The race is on to be this holiday’s hottest doll–and billions are at stake

HASBRO'S Frozen dolls are expected to have a large market share in the fourth quarter, coinciding with a release of Disney's Frozen 2. / BLOOMBERG NEWS PHOTO ILLUSTRATION/MARISA GERTZ
HASBRO'S Frozen dolls are expected to have a large market share in the fourth quarter, coinciding with a release of Disney's Frozen 2 in November. The toys could impact sales of Mattel's Barbie franchise. / BLOOMBERG NEWS PHOTO ILLUSTRATION/MARISA GERTZ

NEW YORK – Holiday Barbie has some fierce competition this coming shopping season, and more than playtime is at stake.

As the critical fourth quarter approaches, a toy war is brewing in the United States, with billions of dollars up for grabs between the country’s three biggest dollmakers: Mattel Inc., Hasbro Inc. and MGA Entertainment Inc.

Mattel’s Barbie is the reigning champ in the massive U.S. doll market, which NPD Group estimates was worth about $3.4 billion in 2018, up 45% over five years. But now Barbie faces its two biggest threats in recent years: the return of Olaf and Elsa dolls for Frozen 2, the sequel to Walt Disney Co.’s 2013 Oscar-winning blockbuster film, and a new release of MGA’s collectible L.O.L. Surprise! dolls that first blew onto the scene three years ago just as the “unboxing” craze began to explode.

Rival dollmakers all have their sights set on segment leader Barbie, which last year returned to a $1 billion brand after four weaker years. The 60-year-old doll that’s Mattel’s biggest property has logged seven consecutive quarters of rising sales, and with a Hollywood film starring Margot Robbie in the works and nostalgic millennials becoming parents themselves, Barbie’s continued success is key to Mattel’s growth. But her emerging challengers could make a dent: Jefferies analyst Stephanie Wissink estimates Barbie sales will remain about flat in 2019 versus 2018 at nearly $1.1 billion, with L.O.L. Surprise! and Hasbro’s Frozen 2 dolls targeted to bring in around $500 million apiece. That would mark a major holiday turnout for Frozen dolls, which won’t even hit shelves until Oct. 4. 

“The consumer is going to veer whatever way the consumer wants to veer, and unfortunately in some cases Mattel can’t react to that,” Wissink said. “They’ve done everything they can and done it remarkably well to get Barbie to a healthy position to at least stand up to the fight, but we don’t know which way the consumer is going to go.”

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The last time a feature-length Frozen film was in theaters, Mattel held the license to Disney Princess toys. That means when the animated movie about two royal sisters in an icy world became an unexpected hit, the El Segundo, California-based toymaker reaped the equally unexpected half a billion-dollar windfall from toy sales, according to Wissink. Before the film’s release, Monster High dolls were about a $600 million brand, which was halved overnight due to the surprise success of Frozen. Fortunately for Mattel, it owned both brands.

But Mattel lost the license with Disney several years ago, despite having worked with the media company since 1955, when it became the first sponsor for the Mickey Mouse Club. Mattel had been Disney’s go-to dollmaker since 1996, and winning the princess line may have been the “greatest coup that Hasbro has had in the last three decades,” Gene Del Vecchio, a former Ogilvy & Mather executive who has worked with Mattel and Disney in the past, said at the time.

The question now is whether Hasbro will be able to bring in a half billion dollars with the doll rights to the Frozen sequel, or whether kids’ Anna and Kristoff toys from the first go-around are still in working order. Jim Silver, the editor in chief of TTPM, a consumer-facing review site for toys and other products, said historically merchandising sales of dolls drop 20% or more during the second installation of an animated film franchise.

For example, Transformers merchandise sales dropped about 20% from the first movie to the second, while Toy Story fell about 25% for Toy Story 2, Silver said. That means there’s a chance Barbie gets through the rest of 2019 largely unscathed, especially since traditionally toy sales from movie premieres don’t pick up speed until the film goes to home release.

“Everybody expects Frozen to do well, but I don’t expect it merchandise-wise to do as well as the initial movie,” Silver said in an interview. “Whenever you have something as big as Frozen 1, it’s really hard to replicate the numbers.”

The bigger tell will be whether Frozen 2 is a major success in China. Already a massive consumer of everything from steel to iPhones to Hollywood movies, China is ramping up as a leading toy consumer, and if the film takes off there, that could give Hasbro a huge global boost. Barbie is an internationally recognized brand that Mattel has been selling into the booming Chinese market for years, largely without a major competitor. That means a giant success for Frozen and other competitors could hit Barbie’s sales globally by as much as 50%, Wissink said.

Mattel says it isn’t worried. “With Frozen, when they have a movie year, the heat is really on,” said Michelle Chidoni, a Mattel spokeswoman. “But Mattel leadership has always been in dolls” and Barbie tends to do well whether or not there’s a wider doll war raging, she said.

Of course, Hasbro isn’t the only encroaching rival that Barbie will need to fend off this holiday. MGA Entertainment, the closely held company that makes Bratz dolls and Little Tikes, jolted awake the competition three years ago when it rolled out its L.O.L. Surprise! line of collectible toys made famous for the several layers of packaging that children like to unwrap, videos of which they’ll sometimes even upload to YouTube. They were a top product again last Christmas season, according to Adobe Analytics, alongside Fingerlings, the Nintendo Switch and the always popular laptop computer.

The company’s L.O.L. Surprise! O.M.G. Fashion Dolls are on Toy Insider’s Hot 20 list, an industry publication’s best guess at which items will be the most coveted this season; Barbie and Frozen dolls are not.

Isaac Larian, chief executive of MGA, says the detail element his company puts into the dolls is why customers will reach for L.O.L. OMG this holiday season instead.

“Since Bratz, no other company has ever made a real fashion doll. Barbie cost-reduced the product and fashions to a point that fashion is spray painted on the doll body. That’s not what the consumers want,” he said.  “We’ll be No. 1—L.O.L. OMG will be sold out worldwide before Christmas.”

Joe Deaux is a reporter for Bloomberg News.

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