November 23, 2010 - USA Today

http://www.usatoday.com/money/companies/management/2010-11-24-mattelceo24_CV_N.htm

Mattel CEO Bob Eckert believes in Monster High

Mattel CEO Bob Eckert with Monster High's "Frankie Stein," daughter of Frankenstein, and "Cleo De Nile," daughter of the Mummy.

By Bruce Horovitz, USA TODAY EL SEGUNDO, Calif. — No one has ever accused Mattel CEO Bob Eckert of being a risk taker. But one of the most conservative kings to ever rule Toyland is going seriously outside the box for holiday 2010. Even Santa must have one eye on Mattel — and its suddenly dice-rolling CEO.

Eckert's big holiday bet is something dubbed Monster High. It's a full-fledged consumer products line, from toys to clothing to music, that's akin to High School Musical meets Twilight.

Eckert is wagering this will be Mattel's first new franchise —à la Barbie and Hot Wheels— in decades. Then, again, with success so nebulous in Toyland, Monster High could be a five-alarm flop.

One thing's for sure: The success, or failure, of Monster High could help determine Eckert's future with the company he's overseen for a decade.

Ten years after the former CEO of Kraft Foods was rushed in to rescue Mattel (MAT) from financial free fall, Eckert, 56, is chief cheerleader for the high-school-themed line of tween-targeting dolls that are part vamp, part vogue and fashion-forward. They are the toymaker's vision of how teenage descendants of Frankenstein, Dracula and Werewolf might look and act — flaws and all.

But Monster High isn't just dolls. It's also jewelry. And books. And clothing. And costumes. And webisodes. And that may be just the beginning. What it took Barbie and Matchbox cars decades to become, Monster High is stretching to be right out of the starting gate. For Mattel — and for Eckert — this is the rough equivalent of a toy chest revolution.

"We're changing from the world's premier toy brand to one that's creating the future of play," says Eckert, whose office is so chockfull of toys that it looks more like a Toys R Us than a CEO's workplace. "We weren't thinking like this 10 years ago."

Monster High isn't a toy brand, he says, "but a consumer products brand anchored in toys."

Play is serious business. Global toy-industry sales topped $50 billion last year, with U.S. sales accounting for $22 billion of that. Mattel's sales were about $6 billion last year, down 8%, which mirrored the industry decline. Through September, Mattel's sales are up 7%, says Eckert, not only because of Monster High, but also due to:

•Barbie Video Girl. This high-tech Barbie lets girls create movies from Barbie's point of view — with a working video camera inside the doll. $50.

•Barbie Fashionista. Dolls with names like Artsy and Sassy wear trendy fashions that represent their personalities. $12.49.

•Toy Story line. Figures, play sets and items inspired by Toy Story 3. $6.99 to $89.

•Loopz. The interactive memory game has four semi-circular rings — "loopz" — that combine music and motion. Players match patterns of light and sound by moving their hands through the rings. $29.99.

•Sing-A-Ma-Jig. Plush characters that respond with off-the-wall laughter and other oddball reactions when their tummies are squeezed. $12.99.

•Hot Wheels RC Stealth Rides. This Hot Wheels on steroids costs way more than the usual $1. It folds flat enough to fit into a carrying case no bigger than a cellphone. Slide the race car out of the case, and with the touch of a remote control it transforms into a 3-D race car. $24.99.

"Product development at Mattel is better than I've seen in 10 years," says Gerrick Johnson, equity research analyst at BMO Capital Markets.

But it's the Monster High line that has analysts — and consumers — roaring.

"Monster High is the hottest thing in the fashion doll aisle," says Jim Silver, editor-in-chief of TimetoPlayMag.com.

PHOTOS: See the hottest toys for 2010 Just as important, Mattel created and developed it from inside the company. That means it can mostly collect rather than pay licensing fees on the line. And it's already becoming scarce in stores. "Some will accuse us of shorting the market," Eckert says. "But we've made and shipped all that we can."

Even more outside-the-box for Mattel, the inspiration for Monster High didn't come from its super-secret R&D department. It came from the company's packaging group. The line's logic: "Everyone feels like a freak in high school," says Tim Kilpin, general manager of Mattel Brands. "That's a universal truth."

So each doll has a physical blemish that mirrors its parent.

Frankie Stein, daughter of Frankenstein, shares his weird head scar. Draculaura, daughter of Dracula, has those trademark fangs. Clawdeen Wolf, daughter of Werewolf, has wolf-like ears.

Getting into girls' minds

While the name says Monster High, it's really about aspiration, Eckert says. Even at ages 7 to 10, girls already are closely eyeing the high school crowd.

Mattel found that out in its Imagination Center, a sprawling facility with one-way mirrors and hidden microphones where it watches volunteer kids play with new toys. Sometimes these sessions are taped or, if they're important enough, even broadcast live throughout the facility.

When the Monster High dolls were first shown to girls in the Imagination Center, "They got it instantly," says Michael Shore, vice president of consumer insights. "It was the humorous twist on the monster thing that the girls liked. But they wanted a sense of style. They didn't want them to look like monsters."

Now, so certain is Mattel of the viability of this new line that it already wants more. So, just a few months ago, Eckert ordered up and assembled a new team of Mattel executives whose sole job is to concoct future franchises. Not just toys, mind you, but ultra-extendable lines of stuff.

Ironic, perhaps, that a new crew of monsters could ultimately help lift Mattel's CEO from the mostly monstrous decade that preceded them.

For a guy who is admittedly risk-averse, maybe toymaking is the wrong business.

Even outside the office, Eckert methodically searches out strategic ways to win at whatever he's doing. In a summertime beach volleyball league that he's played in for more than 25 years, he concocted his own serve that he dubbed the "sky ball," says Mary Kay Haben, president of Wrigley North America, who has played against him in the sand.

"When you're playing beach volleyball, the two elements are wind and the sun," she says. "His serves are so high, that either the wind takes it — or the sun gets in your eyes trying to find it."

He uses this same sort of winner-take-all strategy back at the office, too. It never changes. "He's as straight as a great vanilla ice cream," says Silver, the toy editor. "He's not a rocky road."

But his road at Mattel has certainly been rocky. When Eckert joined Mattel 10 years ago from Kraft, he now concedes, he didn't have a full grasp of what terrible financial shape Mattel was in.

Former CEO Jill Barad had been forced out after the big financial losses that followed her purchase of The Learning Co.

Eckert recalls sitting in his office and asking himself, "What have I gotten into here?" To be precise: He'd gotten into a money-sucking pit. "We were losing about $1 million cash a day."

Tough challenges

He arrived at the company promising to build brands and careers. But he also had to cut costs, thin staffs and reinvent Mattel.

He sold The Learning Co. He grew Mattel's once paper-thin games division by buying big names like Uno and Apples to Apples. He brought Barbie into the 20th century. He continues to battle in the courts with Bratz dollmaker MGA Entertainment over ownership of Bratz — but says he's willing to settle. And he's focused on growing Mattel's international business, which he projects will account for a majority of sales by the end of 2011.

But he's also watched frisky rival Hasbro expand leaps and bounds as an entertainment company — with G.I. Joe and Transformers movies — while Mattel moved much more slowly.

"Hasbro has been very aggressive in the movie area, while Mattel has been very conservative," Silver says.

Under Eckert, Mattel's also taken several serious body blows in toy safety. No major toymaker has been the subject of more serious recalls over the past handful of years than Mattel.

In August 2007, its Fisher-Price division recalled 1 million Chinese-made toys because of lead paint hazards. Two weeks later, it recalled 18 million products considered dangerous to small children due to magnets that could be detached and swallowed. Two months ago, Fisher-Price recalled 10 million toys that could hurt or choke children.

Why can't Mattel get its safety act together?

"We do have our safety act together," Eckert insists. "In our business, we create 8,000 new toys a year." With that staggering number of new toys, he concedes, mistakes are sometimes made. "We don't always get everything right."

Even then, Eckert has lots more than safety on his plate.

Mattel, like all toymakers, is still recovering from the recession. While the toy business wasn't hit as hard as most — many parents will skimp on themselves but not on their kids — it still took a punch to the gut.

Then, last year, he says, Mattel was too cautious and didn't bring enough product to market.

Now, Eckert has big-time recovery plans in the form of trend-setting, female monster dolls.

"If we find the next Barbie or Hot Wheels, that's a big deal," he says, taking an extra-long look at a packaged Monster High doll in his hands. "It's a game changer."