Hasbro's Famous Jedi Trick

Fans of Star Wars role-playing games can resist the urges from the dark side, now that toymaker Hasbro's (Nasdaq: HAS  ) Wizards of the Coast has extended its licensing deal with Lucasfilm to keep the niche playthings coming.

Wizards of the Coast is best known for its Magic trading-card games and Dungeons & Dragons role-playing endeavors, but it has carved out a cozy living with Star Wars miniatures. These aren't just collectibles; they are part of lavish role-playing experiences. We're not talking about playtime for toddlers, as is the case with some of Hasbro's other licensed Star Wars toys. The revised core rulebook that is due out in March is 288 pages deep.

This is a good move for the Stock Advisor recommendation. More conventional Star Wars toys will fluctuate with the release of related films. Back in October, Hasbro posted a 5% uptick in net revenues for the third quarter that would have been a more impressive 13% top-line spurt if one were to back out Star Wars playthings. It can be "out of sight, out of mind" in the licensing world, and we're now in a pronounced lull before George Lucas hits us with the third and final trilogy in the Star Wars series.

I am guessing that the depth of fandom runs more profound with Wizards' games. These are diehard fans who aren't likely to move on to new diversions just because Anakin Skywalker met his demise on the big screen a couple of years ago.

I prefer it when Hasbro is the one doing the licensing rather than building on the brainwork of others. Passive royalties are higher-margin pursuits. So I can really get behind deals like the one announced earlier this week for Reebok to produce Play-Doh-branded kiddie footwear or this summer's pact with Navarre (Nasdaq: NAVR  ) to produce value-priced software based on Hasbro's popular board games.

Toy giants such as Mattel (NYSE: MAT  ) and Hasbro have a lot to offer with their brand-rich portfolios. Yes, it's always sweet when the companies ring up the sales on their own, especially this time of year. However, with the popularity of third-party providers of things such as mobile-phone games and software generating some licensing-revenue checks, it's great to see that the licensing streams flow both ways.

Anything else? Well, that would be a Wookie mistake.

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Mattel is anInside Valuenewsletter service selection, and Hasbro has been recommended inStock Advisor.

Longtime Fool contributor Rick Munarriz is a kid at heart. He does not own shares in any of the companies in this story. He is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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