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Disney+ will fuel Hasbro gains long after the pandemic is over

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Hasbro proves that it doesn’t take movie theaters to sell Star Wars toys.

While the Rhode Island-based toy company posted full-year sales of its partner brands, licensed entertainment studio content, up 12% to $ 1.08 billion, Star Wars sales in 2020 grew 70%.

Last year, it was the first time since 2014 that Disney didn’t release a Star Wars movie in theaters, but rather Grogu, the child formerly known as Baby Yoda. High-end collectibles and toy lightsabers fueled the growth of the toy franchise.

Theaters have been withheld high quality Hollywood content due to the ongoing pandemic, but Disney + is making up for that loss with shows like “The Mandalorian”.

“What has been great for our business is that streaming content is now being enjoyed by so many people that it has really reached a turning point,” said CEO Brian Goldner on CNBC’s “Squawk on the Street” on Monday. “And that turning point means you have tens of millions of people watching some piece of content in some early period of time that allows us to reach events.”

Earlier Monday, Hasbro announced that fourth quarter earnings had fallen from $ 267.3, or $ 2.01 per share, a year ago to $ 105.2 million, or 76 cents per share. After being knocked out, Hasbro earned $ 1.27 per share, which was better than what analysts were expecting $ 1.14 per share.

Revenue rose 21% to $ 1.72 billion, beating expectations of $ 1.69 billion, aided by strong sales from games like Jenga, Scrabble, and Dungeons & Dragons.

Hasbro shares initially rose on the news, but recently the shares fell about 3% as investors worried about the company’s investments in new video content and advertising.

Keep grogu in stock

The company is also facing higher costs due to supply issues, which included delays due to port congestion. Hasbro was struggling to keep a few items in stock, including Grogu’s.

When the character was introduced in 2019, Hasbro was unable to take full advantage of its popularity. Showrunners Jon Favreau and Dave Filoni were so keen not to spoil his appearance on “The Mandalorian” that they didn’t share reference photos with toy makers.

Hasbro, along with other toy and retail manufacturers, had to strive to meet consumer demand for goods with the little green alien. For the second season, which started in late 2020, Hasbro was able to test new products and include Grogu merchandise in its Christmas releases.

New York Toy Fair product presentation: “The Mandalorian” and “Star Wars The Clone Wars” at the Dream Hotel on February 20, 2020 in New York City.

Craig Barritt | Getty Images Entertainment | Getty Images

And Disney + has more than just “The Mandalorian”. The streaming service will release at least nine more Star Wars shows over the next few years. These include series with popular characters such as Ahsoka Tano, Lando Calrissian, Obi-Wan Kenobi and Boba Fett.

These shows will keep Star Wars fans and Hasbro toy makers busy until 2023, when Patty Jenkins “Rogue Squadron” is due to hit theaters.

Outside of the Star Wars universe, Disney + also has nearly a dozen Marvel series in the works. “WandaVision” is already being streamed on the service and “The Falcon and the Winter Soldier” and “Loki” are due to launch before the middle of the year.

“We see the rapid growth in subscriptions, the globalization of Disney + and new audiences’ access to Disney content as a major catalyst for consumer product demand,” said Stephanie Wissink, executive director at Jefferies. “Hasbro is one of Disney’s largest strategic partners, enabling fans of all ages to get involved with the brands in the form of physical goods.”

When the theaters open again

Hasbro extended its Star Wars and Marvel partnerships with Disney in early 2020. It is unclear how long this new contract will last, but the last time the toy company renegotiated its master toy licenses for this franchise was in 2013.

Hasbro has long benefited from its relationship with Disney. In 2019, Hasbro partner brands grew revenue 24% to $ 1.22 billion. The company pointed to strong sales of the Frozen 2, Avengers, Spider-Man and Star Wars lines for the increase.

The toy company’s licensed content is expected to recover in 2021 as more Americans with coronavirus vaccines roll out and moviegoers can return to theaters in larger groups. However, Hasbro has not provided a specific profit forecast.

Four films are due to be released at Disney’s Marvel Studios this year: “Black Widow”, “Shang-Chi and the Legend of the Ten Rings”, “Eternals” and a third “Spider-Man” film, which was made in collaboration with Sony .

“The plans to show approximately 5 TV shows of Marvel content on Disney + this year, combined with expected movie releases, give Hasbro year-round programming with a rotating array of product offerings,” said Eric Handler, CEO of Media and Entertainment equity research at MKM Partners.

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Robert Dunfee