Now before anyone says… “that’s clickbait”, this is actually taken from a quote by Hasbro CEO Chris Cocks when he appeared at the recent JP Morgan Global Technology, Media and Communications Conference in Boston. Actually, Chris Cocks said a few very illuminating things about Hasbro at that conference. So click through to learn from the Hasbro CEO how he sees the toy market and who Hasbro’s best customers are (spoiler, yes, it’s YOU!).
The Boston Globe ran a story on Mr Cocks’ appearance a while back and the article has several quite interesting quotes from Chris Cocks, when he spoke to investors at the JP Morgan conference.
First, the article reveals that Chris Cocks earned $9.4 million in 2022. A 250% increase over his 2021 salary, now of course Cocks only became CEO in the latter half of 2021, after the untimely passing of former CEO Brian Goldner earlier in 2021, so some salary increase is expected. Still, it’s interesting to learn what a Hasbro CEO is earning, especially in light of “Blueprint 2.0”, that saw the company fire thousands of employees to save costs.
But now on to the statements made by Chris Cocks.
Mr Cocks thinks that in the current economic climate Hasbro is not so much competing with Mattel or LEGO, but with food prices. High inflation presents a challenge. And Chris Cocks freely admitted that a large part of Hasbro’s customer base is currently “pinched pretty hard”. Well, the recent earnings reports more than support this statement with catastrophic Q4/2022 and Q1/2023 results.
But not all Hasbro customers are equal, Chris Cocks said this:
When you look at the top 20 percent of discretionary-income households, particularly the ‘collector market’… that market is staying very buoyant and very healthy
In short: it seems despite all the moaning and complaining here and elsewhere all those Star Wars and Marvel hardcore collectors keep buying the stuff, as well as Magic The Gathering card collectors still buy more and more cards, even if they are overpriced as well.
And the article then points out how Pulse increased its revenue by 40% in the first quarter of 2023 and how Magic The Gathering reported 12% revenue growth and Cocks added this about the collector market and richer customers:
We think this consumer is continuing to hold up pretty well despite inflationary concerns and macroeconomic headwinds
So again, it seems despite all the bellyaching about high prices and ugly pfp boxes the core customers keep on buying the toys. And it is implied that the “normal” customers are the ones who buy much less than before, whereas adult hardcore collectors may complain loudly about prices… and then buy the toy, game or Magic booster pack anyway.
In plain English: Hasbro can price TVC and TBS figures the way they do, because the suckers (i.e. “we”) will buy it anyway. Even if they complain about it. We are the “buy at full price” crowd that is so important, because smart people actually wait for discounts or just say “no” when they feel something doesn’t have a fair price. But discounts destroy the small profit margins.
And here a direct quote from the article that tells you the headline is on point and not just clickbait:
While speaking at the investors conference, Cocks said Hasbro tends to be more oriented toward collectors and higher-income consumers, particularly when it comes to brands like Magic: The Gathering, Dungeons & Dragons, and Hasbro’s other high-end action games.
Now Star Wars is not mentioned specifically, but we all know Star Wars, especially when we talk about the toys and here the action figures, primarily appeals to adult fans, many of whom have plenty of disposable income.
The article ends with an outlook on Hasbro’s future plans… and according to Chris Cocks Hasbro is planning some “pretty aggressive pricing actions” in the latter half of the year. I wonder if that will include Star Wars toys and action figures. Cocks does also say that despite the collector market holding up Hasbro needs to do right by both sides, i.e. also the poorer, “normal” customers. Thus the need for aggressive pricing actions.
Another interesting tidbit is that Chris Cocks explains how his vision for Hasbro is different from Brian Goldner’s. Goldner was very much about entertainment, whereas Cocks is very much about games, much less about entertainment. While entertainment is supposed to play a role even in the future, because of the shift in strategy, Hasbro is looking into selling its eOne entertainment branch, something that is still “in progress”, i.e. apparently no buyer has been found yet.
So what do you make of Chris Cock’s remarks? Are you surprised by his statement that despite the very strong headwind the adult collector market is holding up and that he sees no pronounced negative effects here? Basically meaning we buy the stuff regardless of how much we complain online about virtually everything?
And thanks to JTA regular Ondrej M. for the alert!
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