US toy company Mattel suffered quite a loss earlier this week. Warner Brothers decided not to extend the DC Comics boys’ action toys license with Mattel and instead gave the license to Canadian toy manufacturer Spin Master, beginning in 2020. Spin Master is a much smaller company compared to Mattel, their revenue in 2017 was 1.55 billion USD compared to Mattel’s 4.88 billion USD (Hasbro made 5.21 billion USD). You may know Spin Master from toys such as Air Hogs (there were a few Star Wars Air Hogs) and the more recent Hatchimals. Now, why exactly is Mattel losing most of its DC Comics license news on a Star Wars website? Let’s click through for a discussion and also for some speculation!
So why exactly is this newsworthy on a Star Wars website? Because the article about the DC Comics licensing deal in the LA Times also mentions that analysts now believe that Mattel might try to aggressively pursue other licenses to fill the hole DC comics will leave behind. And a Goldman Sachs analyst remarked that Hasbro’s Star Wars and Marvel license expires in 2020, just when Mattel will lose most of its DC license. They will only keep DC Comics preschool and girls’ toys.
So let’s speculate a bit…
In the past, the Star Wars license was extended well in advance, long before it expired. But now we are fast approaching 2019 and there’s not that much time left until the license expires in 2020. So what is different this time? Why haven’t we heard from Hasbro and Disney extending the license yet?
One reason might be disappointing sales figures and the exorbitant cost of the Star Wars license. The license is said to be the most expensive toy license on the planet. With licensing fees of at least 20% plus some exorbitant minimum guarantees it may very well be that Hasbro feels this is the time to renegotiate the license and to demand better terms. This is not without precedent. When the prequels failed to be the huge box office hits Lucasfilm did reduce their minimum guarantees when the license was extended well in advance. Hasbro had to pay many millions less in minimum guarantees than originally agreed upon.
Buy maybe there’s another option. Mattel has been considered a takeover candidate for a long time now. Mattel’s situation is not the best, their stock price dropped almost 40% in 2018. Hasbro’s stock fell by a little more than 11%. It was not an easy year for toy companies thanks to TRU’s demise, but Mattel has been in stormy waters for quite a while now and they are really struggling in Europe and elsewhere.
With Mattel’s stocks so low a company such as Disney would not need to pay that much actually to take over. So maybe Disney is the one party not wanting to extend the license and they are still weighing all their options. We don’t know. As I said, it’s speculation.
One thing is certain: the Star Wars license will expire in 2020. And Hasbro will either keep the license or someone else will take over. Mattel is now in dire need of some licensed toylines. Their Jurassic World line did ok, fans really liked the toys too, but DC action figures will be sorely missed by Mattel and Star Wars and/or Marvel would fill that gap quite nicely.
The transition could be relatively seamless. Everything Hasbro ever made for Star Wars, all the designs, molds, sculpts and digital assets are property of Lucasfilm/Disney and they can give it to whoever will have the license in 2020. So, in theory, Mattel could make The Vintage Collection and Black Series instead of Hasbro and everything could easily look the same.
So, what do you think? Would you want someone else to get the Star Wars license? Before you say “yeah, sure, Hasbro are the worst” think of this, though: any new company would operate under the same unfavorable conditions as Hasbro, UNLESS Disney changed their tune and demanded less fees and didn’t keep essential designs or characters a secret even from their own licensees.
In my opinion Hasbro does a great job given the conditions they operate under. Remember, the license is extremely expensive (about twice as expensive as any other toy license) and the licensor didn’t think giving the details about Crait Luke well in advance was something they needed to do, because they considered him top secret. So there was no Crait Luke by any company in time for the movie release in 2017.
Whatever happens, we should have a clearer picture sooner than later. 2020 is not that far away anymore and any new deal or license extension should be announced months in advance.
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