITTLEST PET SHOP. These
programs air on networks around the world, on
streaming services and in home entertainment. Since
forming the studio, we have spent more than $260
million in cash to develop programming, which in turn
has delivered more than $1 billion in television-backed
merchandise sales.
To further the reach and impact of our content,
in 2014 we unveiled our new film label, ALLSPARK
PICTURES. ALLSPARK is an evolutionary step in
our entertainment strategy that allows us greater
control of the film-making process and increased
opportunities to reach multiple audiences.
We will continue to work with major film studio
partners on larger-budget films, including both the
TRANSFORMERS and G.I. JOE movie franchises, but
will create more modestly budgeted films through
ALLSPARK PICTURES, where and when it makes
economic sense.
In October 2015, our first film under the
ALLSPARK PICTURES label, JEM AND THE
HOLOGRAMS, will be released in partnership
with Universal Pictures. The film will introduce the
1980s pop star and her band to a new generation
of girls. In JEM AND THE HOLOGRAMS, four
aspiring musicians will take the world by storm
when they see that the key to creating one’s
own destiny lies in finding one’s own voice.
In addition, with the global success of MY LITTLE
PONY, we believe this is the right time to bring the
story of our “mane” cast to the big screen. We are
currently developing a MY LITTLE PONY feature film
under the ALLSPARK banner for release in the 2017
timeframe. This project is just underway, and we look
forward to updating you on our progress in future
communications.
Brand-Driven Consumer Engagement
While stories further the reach of our brands, they
also fuel our consumers’ desire to experience brands
across a broad spectrum of licensed consumer
products. Over the past several years, we built our
global licensing organization and developed our
storytelling capacity to capitalize on this opportunity.
Our Hasbro-owned brands give us access to
profitable incremental revenue opportunities in
licensing, entertainment and digital gaming. Through
the execution of our brands across the blueprint,
we have dramatically expanded the revenue and
profit opportunities of these properties. A few select
brands, including MONOPOLY and MY LITTLE PONY,
are capitalizing on their cultural relevance and broad
appeal, delivering a higher percentage of total
revenues in the licensing category.
ANNUAL REPORT
From 2012 to 2014, entertainment-based
toy revenues in the U.S. grew at a 7%
compound annual growth rate, while non-
entertainment toys remained essentially flat.3