November 13, 2012 - Mattel Analyst Meeting

We have gold standard brands that can extend beyond the toy aisle into consumer products; household names like Barbie, Fisher-Price, Hot Wheels, American Girl, Thomas & Friends and, more recently, Monster High.

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It’s hard not to talk first about the incredible momentum we’re seeing in our strong Girls portfolio, which, as you know, features Barbie, American Girl, Monster High and Disney Princess. This is an impressive lineup and one that has experienced solid growth over the past few years.

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So our core brands have great opportunities and a clear roadmap for growth. But we also want to create new brands like the runaway success of our Monster High franchise. Monster High has performed beyond anyone’s expectations. It is the #2 fashion doll property in both the U.S. and Europe-wide toy markets through September according to NPD. This year, we expect Monster High to achieve more than $750 million at retail.

We've learned a lot from Monster High's tremendous success; build off of great consumer insight, create relevant stories, and think beyond the toy line into a holistic consumer products offering. And finally, engage girls in new and innovative ways in the digital space. We now have a dedicated team focused on bringing new franchises to the marketplace with no limitation on the directions in which they can go. They're free to mine our heritage brands or leverage our extensive consumer research to look for and build off new insights.

Currently, we have a number of strong candidates. And while Monster High knocked it out of the park in the first swing, we expect to be hitting singles and doubles as we create a series of brands with global appeal and staying power. Overall, our long-term goal is to launch a new global franchise every one to three years starting in the spring of 2013. Additionally, the strength of our remaining pipeline should allow us to launch another franchise in late 2013 or early 2014, which I look forward to revealing in 2013; so more to come.

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I am going to talk in a bit more depth about our commitment to franchise development for the long term. And as we have mentioned before, one of our key strategies is to build new franchise so I'd like to go into a little more depth about that process.

We always start with consumer insights. What need are we trying to answer? What opportunity do we see in our audience for Boys and Girls? And we'll challenge ourselves to answer if that concept we develop will be able to work well across multiple story-telling platforms. We'll consider how that idea will manifest itself across a number of different merchandise categories. And then finally, we'll test the concept to determine if they have true long-term evergreen potential.

Then we start the process of actually developing concepts and sometimes we start with a simple premise. If everyone feels like a freak in high school, what would a high school of freaks and monsters be like? Or sometimes we imagine a whole new universe. And then we begin the heavylifting creativity.

We call this our sandbox. We start with a lot of insights and a lot of ideas and a lot of them die along the way. But for those concepts that emerge from the sandbox, we put them through a rigorous development process; not just consumer testing but financial modeling as well. And the intent here is to begin to build a pipeline of marketable concepts that addresses the needs of our audiences and the gaps that we see in the market.

Now we know going in that not every franchise will be a monster hit. As Bryan said, we'll field some singles and doubles too and that's okay, but we are committed to this process for the long term. And that commitment has led us to a strong pipeline of concepts that we are working diligently on. As Bryan mentioned, there may be another launch around the corner fairly soon.

First, I'd like to take a few minutes to talk about our most recent franchise launch and that is Monster High. And as you can imagine, we're very pleased with the results so far in Monster High. We've delivered on every goal we set for ourselves. Monster High is now the #2 fashion doll brand worldwide, trailing only Barbie.

And we've created a world of content that girls can immerse themselves in: over 100 webisodes now available online on monsterhigh.com and on our own YouTube channel. And Monster High content has been viewed online 350 million times since the franchise was launched, 1.2 million Facebook friends, 10,000 Twitter followers, and even the brand's own Tumblr page where we publish the Gory Gazette, the Monster High School newspaper. And where, by the way, our fans post their own stories and artwork. We are now airing three CGI TV specials each year all around the world and posting outstanding ratings on Nickelodeon here in the U.S. And just three weeks ago, Universal Home Video released our first-ever full-length CGI-animated feature film, Ghouls Rule.

In terms of consumer products, we are now partnering on Monster High with nearly 300 licensees across 20,000 different products in over 85 countries. Nearly 30% of the franchise's revenue comes from outside the toy category. So Monster High is, indeed, a full-blown entertainment franchise and it reaches everywhere around the world.

So how do we continue to drive growth in 2013? Well, 13 is our lucky number. We don't fear the year. We will be launching an all new brand campaign where screams come true. Also in 2013, we'll be going on the road to tell new stories when the Monster High friends head overseas to Scaris, the City of Frights, in spring. And we'll release our second full-length animated feature on DVD in fall called 13 Wishes. We'll also continue to create all new characters to help continue populating this world.

So Monster High meets all our criteria for a successful franchise. In fact, since we launched just two-and-a-half years ago, Monster High has delivered over $1 billion in global retail sales. So, with our strategy to continue to build new franchises firmly in place, what's next? Well, as Bryan mentioned, our next new franchise that we will launch globally is Max Steel. And as you know, Max has been very successful for us in Latin America for several years.

Now, why does it work so well there? We created an iconic hero in Max for this territory with cool turbo powers and then we put him up against a strong cast of over-the-top villains and we used a lot of different ways to tell the story in Latin America. From TV specials to direct direct-to-video animated features, kids in the region grew to know and love Max Steel's world.

And that allowed us to expand this brand across multiple categories led by toys, of course, but also across consumer products like bikes and back-to-school accessories. And the brand’s profile there allowed us to work with some of the most significant consumer goods partners in the region like Nestle and Kellogg’s. And from its introduction in 1999, the brand has continued to grow in Latin America—this brand currently delivers well over $100 million in annual retail sales there—and 2012 will be no different. Max will grow again.

So we knew we had something really powerful here and the challenge we gave ourselves was how do we take the success and translate it into a new, broader, global opportunity. Why this guy? Well, we saw there was an opportunity for a new kind of hero, one that would be complementary to our superhero portfolio. So, stated simply, from what worked in Latin America, we took the best and improved the rest.

Now, you heard Bryan mention this. We've learned this from Monster High. It all starts with that universal truth, something that we know from all our consumer research. Then, as with all of our brands and franchises, we honed in on the DNA, those things that would define this brand and never change.

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We're also continuing to invest in new franchises including Max Steel. Coming off the success of Monster High, we now have a dedicated team that focuses on developing new franchises. We believe in taking the time to identify key consumer insight by thoroughly researching, testing and refining it. From there, we build a comprehensive business plan that includes statements and stories that are executed with multi-platform content that deeply engages consumers and intersects with retail executions: an innovative toy line and engagement with licensees to create a compelling consumer goods product line. By following this disciplined process, we're making smart investments in new franchises. Across our core brands, we also continue to invest in multi-platform content that deeply engages our consumers whenever and wherever they choose.

Source

 * Mattel Analyst Meeting (Nov 13, 2012; 7:00 AM PT)