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Can Hasbro Inc. Overcome This Year's Lousy Movies?

By Rich Duprey – Sep 20, 2016 at 3:32PM

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The toymaker still wants to be a moviemaker, too, but it's going to have to come up with a better script.

Superhero adventures like Batman v Superman: Dawn of Justice failed to generate much interest at the box office, which doesn't bode well for toymaker Hasbro. Image source: Warner Bros Entertainment.

Hollywood's movie lineup in 2016 had a few hits, but the bombs outweighed the blockbusters and that doesn't bode well for toymaker Hasbro (HAS -0.53%), which is still searching for a formula for big-screen success. The plan it has laid out so far doesn't inspire much confidence.

Coming up short

Despite the hype machine working overtime this year, the Ghostbusters reboot was a failure, Batman v Superman only generated $330 million in domestic box office receipts compared to its estimated $250 million production budget, and the latest installment in the X-Men franchise also came up short in domestic markets, not even earning back its production costs. It seems people just aren't going to the movies like they were in other years.

According to the folks at Box Office Mojo, the biggest blockbuster this year is the children's animation sequel Finding Dory, which generated $483 million in domestic receipts since its mid-June release, but only sold an estimated 55 million tickets. The next closest was Captain America: Civil War with just 47 million tickets sold. In comparison, last year's monster hit Star Wars sold 108 million tickets, Jurassic World sold 79 million, and Avengers: Age of Ultron sold 53 million.

The problem is studios are using more gimmicks to push receipts higher, showing movies at higher cost Imax theaters, in 3D, or at other pricey venues like AMC dine-in theaters. Although dinner and a movie at an AMC or Regal Entertainment theater might not boost a studio's numbers, it increases the costs for moviegoers who are unlikely to take in too many films during a year at the elevated price. In 1981, Superman II sold just as many tickets as did Batman v Superman, but generated a third of the receipts.

A mashup mess

Into this maelstrom Hasbro is trying to juice movie sales. While it might wish every movie was a Transformers affair, since it earns the toy company many times over in action figure sales, its plans for the future are likely to be similar to its experience with the horrible Battleship.

Last December, Hasbro revealed the roadmap it was following for future releases and that entailed creating a cohesive universe for its properties to travel in. Much as Disney (DIS -3.22%) has done with its Marvel characters that successfully allow Iron Man, The Avengers, and Captain America to all cross-pollinate each other's movies, Hasbro, together with Viacom's (NASDAQ: VIA)(VIAB) Paramount Pictures, wants its characters to live in a connected universe as well. The problem is, there's no seemingly natural association for G.I. Joe, The Micronauts, and Visionaries to interact with characters from M.A.S.K. and ROM.

Moreover, some of the big movie flameouts in 2016 were just the kind of films Hasbro wants to produce: superhero, sci-fi-style flicks.

For every Captain America or Deadpool that did reasonably well, there was a Teenage Mutant Ninja Turtles, Star Trek Beyond, or Divergent that bombed. The latter was a movie that was so poorly received Lions Gate Entertainment may not let the planned fourth installment in the series hit the big screen. And though Suicide Squad may have been a surprise hit for August, it required a major studio makeover before it was released. If moviegoers aren't exactly into seeing Batman and Superman square off against one another, they're probably not going to want to see G.I Joe ride in on My Little Pony, either.

This summer the toymaker purchased Boulder Media Animation Studios in a bid to drive creation of more TV series, movies, and other animated projects, much as Disney has done by acquiring Marvel and Lucasfilms. Yet simply copying a playbook doesn't mean you can execute it as successfully, and if you're following a losing script like the one that played out this summer, Hasbro may not find its name up in lights much longer.

Rich Duprey has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Hasbro, Lions Gate Entertainment, and Walt Disney. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Hasbro Stock Quote
$61.77 (-0.53%) $0.33
Walt Disney Stock Quote
Walt Disney
$95.69 (-3.22%) $-3.18
Lions Gate Entertainment Corporation Class A Stock Quote
Lions Gate Entertainment Corporation Class A
$7.64 (-0.13%) $0.01
Viacom Stock Quote
IMAX Stock Quote
$15.88 (-1.55%) $0.25
AMC Entertainment Holdings Stock Quote
AMC Entertainment Holdings
$7.33 (-2.40%) $0.18

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