Hasbro’s profits dropped 71% in Q1 2011 against Q1 2010 ($58.9 million to $17.2 million; source). However, revenues were about the same for both quarters, which means that they took in the same amount of money but spent a lot investing in their new projects, such as The Hub. Beyblade was a big seller, but games and puzzles overall fell 12%.
Still, profits were less than expected. Hasbro is considering moving 120 of its workers from East Longmeadow, MA to its HQ in RI. (source). Which is odd, because a week ago they were complaining about a new tax proposal that would hinder their plans to expand their RI operations. (source)
Mattel also lost profits, down about a third from $24.8 million to $16.6 million, while seeing revenue rise about 8%. Both companies beat sales expectations.
Michael Mindes writes:
That personally looks like too much $ decline to be due to R&D investment. For these companies there is not too much to R&D. Certainly not large percentages of the profits.
Higher energy costs (shipping & plastics)
General Material inflation
Producing country wage inflation
Higher advertising costs to mantain market share versus companies like Spinmaster
I think what we will see out of these macro effects is one of 2 things:
Hasbro and Mattel will raise prices and make hobby games more competitive on a cost basis.
Hasbro and Mattel will more aggresively move to make the industry less competetive and open in the favor of themselves. Which means it will probably be even harder to get games from small companies into MEGA-retailers. On the other hand, consumers as a group might be more likely to shop at the smaller hobby game retailers.
I am probably way off, but that is what I see. Especially if their revenues remained steady.
Michael Mindes, Founder
Tasty Minstrel Games