Hasbro 2012 Annual Report Download - page 23

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Challenging market conditions in certain developed markets, such as in the United States and certain
Western European countries, make it more difficult for us to succeed.
Our future success in the United States and Europe is impacted by market conditions. A European sovereign
debt crisis or other significant negative shock to European markets could lead to a recession in Europe, which
may negatively impact consumers and in turn, sales of our products in the European markets. Similar negative
events impacting the market in the United States may harm our business.
Many components of the toy, game and family entertainment industries in the United States and certain
Western European countries, have not grown, or in some cases have even contracted, in recent years. These
markets represent a majority of our current product sales. It is more difficult for us to grow, or even maintain, our
business when the overall market in certain of the major countries we serve is not growing. To succeed in a
market that is stable or contracting, we must gain market share from our competitors, which is more difficult than
growing in an expanding market. As long as economic conditions in the United States and certain European
markets remain difficult, this will be an additional challenge we must face and overcome.
Loss of a significant licensed property could harm our business.
In addition to developing and marketing products based on properties we own or control, we also seek to
obtain licenses enabling us to develop and market products based on popular entertainment properties owned by
third parties.
We currently have in-licenses to several successful entertainment properties, including MARVEL, STAR
WARS, BEYBLADE and SESAME STREET. These licenses typically have multi-year terms and provide us
with the right to market and sell designated classes of products. In recent years our sales of products under the
MARVEL, STAR WARS, BEYBLADE and SESAME STREET licenses have been highly significant to our
business. If any of these licenses were to terminate and not be renewed, or the popularity of any of these licensed
properties was to significantly decline, our business would be damaged and we would need to successfully
develop and market other products to replace the products previously offered under license.
Our license to the MARVEL property is granted from Marvel Entertainment, LLC and Marvel Characters
B.V. (together “Marvel”). Our license to the STAR WARS property is granted by Lucas Licensing Ltd. and
Lucasfilm Ltd. (together “Lucas”). Both Marvel and Lucas are owned by The Walt Disney Company.
Delays or increased costs associated with the development and offering of entertainment media based upon
or related to our brands, can harm our business and profitability.
Entertainment media, in forms such as television, motion pictures, DVD releases and other media, can
provide popular platforms for consumers to experience our owned and licensed 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. 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.
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 or released, and our licensors or media partners may change their plans with respect to
projects and release dates. This can make it difficult for us to 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.
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