Mattel buys Megabloks

[Clone OPatra]

AusAFOL makes some great points about how Megabloks currently is tailoring itself towards a different demographic with a lot of its lines. Most of the Licenses, and the style of them, are quite different from what LEGO offers.

At one time Megabloks seemed to make lines that directly corresponded to LEGO themes. LEGO has space, Mega does space; LEGO has race cars, Mega has race cars; etc. They still do make some construction-site themed sets and the like, but for the most part their stuff seems pretty different. Of course, I don't know if a parent or grandparent in the toy aisle would make such a distinction, but even then I think a random gift-buyer will not a difference between hard-core guns and stuff and LEGO's more colorful themes.

What Mattel could do is move Megabloks more in line to directly compete with LEGO. Kreo's stuff is a lot more LEGO-like than Mega right now, and Mattel could bring Mega back into that realm in a bigger way. The Barbie stuff is already so freakishly similar to Friends that I did a double take the first time I saw a display of it in a store. I doubt Mega would move away from all of the Mature-game licenses, but Mattel could widen the offerings to put out more LEGO-like sets.

[Faefrost]

I'm sure it was mentioned earlier, but Mattel and Mega Bloks already teamed up for their Barbie building sets. So Mattel was already trying to get into the construction toy business on the female side of things. Now with these other licenses, they will have a bigger piece in the market. But that doesn't mean anything. It seems most people that are already into LEGO won't pay much attention to MB outside of seeing it on the shelves. The families that want a building block set, will buy anything they can afford.

Mattel has had a few deals with MB. Most notably Barbie and Hot Wheels. Megabloks is a weirdly positioned product. They really aren't "cheap" bricks. They are a mid level product. Which means they are losing out to Lego on quality and to the cheaper horrid generic brands with the price driven. Their entire business at this point requires the licensing. Think about it. When was the last time you saw a succesful unlicensed MB product line.

And in spite of some of our prejudices, MB is actually one of the better well engineered products. Their only true failing is their choice of materials. Lego has long worried that if MB were to ever start using ABS they would be able to compete on quality. MBs other big failing is their production chain and logistics. Mattel may be able to straighten that out.

I'm really not to worried. I suspect that the MB Mattel merger is something that had to happen, but neither were particularly seeking the other. They were the last two single folks at the dance. MAttel was the only major toy player with no presense in the high growth brick arena. MB was the best of the still standalone brick companies that looked viable for acquisition. MB carries the number 2 brand recognition. Which is high value in itself. The alternatives probably would have been Character Builder, which has no North American brand recognition or infrastructure, or Ionix, which is a bit of a rising star, and to broad with all the figures etc. they would end up paying to much for mostly capacities they already have.

It will be interesting to see how it plays out. Don't expect anything soon. For the near term MB will be tanking and strangling itself. Everything will suffer for the next year. If it doesn't than it means Mattel really isn't bothering much with MB. But there is no way that there is no corporate conflict. Mattel is a huge corporate behemoth, with lots of Injection Plastic experience, but none really in the construction product or marketing area. MB is a well experienced brick maker with a mall small private company structure and no experience of corporate overlords. It's gonna be spectacular to watch.

[rzetlin]

Looks like Mega Bloks may not be the golden goose for Mattel after all:

Mega Brands reports lower Q4 net earnings of $1.4M

Mega Brands' net sales fell 21 per cent in the quarter to US$101.2 million, compared with US$127.5 million in the same quarter of 2012.

Mega Brands said its net sales were down 24 per cent in the toys segment and three per cent in stationery & activities.

[AmperZand]

Looks like Mega Bloks may not be the golden goose for Mattel after all...

I wouldn't read too much into that. An announcement of seemingly poor results is not unusual immediately after an acquisition. In the run-up to a possible buy out, the management of the company for sale (in this case MB) takes near term measures to look more attractive to prospective buyers in the expectation that the first few sets of results after acquisition will not be very impressive.

The buyer (Mattel) knows that, of course, so expects as much.

[bricklayer]

Its a generational thing.If you are brought up in a Lego household, you will follow that trend.....thats what Lego have captured waaay back!!

If you were brought up in any other "brick" household, you soon figure out where the good stuff is at, then that generation is now tied into Lego.

[bricklayer]

WAIT A MINUTE

Someone mentioned Tyco, well a bit of research shows the....you guessed it.

Mattel bought Tyco in 97.Not sure if Tyco was still producing blocks.