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Thread: How will Mattel's dismal 2Q earnings report affect MOTUC?

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    Heroic Warrior air7walk's Avatar
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    How will Mattel's dismal 2Q earnings report affect MOTUC?

    It's pretty clear that Mattel as a company is hurting. With today's 2Q earnings report showing dismal losses in almost everything (worldwide net sales down 9%, Mattel Girls & Boys brands down 13% versus last year -- even Barbie is down 15%). When a company is losing that badly for half a year, you can bet they're looking at crazy cuts across the board to try to make up the difference. How do you think this will impact MOTUC? Will we see even more cost cutting measures on figures?
    This could be the end of the world.. of warcraft.

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    Heroic Warrior Grouchor's Avatar
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    I remember a few years back they lost a sizable lawsuit and MOTUC survived - and actually has grown since. I was concerned back then too.

    With the prices they charge for these figures plus inflated shipping, I am sure this is an incredibly profitable line. Albeit a small one.

    I think we should be OK.

  3. #3
    Heroic Warrior goluphi's Avatar
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    It will likely be harder for MOTUC to get budget for 2015/2016. Look for less sub items, less con appearances, less web presence, less of everything that could cost money. I don't think they're going to cut deeply into the figures themselves, so I wouldn't expect quality to drop there, but I wouldn't expect any risky out of sub items.
    Hey, if you want to wallow in the negative, go nuts. Sure, things arenít absolutely perfect, and people passionate about a property can get all keyed up about things. But I donít collect toys to be miserable. So Iíd rather think about the things that do excite me
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    Supreme Fudge Dynamo of Eternia's Avatar
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    I doubt that it will have much impact, at least not for the 2015 line up.

    They know the minimum of subs that they need to get to in order for the 2015 MOTUC line to go forward, and unless they hit that minimum or get very close to it (like they did with the POP sub), they will cancel it.

    If they get enough sign ups, then that money will go towards making the figures. I'm sure some amount of profit for Mattel is built into that cost, but otherwise the money funds the line. I don't think there will be cost cutting measures done specifically because of Mattel as a whole having problems. If cost cutting measures and short cuts do happen, it will probably have more to do with the cost of production continuing to rise, which would be a factor even if Mattel was otherwise doing really well.


    If this impacts MOTUC at all, it might be in the form of not having any kind of renamed/rebranded 2016 line, and it just ending completely. They might decide that they will be better reallocating their employees and resources to something that will be more likely to bring in larger profit.

    But to be honest, I really didn't have much hope of it continuing into 2016 anyway. The line has always had it's own budget, and ever since things shifted from the subs once being a convenient way for fans to get their figures and instead became the basis for the line continuing, the line continuing has been based on fan support and the budget generated from that. That's been dwindling for some time and likely still would be even if Mattel was otherwise flourishing.
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    Heroic Warrior air7walk's Avatar
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    Quote Originally Posted by Dynamo of Eternia View Post
    The line has always had it's own budget
    This is the only thing you said that I can't fully agree with. Even if a section of a company has a separate budget, it's still tied to the overall financial strength of the company. That's where the budget comes from. MOTUC isn't self-contained, it's part of Mattel. When large companies go through resource actions, it's generally a broad cut across the board (unless they're closing an entire division). Mattel is hemorrhaging profit right now, so I'm *sure* they're challenging each manager to cut cost wherever they can. That includes resources, and that includes quality.
    This could be the end of the world.. of warcraft.

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    Heroic Warrior Stygian360's Avatar
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    Any impact is and will be unknown by fandom until it becomes apparent. Guessing, hoping, wishing or what have you seems premature at this stage.
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    Casual Fan slackrguy's Avatar
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    They still turned a positive operating income and declared a dividend for the 3rd quarter. Plus, they knew they were struggling so they brought back Richard Dickson. In the short term, they have to weather the storm and do the best they can, so to speak. We may not see any significant initiative until the 4th quarter, at a minimum.

    What they do with Mega Brands will be interesting to see. I think that's an area MOTU could expand into. However, without new media (movie, tv) it may not thirve on its own. People collecting MOTUC doesn't translate into 1:1 sales for block toys. WoW had some cool sets, but never really took off. HALO & Call of Duty seem to do well though. I'm not sure how successful Skylanders, Barbie, & Hot Wheels did. Likely not great as Mattel purchased them.

    I agree with some of the other orgers, it likely won't impact MOTUC at all.
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  8. #8
    Supreme Fudge Dynamo of Eternia's Avatar
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    Quote Originally Posted by air7walk View Post
    This is the only thing you said that I can't fully agree with. Even if a section of a company has a separate budget, it's still tied to the overall financial strength of the company. That's where the budget comes from. MOTUC isn't self-contained, it's part of Mattel. When large companies go through resource actions, it's generally a broad cut across the board (unless they're closing an entire division). Mattel is hemorrhaging profit right now, so I'm *sure* they're challenging each manager to cut cost wherever they can. That includes resources, and that includes quality.
    It is very true that it's part of the overall company and not fully treated like something completely independent from the rest of Mattel.

    But again, MOTUC in it's current form is unique in that it is based on preselling most of the items directly to the customer before production is guaranteed. They are making sure that those resources are paid for before even using them. Granted the profit margin is likely very low compared to other mass-retail toylines. But none the less, once they hit that minimum, at least whatever profit they do make is pretty much guaranteed.

    I think that as long as we get enough subs, MOTUC will be pretty much safe through 2015, and any cost cutting on the end product will have more to do with the rising cost of production and less to do with Mattel's less than stellar (but still existing) profits.
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    Let's get Crita in MOTUC! The All American's Avatar
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    That'll be up to the powers that be at Mattel.

    Just hope it doesn't affect MOTUC negatively at all. We're so close to the end of the line. It would be tragic to lose out so close to the finish line.

    I guess the positive is, with the sub, MOTUC isn't a risky line for Mattel. They have guaranteed sales.
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    Golems for 2016! AdultCollector's Avatar
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    Mattel is accountable to its shareholders, and I have no doubt it has been taking a hard look at all of its toy lines to see what's working and what isn't. Whatever plans the company may have for MOTU in 2016, they can easily be changed or scrapped depending on the level of support we give to the current line. This year's Club Eternia sales will be more important than any previous Classics year, because as Toyguru stated, vintage figures sell a lot better than other figures. Now that the vintage line is set to be completed, Mattel needs to know they can still count on the guaranteed sales we provide before it takes the risk of offering up more of the toys we celebrate and collect.



    http://www.fool.com/investing/genera...-earnings.aspx
    * The problems weighing on Mattel right now are inventory overhang and bloated costs.

    http://www.thestreet.com/story/12777...all-today.html
    * Mattel's income plunged 61 percent in the second quarter.
    * Total net sales were down 9% to $1.06 billion, from the year ago quarter.
    * Fisher-Price sales retreated 17% from 2013's second quarter.
    * Worldwide gross Barbie sales lower by 15% for the 2014 second quarter, from the same period last year.
    * Hot Wheels sales down 2% for the quarter.
    Last edited by AdultCollector; July 17, 2014 at 04:49pm.

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    Heroic Warrior wundarwarrior's Avatar
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    Toys in general are becoming obsolete unfortunately. It is now the time for all toy companies to restructure their practices. Video games are killing toys and imaginations everywhere. Until big changes are implemented, I expect to see negative numbers for the future. It makes me sad to see kids not play with figures. I do not think the report will hinder MOTUC for 2015 or at all. I personally could see more resources put into the online sub model because it is guaranteed money. Retail is a huge gamble and Mattel struggles heavily with boys action figures at least in my area.

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    Heroic Warrior Stygian360's Avatar
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    Quote Originally Posted by wundarwarrior View Post
    Toys in general are becoming obsolete unfortunately. It is now the time for all toy companies to restructure their practices. Video games are killing toys and imaginations everywhere. Until big changes are implemented, I expect to see negative numbers for the future. It makes me sad to see kids not play with figures. I do not think the report will hinder MOTUC for 2015 or at all. I personally could see more resources put into the online sub model because it is guaranteed money. Retail is a huge gamble and Mattel struggles heavily with boys action figures at least in my area.
    I don't agree that toys are becoming obsolete. The market is changing vastly, to admit otherwise would be putting on major blinders, but toys will always be a valuable part of the imagination play pattern for children, and to a much lesser degree the collecting landscape for the collector. Fortunately Matty Collector and other collector targeted toy lines and sites exist and for the most part seem sustainable, but who knows. Best to focus on the now and deal with what's in front of us. Let the Fortune 500 toy companies deal with the future. As for the most part they are at a much better vantage point than we are on ground level to know what to do.
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    Quote Originally Posted by wundarwarrior View Post
    Toys in general are becoming obsolete unfortunately. It is now the time for all toy companies to restructure their practices. Video games are killing toys and imaginations everywhere. Until big changes are implemented, I expect to see negative numbers for the future. It makes me sad to see kids not play with figures. I do not think the report will hinder MOTUC for 2015 or at all. I personally could see more resources put into the online sub model because it is guaranteed money. Retail is a huge gamble and Mattel struggles heavily with boys action figures at least in my area.
    This! And toy companies still don't seem to get this. Take a look at a lot of movie lines that have come out: Avengers, Iron Man Captain America, etc. Stores get massive shipments of the first wave and they just sit there til it's clearance d out a month or two after Christmas and none of the new product gets out (okay in some rare cases the second wave seeps out in some markets). Toy companies need to realize that they need to scale back and yes, that means adjusting to smaller profit margins (yeah God forbid you have 10 million in profits instead of 25 million). I will harp on this til I die: don't ignore the adult collectors as we help your lines chug along when it is not Christmas time. Do one of each figure per case. That forces stores to order more and sell out faster. Brick & Mortar are shrinking their toy aisles, so focus more with the online shops. Yeah it will be painful and you will shrink a bit, but you really need to adapt, something corporations just really don't want to do or they don't do it well enough.

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    Heroic Warrior ksharpe's Avatar
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    Quote Originally Posted by wundarwarrior View Post
    Toys in general are becoming obsolete unfortunately. It is now the time for all toy companies to restructure their practices. Video games are killing toys and imaginations everywhere. Until big changes are implemented, I expect to see negative numbers for the future. It makes me sad to see kids not play with figures. I do not think the report will hinder MOTUC for 2015 or at all. I personally could see more resources put into the online sub model because it is guaranteed money. Retail is a huge gamble and Mattel struggles heavily with boys action figures at least in my area.
    YUP. I agree. But since MOTUC are mainly aimed at " Adult Collectors" then it shouldn't be AS affected as the retail lines.

    But I'd Love to see a NEXT GEN MOTU game. That would be pretty awesome.

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    AZ Mazter Shokoti's Slave's Avatar
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    MOTUC and Monster High... LEAVE BOTH ALONE! ... That is all.
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    A Real Master Of Arms nato's Avatar
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    Toy sales, especially action figures, decline because of the price. As 80's kids become parents, we know that our action figures cost around $2.99 to $4.99 when we were little. Now you see action figures in the range of over $10-$20 and parents are saying.....forget it. They are becoming too expensive and not worth the cost that you pay for them. One Motuc figure alone costs almost $40. That's why I can't wait until this line is done. I'll be saving tons of money!
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    Sorcerer of Zalesia bcrduke's Avatar
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    Mattel needs to wake up and realize that customers are wiser than they used to be.

    The incredibly obscene price increases across all their brands over the past few years have made toys unaffordable.

    Batman '66 figures range from 18.99 to 26.99 at TRU's across the country

    I MEAN... Come on now.

    They are losing money because their toys are too expensive, and they make foolish decisions.

    Argue about costs skyrocketing, etc etc.

    Bull.
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    For Hordak. To the death. lorde trooper's Avatar
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    Quote Originally Posted by nato View Post
    Toy sales, especially action figures, decline because of the price. As 80's kids become parents, we know that our action figures cost around $2.99 to $4.99 when we were little. Now you see action figures in the range of over $10-$20 and parents are saying.....forget it. They are becoming too expensive and not worth the cost that you pay for them. One Motuc figure alone costs almost $40. That's why I can't wait until this line is done. I'll be saving tons of money!
    I'm feeling the same now as my 3 girls are getting older so is the cost of living, I just subbed the other day like every year but I got quarterly shipping for the first time to save money.
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    Quote Originally Posted by bcrduke View Post
    Mattel needs to wake up and realize that customers are wiser than they used to be.

    The incredibly obscene price increases across all their brands over the past few years have made toys unaffordable.

    Batman '66 figures range from 18.99 to 26.99 at TRU's across the country

    I MEAN... Come on now.

    They are losing money because their toys are too expensive, and they make foolish decisions.

    Argue about costs skyrocketing, etc etc.

    Bull.
    Couldn't have said it better myself.
    It's all been done before. Everything to say has already been said. Do me a solid and pretend I posted something witty and and original here

  20. #20
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    Quote Originally Posted by Forcehunter View Post
    This! And toy companies still don't seem to get this. Take a look at a lot of movie lines that have come out: Avengers, Iron Man Captain America, etc. Stores get massive shipments of the first wave and they just sit there til it's clearance d out a month or two after Christmas and none of the new product gets out (okay in some rare cases the second wave seeps out in some markets). Toy companies need to realize that they need to scale back and yes, that means adjusting to smaller profit margins (yeah God forbid you have 10 million in profits instead of 25 million). I will harp on this til I die: don't ignore the adult collectors as we help your lines chug along when it is not Christmas time. Do one of each figure per case. That forces stores to order more and sell out faster. Brick & Mortar are shrinking their toy aisles, so focus more with the online shops. Yeah it will be painful and you will shrink a bit, but you really need to adapt, something corporations just really don't want to do or they don't do it well enough.
    Few managers will volunteer to shrink their own budget. The game largely is to get bigger and bigger budgets. So if that kind of change is to come it needs to come from the top. Also its not just about the bottom line (profit) its also about the top line (revenue). Doing morewit h less (more profit, less revenue) is actually bad as it shrinks your company.

    Personally I still think they should use MOTUC to try and experiment with digital collecting. Make a Soul Caliber like fighting game and then release new fighters in waves once a quarter.

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    Quote Originally Posted by Forcehunter View Post
    This! And toy companies still don't seem to get this. Take a look at a lot of movie lines that have come out: Avengers, Iron Man Captain America, etc. Stores get massive shipments of the first wave and they just sit there til it's clearance d out a month or two after Christmas and none of the new product gets out (okay in some rare cases the second wave seeps out in some markets). Toy companies need to realize that they need to scale back and yes, that means adjusting to smaller profit margins (yeah God forbid you have 10 million in profits instead of 25 million). I will harp on this til I die: don't ignore the adult collectors as we help your lines chug along when it is not Christmas time. Do one of each figure per case. That forces stores to order more and sell out faster. Brick & Mortar are shrinking their toy aisles, so focus more with the online shops. Yeah it will be painful and you will shrink a bit, but you really need to adapt, something corporations just really don't want to do or they don't do it well enough.
    Few managers will volunteer to shrink their own budget. The game largely is to get bigger and bigger budgets. So if that kind of change is to come it needs to come from the top. Also its not just about the bottom line (profit) its also about the top line (revenue). Doing morewit h less (more profit, less revenue) is actually bad as it shrinks your company.

    Personally I still think they should use MOTUC to try and experiment with digital collecting. Make a Soul Caliber like fighting game and then release new fighters in waves once a quarter.

  21. #21
    Evil Collapsing Robot! Zodach's Avatar
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    Quote Originally Posted by bcrduke View Post
    They are losing money because their toys are too expensive, and they make foolish decisions.

    Argue about costs skyrocketing, etc etc.

    Bull.
    Ummm, production costs have been increasing. Prices have gone up all throughout the toy aisle, not just on Mattel's products. They don't make that many collector focused toys because the prices have gone above what the average consumer is willing to pay for them ($17-20+). Even Walmart doesn't carry the Star Wars Black Series figures because they want to sell cheaper toys. That is why Hasbro and Mattel are offering lower price-point product lines that have simpler paint deco and articulation (ie- Total Heroes, Mashers).

  22. #22
    Heroic Warrior Hosed Ovor's Avatar
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    Quote Originally Posted by wundarwarrior View Post
    Toys in general are becoming obsolete unfortunately. It is now the time for all toy companies to restructure their practices. Video games are killing toys and imaginations everywhere. Until big changes are implemented, I expect to see negative numbers for the future. It makes me sad to see kids not play with figures. I do not think the report will hinder MOTUC for 2015 or at all. I personally could see more resources put into the online sub model because it is guaranteed money. Retail is a huge gamble and Mattel struggles heavily with boys action figures at least in my area.
    LEGO isn't experiencing that problem. Of course LEGO is in tune with their customer base and consistently delivers products their fan's actually want.

  23. #23
    Supreme Fudge Dynamo of Eternia's Avatar
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    Quote Originally Posted by bcrduke View Post
    Mattel needs to wake up and realize that customers are wiser than they used to be.

    The incredibly obscene price increases across all their brands over the past few years have made toys unaffordable.

    Batman '66 figures range from 18.99 to 26.99 at TRU's across the country

    I MEAN... Come on now.

    They are losing money because their toys are too expensive, and they make foolish decisions.

    Argue about costs skyrocketing, etc etc.

    Bull.

    The cost of production HAS gone up. That's not just some line that Mattel is feeding us. One of the 4HM went into detail about this on a previous RGD podcast, and went into specific examples with some of their own specialty figures that they make.

    As far as the TRU prices, TRU in general tends to be more expensive compared to other places when carrying the same products, and their prices do bounce around quite a bit. That huge Sewer Playset for the current TMNT toyline has bounced up and down in price from just under $100 to around $150. That's just something TRU does. If TRU is jacking up the price of the '66 Batman figures from $18.99 to $26.99, that's because TRU decided to do that... not because Mattel mandated it.


    Don't get me wrong. There are plenty of reasons to criticize Mattel for some of their lesser decisions. But these are things that are beyond their control.
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  24. #24
    Heroic Warrior goluphi's Avatar
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    Quote Originally Posted by Dynamo of Eternia View Post
    One of the 4HM went into detail about this on a previous RGD podcast, and went into specific examples with some of their own specialty figures that they make.
    I would love to hear this, do you happen to remember which one this was?
    Hey, if you want to wallow in the negative, go nuts. Sure, things arenít absolutely perfect, and people passionate about a property can get all keyed up about things. But I donít collect toys to be miserable. So Iíd rather think about the things that do excite me
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  25. #25
    Heroic Warrior Stygian360's Avatar
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    Quote Originally Posted by bcrduke View Post
    Mattel needs to wake up and realize that customers are wiser than they used to be.

    The incredibly obscene price increases across all their brands over the past few years have made toys unaffordable.

    Batman '66 figures range from 18.99 to 26.99 at TRU's across the country

    I MEAN... Come on now.

    They are losing money because their toys are too expensive, and they make foolish decisions.

    Argue about costs skyrocketing, etc etc.

    Bull.
    This ---^ I have an acquaintance who works in China and is very 'in bed' with the factory side of things there. In observation of the action figure industry in general he remarked that he was appalled at the prices major toy companies charge at retail for a figure that costs much less to actually make. He went on to say that due to parts reuse, rampant repaints, cheaper materials/labor in general, and all of the cost cutting that goes on, these companies are making obscene profits for what's actually put into the final product. Not everyone is using high quality plastics and paint. And don't for one second believe Scott when he cites "deco hits" on Blade's chainmail as being charged by the literal ring of chain mail!! That's about the most obscene lie perhaps he's ever uttered in his storied career as a professional marketer.

    It's easy to look at the quarterly losses for Mattel or Hasbro and begin to worry about whether this profit loss will translate to less toys. To a degree it probably will, but there is no way these companies are going to give up on toys entirely because the profit model is too well established and strong. They know if they pump very little into the front end they can net very decent profits on the back end once their product reaches actual retail. Even better when you factor that their majority audience isn't necessarily concerned about the same things we collectors are- quality, quality, quality.

    But to an earlier point made, that Mattel needs to wise up and realize we collectors are much more savvy then their core demo--- this is very true. The same tricks and marketing speak glamor that placates mom's and kids doesn't work on the adult collector. And if they plan to continue to play in this adult collector 'sandbox' they will need to smarten up. Sure we'll pay $25-30 for a figure if that's what Mattel says it costs to make, but most of us don't believe for one second this doesn't represent a huge profit margin for Mattel, nor are we easily placated when it comes to the end product. That product better shine or we'll simply take our money elsewhere.
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