According to its most recent earnings release, Mattel (NASDAQ:MAT) seems to have become a victim of its own success. The company reported a 12% drop in revenue from its Barbie brand, while other girls' toys ate up market share. The American Girl and Monster High lines did particularly well, but the cost was high. As the newer lines continue to succeed, the questions around Barbie's future grow.

Making the most of the trend
Monster High is leading the way at Mattel, and analysts now believe that the business may be worth up to $500 million annually. That success has helped steer Mattel toward new opportunities, including a variation on Monster High -- which is a line of monsters in high school -- called Ever After High. The new line is going to hit stores in the second half of the year, and focuses on classic fairytale characters while they're in high school.

When I say "classic fairytale characters," I, of course, mean slightly rebranded Disney (NYSE:DIS) princesses. The list includes Snow White, Sleeping Beauty, and Cinderella-style characters, along with some princes, and Alice-in-Wonderland themed dolls.

The move makes an incredible amount of sense for Mattel, as Disney has had runaway success with its rebranding of the princesses as a separate line. According to analyst studies, the Princess line is generating $3 billion in annual global sales. That's six times what Monster High is pulling in, and highlights the value available in the marketplace. Since Mattel is only spending $10 million to $20 million to develop the spin-off lines , the payback is almost immediate.

The long game
The stock suffered a 7% drop yesterday in light of the shortfall from Mattel. Overall, the company managed a 1% increase in global sales, but it had a 25% drop in earnings per share . The long game for Mattel looks increasingly like an ever evolving line of girls' toys. While the company has had success with boys' lines, its real core lies in girls.

On the competitive side, Hasbro (NASDAQ:HAS) seems to have boys' toys locked down. The company is generating more than twice as much from its boys' toys as it does from girls' toys. That success is resting on the strength of Marvel-branded toys, G.I Joe, and NERF. Mattel is a much larger company, and Hasbro has to be content to simply succeed where it can.

For Mattel, the most interesting thing to come over the next year may be the conflict that arises between Mattel and Disney, if its Ever After brand takes off. Right now, Mattel produces a number of toys with the Disney branding, and it relies on a good relationship with the media company. Disney may start to see some encroachment on its territory, which could lead to a confrontation. But first, Ever After has to succeed.