Hasbro vs Mattel: A Financial Comparison of Two Toy Giants

Hasbro and Mattel are two of the biggest names in the toy industry, each with decades of experience shaping childhood entertainment. While both produce popular toys and games, their financial strategies and business models differ in ways that impact performance. Investors and analysts often compare them to assess which company is better positioned for long-term success.

A closer look at their revenue sources, cost structures, licensing deals, acquisitions, and shareholder returns provides insight into how they generate profits and sustain growth.

Revenue Streams and Product Categories

Hasbro and Mattel generate revenue through toy sales, digital gaming, and entertainment ventures, but their product portfolios and diversification strategies set them apart. Hasbro’s revenue comes from action figures, board games, and digital gaming, with brands like Transformers, Monopoly, and Dungeons & Dragons playing key roles. Mattel focuses on dolls, vehicles, and infant toys, with Barbie, Hot Wheels, and Fisher-Price as its primary revenue drivers.

Hasbro has expanded into digital gaming through Wizards of the Coast, which manages Magic: The Gathering and Dungeons & Dragons. This segment has grown rapidly, benefiting from both physical card sales and online platforms like Magic: The Gathering Arena. In 2023, Wizards of the Coast generated over $1 billion in revenue, making it one of Hasbro’s most profitable divisions. Mattel has a smaller presence in digital gaming but has used mobile apps and interactive content to strengthen engagement with Barbie and Hot Wheels.

Both companies have moved into entertainment production, leveraging their intellectual properties for films and television. Hasbro owns Entertainment One (eOne), which develops content for brands like Peppa Pig and Transformers. Mattel has focused on partnerships with major studios, as seen with the Barbie movie, which grossed over $1.4 billion worldwide. These ventures not only generate revenue but also boost toy sales by keeping brands in the public eye.

Operating Costs and Profit Margins

The financial health of Hasbro and Mattel depends on how efficiently they manage expenses. Manufacturing costs are significant, as both rely on third-party factories in China, Vietnam, and India. Rising labor costs and supply chain disruptions have put pressure on profit margins, requiring adjustments in production and logistics. Hasbro has diversified its manufacturing footprint to reduce risks, while Mattel has focused on automation and lean production techniques to cut costs.

Distribution and retail partnerships also affect profitability. Both companies sell through major retailers like Walmart, Target, and Amazon, but direct-to-consumer (DTC) sales have become a priority. Hasbro has invested in its e-commerce platform to capture higher margins by bypassing third-party retailers. Mattel has expanded its DTC efforts but remains more reliant on traditional retail channels.

Marketing and advertising are major expenses. Hasbro and Mattel spend hundreds of millions annually on promotions, using television, digital, and influencer marketing to drive demand. Mattel’s marketing surged in 2023 due to the Barbie movie, significantly boosting brand engagement. Hasbro has relied more on content-driven marketing through its entertainment division, reducing the need for traditional advertising while maintaining brand visibility.

Licensing and Merchandising Agreements

Hasbro and Mattel use licensing agreements to expand their brand reach and secure additional revenue. These deals allow them to produce toys based on popular franchises while also monetizing their intellectual properties through third-party partnerships. Licensing agreements typically involve royalty payments ranging from 5% to 15% of sales, depending on the brand’s strength and market demand.

Hasbro’s most significant licensing arrangement is its long-standing partnership with Disney, which grants it the rights to produce toys based on Star Wars and select Marvel properties. These agreements provide steady revenue but come with financial risks, as royalty rates can be high and contract renewals uncertain. Mattel regained the Disney Princess and Frozen toy licenses in 2022 after losing them to Hasbro in 2016, strengthening its position in the doll segment.

Beyond character-based licensing, merchandising agreements extend into apparel, home goods, and theme park attractions. Mattel has used Barbie and Hot Wheels for collaborations with fashion labels and automotive manufacturers, generating licensing fees while reinforcing brand prestige. Hasbro has pursued similar strategies with Nerf and Monopoly-branded merchandise, expanding their presence beyond traditional toy aisles. These deals enhance brand recognition while providing revenue without direct manufacturing costs.

Acquisitions and Divestitures

Acquisitions have shaped both companies’ competitive positioning. Hasbro’s 2019 acquisition of eOne for $3.8 billion aimed to strengthen its content production capabilities. This deal brought Peppa Pig and PJ Masks into Hasbro’s portfolio while giving the company greater control over media tied to its toy brands. However, the acquisition also added substantial debt, leading Hasbro to sell eOne’s film and TV business to Lionsgate for $500 million in 2023 to refocus on core toy and gaming operations.

Mattel has taken a more selective approach to acquisitions, concentrating on revitalizing existing brands. Its 2014 purchase of Mega Brands for $460 million expanded Mattel into the construction toy segment, allowing it to compete with LEGO. However, Mega Brands has struggled to gain significant market share, highlighting the challenges of breaking into established categories.

Shareholder Returns

Hasbro and Mattel take different approaches to shareholder returns. Hasbro has prioritized dividends, maintaining a consistent payout even during downturns. As of 2024, Hasbro’s dividend yield stands at approximately 4%, appealing to income-focused investors. Mattel suspended its dividend in 2018 to focus on debt reduction and operational improvements and has yet to reinstate it, instead reinvesting profits into brand development and digital expansion.

Stock performance has been influenced by broader market trends and company-specific developments. Hasbro’s shares have faced volatility due to concerns over its entertainment strategy and debt load. Mattel has seen renewed investor confidence following the success of the Barbie movie, which revitalized its brand perception and boosted revenue. Share buybacks have also played a role in capital allocation, with Mattel repurchasing shares to enhance earnings per share, while Hasbro has been more conservative, prioritizing debt reduction after its eOne acquisition.