Hasbro 2015 Annual Report Download - page 24

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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 Studios’ 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 2015 we spent $42.5 million for television programming and film projects being developed by
Hasbro Studios and we anticipate that we will continue spending at comparable levels in 2016 and future years.
At December 27, 2015, $242.9 million, or 5.1%, of our total assets, represented our investment in Discovery
Family Channel. If Discovery Family Channel does not achieve success, or if there are subsequent declines in the
success or profitability of the channel, then our investment may become impaired, which could result in a write-
down through net earnings.
The children’s and family entertainment industry and consumer products industry are highly competitive
and the barriers to entry are low. If we are unable to compete effectively with existing or new competitors or
with our retailers’ private label toy products our revenues, market share and profitability could decline.
The children’s and family entertainment industry and the consumer products industry are, and will continue
to be, highly competitive. We compete in the United States and internationally with a wide array of large and
small manufacturers, marketers, and sellers of analog toys and games, digital gaming products, digital media,
products which combine analog and digital play, and other entertainment and consumer products, as well as with
retailers who offer such products under their own private labels. In addition, we compete with other companies
who are focused on building their brands across multiple product and consumer categories. Across our business,
we face competitors who are constantly monitoring and attempting to anticipate consumer tastes and trends,
seeking ideas which will appeal to consumers and introducing new products that compete with our products for
consumer acceptance and purchase.
In addition to existing competitors, the barriers to entry for new participants in the children’s and family
entertainment industry and in the consumer products industry are low, and the increasing importance of digital
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