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WIKI ANALYSIS
JAKKS Pacific (NASDAQ: JAKK) is the third largest toy manufacturer in the United States by revenue. The company makes action figures, toy cars, dolls, and video games.[1][2] In addition to its own product lines, such as Funnoodle and Flying Color, JAKKS also has licensing agreements for several leading entertainment brands. These include licenses for Cabbage Patch Kids and Hannah Montana for dolls, Care Bears and Barney for preschool-related products, and World Wrestling Entertainment (WWE) for video games and action toys.[3]
JAKKS Pacific primarily competes with Mattel and Hasbro, the top two toy manufacturers in the United States.[4]
Business Overview
Business & Financial Metrics[5]
In 2009, JAKK incurred a net loss of $385.5 million on net sales of $803.7 million. This represents a significant drop from 2008, when the company earned $70.8 million on $903.4 million in net sales.
Business Segments[6]
JAKKs operates through three business segments.
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Craft/Activity/Writing Products (9.1% 2009 Sales)
This segment consists of crafts, activity sets, stationery products, playsets, and lunchboxes. Its craft products are mostly sold under the Color Workshop name, and include products such as Blopens and Vivid Velvet writing instruments and stationery products, as well as activity products under the Flying Color name. JAKKS' playsets and lunchboxes are mostly based on brands such as Nickelodeon, Dora the Explorer, and Pokemon.
Pet Products (2.0% of 2009 Sales)
The pet products segment consists of toys, food products, beds, clothing, and accessories that JAKKS produces for pets. JAKKS Pacific manufactures these products under licenses with brands such as American Kennel Club and The Humane Society of the United States, entertainment properties such as Disney, and private label brands such as Totally My Pet.
Key Trends and Forces
Video game emphasis
Since 1998, JAKKS has been a part of a joint venture with THQ (THQI), a publisher and distributor in the video game market. As a part of this joint venture, JAKKS Pacific makes games based on World Wrestling Entertainment (WWE), another company with which JAKKS has a partnership. WWE filed a bribery lawsuit against JAKKS in 2004, which JAKKS won in December 2007 when a judge dismissed the case. Nevertheless, JAKKS has maintained its partnership with WWE, and plans to continue to produce WWE-themed video games at least until their licensing deal ran out in 2009.[7]
Although JAKK's video game joint venture added to the company's profitability until 2008, the company incurred a $16 million net loss from the venture in 2009.[5]
Competition
JAKKS Pacific is the third largest toy manufacturer in the United States partially because it makes products in several different categories within the toy industry (i.e. video games, traditional toys, etc.). However, many of its competitors specialize in a certain aspect of the toy industry, and as a result, JAKKS' different products compete with different companies. These include:
- Mattel (MAT) is the world’s largest toy manufacturer, selling a host of well-known brand names such as Barbie, Matchbox, Fischer Price, and Hot Wheels. However, because Mattel focuses so much on traditional toys, it faces pressure from the fast-growing video game industry.[8]
- Hasbro (HAS), the United States' second largest toy company, owns the largest market share in the board game industry. Its products include the Transformers, Mr. Potato Head, Play Doh, Milton Bradley, and Parker Brothers brands.[9]
- RC2 (RCRC) has grown significantly during the new millennium through a host of important acquisitions, and has, as a result, become an influential company in the toy industry. It is perhaps best known for its products under licenses with the Thomas & Friends, Bob The Builder, and John Deere brands.[10]
- Leapfrog Enterprises (LF) produces technology-based educational products under the LeapFrog, LeapPad, Leapster, and Quantum Leap brands.[11]
- Activision (ATVI) publishes and distributes video games. Blizzard, a subsidiary acquired in 2007, is the developer behind the popular World of Warcraft game, thus letting Activision become a key player in both the console gaming and online gaming industries, as well as the largest video game company in the world (surpassing Electronic Arts).[12]
References
- ↑
- ↑ Yahoo Sports: More to UFC’s merchandising future than toys and trinkets
- ↑ JAKK 2007 10-K, Item 1: Business, page 4-5
- ↑ JAKK 2007 10-K, Item 1: Business, page 6
- ↑ 5.0 5.1 5.2 JAKK 2009 10-K pg. 39
- ↑ 6.0 6.1 JAKK 2009 10-K pg. 27
- ↑ Forbes: Jakks Wins Round In Rumble With WWE
- ↑ Wikinvest: MAT
- ↑ Wikinvest: HAS
- ↑ Wikinvest: RCRC
- ↑ Wikinvest: LF
- ↑ Wikinvest: ATVI
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