Barbie Proportional to Mattel Stocks?
The weekend of 21st July was the fourth highest ever grossing movie weekend in the history of Hollywood. 2 high octane movies, Barbie and Oppenheimer released with Barbie ruling the roost in North American markets. The pace of Barbie’s rise is not slowing down, and people are trickling to the theatres to watch the modern touch of Barbie. The revival of Barbie has also caused an uptick in the Mattel’s fortunes (The parent company responsible for manufacturing and marketing Barbie dolls). While Barbie continues to rise there seems to be a lot of uncertainty whether Mattel will be able to revive itself. The surge in Barbie’s popularity will be a factor but there are other companies which have higher licensing rights owing to its entry into cinema. The Q2 (2nd quarter) forecast for Mattel are not very promising with a growth of ~2% expected at an optimistic level.
Generally, any Marvel movie release causes a huge uproar in its merchandise sales and the companies benefit a lot. The same would have been expected for Mattel in the future, but the projections look bleak. The same proportional benefit is not visible because of external consumer factors and licensing rights which make Mattel not stand in an advantageous situation.
1. Drastic change in consumer behavior: The pandemic and the ongoing semi recession has drastically changed consumer behavior. People are looking to cut corners in their expenses and are buying essentials and avoiding buying merchandise or toys for their kids. They are looking to reutilize the already stocked up toys they would have before the pandemic. This change in behavior is not driving the sales of Barbie dolls as much as they would have in a normal scenario.
2. Warner Bros are the rulers: While Mattel did have some licensing rights but the direct revenue benefit from the movie is going to bless Warner Bros Pictures who, in partnership with Mattel, created this spectacle. By defining the profit-sharing percentage in advance and having rights on the movie and images, Warner Bros played its card very well before the movie got released by understanding the profit making areas associated with Barbie. This has led to Mattel not being able to capitalize on the renewed fame of Barbie as it would have expected.
3. Wide and underperforming product portfolio: Mattel has a wide range of products like Hot Wheels and Uno which used to be a rage earlier. Their under performance cannot be made up by the slight uptick in sales of Barbie dolls because of the movie. Thus, Mattel may have a positive impact on one of its product portfolios, but overall, as a company it remains status quo or worse than before.
4. Online is king: Online gaming and virtual reality was not present a decade ago which allowed Mattel to define the toys marketplace. With real world experience present within the confines of home via virtual reality and online interactive games, Mattel will struggle to keep up its share. Barbie kingdoms are being built in virtual reality allowing parents to invest there for their kids to experience the magical world of Barbie and other characters.
While Barbie’s rise is not proportional to Mattel, Mattel can still intervene and reap the benefits of the success of Barbie’s movies. It can introduce digital avatars of Barbie and collaborate with Meta to introduce the same on WhatsApp and Instagram. The advertising benefits can be unprecedented with this. In addition, the success of the movie can help inspire Mattel to enter into agreement with production houses for other products as well like Hot Wheels and have a collaboration with Fast and Furious franchise. Toys are an integral part of our childhood and Mattel should find ways to spark the interest again amongst the public.
