Mattel CEO Ynon Kreiz is hoping that a foray into movies and television will revitalize the struggling toy company.
The creator of Barbie, American Girl and Hot Wheels has faced slowing sales in the last few years as more children gravitate toward video games and electronics instead of traditional toys. It has also been hit hard by the bankruptcy of Toys R Us.
To bolster sales, Mattel announced in September that it created a new division aimed at developing and producing movies based on its iconic brands called Mattel Films. The division is helmed by Academy Award-nominated producer Robbie Brenner, known for her work on “Dallas Buyers Club,” “Mirror Mirror” and “The Fighter.”
“We have two opportunities,” Kreiz, who became CEO in April, told CNBC’s “Squawk on the Street” on Tuesday. “One is to restore Mattel back into being a high-performing toy company and the second is to capture value from our intellectual property by extending brands to highly creative business areas such as film, television, live events, video games and consumer merchandise.”
Mattel’s rival Hasbro has excelled in taking its properties and translating them to successful television shows, movies and online videos. Theatrical releases of its “Transformers” films alone have grossed more than $4.37 billion at the international box office.
Hasbro Studios also produces online shows, including “Littlest Pet Shop,” “My Little Pony” and “G.I.J.O.E.,” which each has its own line of toys.
Mattel has also ventured into web series, launching online shorts with brands such as Barbie, Monster High and Polly Pocket. Its most famous doll, Barbie, has even been featured in a number of home-release films but has yet to grace the big screen in a Mattel-produced film. (She did appear in Pixar’s “Toy Story 2” and “Toy Story 3.”)
Venturing into film production could be a catalyst for sales for Mattel. Like the rest of the U.S. toy industry, the toymaker has been hit hard by the liquidation of retailer Toys R Us. The closure of its biggest customer dented its gross sales by 10 percent in the second quarter, according to the company.
“We’re at the very beginning,” Kreiz said. “Given the strength of the catalog that we own, there’s so much potential.”
Despite overhauling the company’s management team, suspending its dividend and developing plans to cut $650 million in costs, the maker of Barbie and Hot Wheels has been unable to revive sales. In July, the company said it would be cutting 2,200 jobs, or about 22 percent of its global non-manufacturing workforce. These job cuts come just months after Mattel said it was shuttering its New York office, affecting about 100 employees.
This entertainment push is not unexpected from Kreiz. He is the former CEO and chairman of Maker Studios, which was sold to The Walt Disney Company in 2014. Prior to that he was the chairman and CEO of Endemol Group, one of the world’s largest independent television production companies.
Earlier in his career, Kreiz co-founded Fox Kids Group Europe, a children’s entertainment company, which was also acquired by Disney in 2002.
Despite Kreiz’s background, there certainly is risk to the new strategy. Hasbro, for example, aborted its attempt at operating a television cable network in partnership with Discovery. After the network failed to gain traction against The Disney Channel and Nickelodeon, Hasbro sold off the majority of its ownership.
Mattel is dwarfed by Hasbro, which has a market cap of $12.9 billion, more than double that of Mattel. Hasbro shares are up nearly 12 percent over the past year to about $101 per share. Mattel, with a market cap of $5 billion, has seen its stock fall 5.85 percent over the past year, trading at just over $14 per share.