Thursday, October 07, 2010

Hasbro's New TV Channel

Hasbro will be launching its own television channel on Sunday, according to the Wall Street Journal. The network, called The Hub is a joint venture with Discovery Channel, and it will target boys in the six to twelve year old age group. That segmentation strategy fits with Hasbro's product portfolio, which has many products targeted toward young boys (vs. Mattel, which is more girl-oriented with its product line).

Is this a wise move? We can debate whether Hasbro can succeed in a somewhat crowded market, up against rivals such as Disney and Nickelodeon. We certainly know, however, that firms such as Disney have succeeded by driving synergy between a consumer products division and a stable of television networks.

The broader question, though, is whether it makes sense for Hasbro to be in both the toy and television business. After all, Hasbro's ultimate goal here is not simply to have a popular television channel. It's goal is to sell more toys. The central issue is whether Hasbro will be able to sell more toys and games by owning its own TV channel than it could otherwise do through partnerships with established television networks, who have extensive experience in developing children's programming.

Moreover, another issue will be whether Hasbro's strategy will lead to conflicts with other TV networks, such as Disney, with whom it regularly works on licensing deals. For instance, Hasbro sells a great deal of Marvel merchandise. Yet, Disney now owns Marvel. Presumably, Disney will want to air many Marvel-oriented shows on its own channels. This article in the Wall Street Journal suggests that Hasbro is unlikely to show Marvel programming on its new channel. Will other issues such as this arise moving forward? Will it hurt Hasbro's core toy business if they are now increasingly competing with companies that have been strategic partners in the past?

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