Hasbro's (HAS 1.27%) relationship with Walt Disney (DIS 3.51%) goes back decades, and on Friday, the two entertainment brands announced a renewal of Hasbro's rights to make toys based on the Marvel and Star Wars franchises.
Under the agreement, Hasbro will continue to make toys for the Marvel universe, including Iron Man, Spider-Man, Captain America, Black Widow, and Black Panther.
But probably the most valuable part of the agreement for Hasbro is the rights to make toys and games for Disney's The Mandalorian -- the hit new show featured on Disney+ that has stirred a lot of interest over a cute little character everyone is calling Baby Yoda (although its official name is The Child).
Licensed Star Wars toys are like gold for Hasbro
Licensed toys make up a small portion of Hasbro's annual revenue, but strong sales of popular merchandise can have a big impact on Hasbro's growth. Last year, licensed toys for Frozen 2, Marvel, and Star Wars caused revenue in Hasbro's "partner brands" segment to jump 24% for the year, with growth of 50% in the fourth quarter. The consumer frenzy over Baby Yoda could have a similar impact on the segment's growth this year.
More importantly, this multi-year agreement could have enormous benefits for Hasbro well beyond 2020, since Disney+ will be releasing more original content across the Marvel and Star Wars universes. In that light, Hasbro could see a lot of growth from its partner brands segment as Disney+ adds more subscribers.
With sales of Hasbro's core toy brands, like Monopoly and Play-Doh, down 1% last year, the partnership with Disney is becoming increasingly important for Hasbro's growth prospects.