Mattel (NASDAQ:MAT) is still riding high on hopes that a live-action Barbie movie can turn its fortunes around. The toymaker was hit hard by the bankruptcy of Toys R Us, which accounted for around 10% of its sales, but a successful film debut could allow it to launch a franchise it could build on, similar to the way Hasbro (NASDAQ:HAS) has exploited the Transformers and Marvel characters.

The iconic doll has evolved over the years, as Mattel yielded to criticisms that Barbie condoned a fascination with unattainable body types; today, the dolls come in a range of body styles, and there's an increased focus on her careers, such as the just-signed agreement with National Geographic to develop a product line centered around jobs in exploration, science, conservation, and research. In the wake of these moves, Barbie sales have rebounded sharply.

Barbie robotics engineer doll.

Image source: Mattel.

Barbie's big break

Over the last four quarters, sales of Barbie dolls and accessories have been particularly strong, with third-quarter currency-adjusted sales surging 17%. NPD data says Barbie was the No. 1 global fashion doll property through the first nine months of 2018, a period during which none of the other Mattel "power brands" properties -- Hot Wheels, Fisher-Price, and American Girl -- made gains.

Even so, the toymaker has largely failed to monetize any of its brands with theatrical-release movies, in sharp contrast to the successes achieved by both Hasbro and Lego. When a franchise based on plastic building blocks can generate nearly $1 billion globally at the box office, Mattel has clearly been missing some opportunities.

Hasbro, too, was hurt by the demise of Toys R Us, but the impact was cushioned by the income from its movies. Revenue from its entertainment and licensing segment jumped 45% year over year to $84.8 million. Some of that derived from a multiyear digital streaming agreement for its television content, and it also booked revenues from 2017's My Little Pony movie. Now, it has another big hit with its latest entry in the Transformers franchise: Bumblebee has grossed nearly half a billion dollars worldwide.

Charting a new course

To begin capitalizing on those missed opportunities, new Mattel CEO Ynon Kreiz created the Mattel Films division last year. Considering Barbie's enduring popularity over her 60-year history, as well as the doll's recent sales strength, it made sense to use it as the basis for the division's first film, which it's producing in partnership with AT&T's Warner Bros. Pictures. The two will also partner on a Hot Wheels movie.

No release date for the Barbie film has been set yet, but Margot Robbie -- who appeared in Suicide Squad as Harley Quinn, in I, Tonya  as Tonya Harding, and most recently as Queen Elizabeth I in Mary Queen of Scots -- is slated to star as Barbie.

From her comments, it appears she is eager to take on a part that she sees as offering a role model for young girls. Noting Barbie's long aspirational history, Robbie told Variety, "I'm so honored to take on this role and produce a film that I believe will have a tremendously positive impact on children and audiences worldwide."

That's not just a fatuous quote either. Mattel previously tried several times to take Barbie to the big screen, but based on the hints we have about the directions those projects were headed, they could have ended in disaster. Variety noted Mattel had lined up comedian Amy Schumer in 2017 to play the lead in a Sony-produced film, but she dropped out due to scheduling conflicts; Anne Hathaway was reportedly going to succeed her. In those instances, however,  the script took more of an adult comedy approach, with a fish-out-of-water theme.

This next iteration still might -- it's unclear whether the new movie is using the same script -- but it would be horrible for the brand if it did, as a movie targeted to the doll's core customer base would seemingly have the best chance at success.

Check out the latest Mattel earnings call transcript.

Break a leg

A Barbie movie could certainly boost Mattel's fortunes -- if done well, and crafted to suit the right audience. It will take more than one, though, to generate the earnings bounce the company needs. But Kreiz already has laid the groundwork for additional adaptations, and it's clear that Mattel Films is ready to move rapidly to capitalize on its portfolio of brands.

The 23% rise in Mattel's stock that followed news of the Barbie film plans was probably a bit of an overreaction from investors, since it will be at least a year before the toymaker sees any return on its endeavor. But Barbie is ascendant again, and the time is right for her to be up on the silver screen.