Mattel Continuously Innovates to Keep Barbie Alive in a Tech World
Image: Ethan Pines for Forbes
ead 10 minutes south of Los Angeles international airport on the 405, exit at El Segundo and you’ll blunder upon a 200,000-square-foot concrete bunker lurking among the strip malls in this seedy bit of Los Angeles County. The low-slung structure, surrounded by a black iron fence, was once an aircraft parts factory. It now houses the design laboratories of Mattel, Inc, the world’s largest toymaker, and deep inside the high-security facility, a crack 12-person team of screenwriters, computer animators, comic book artists and industrial designers are busy engineering the next great American toy: Max Steel.
In physical form, Steel will be a 6-inch plastic superhero action ﬁgure, with a well-developed backstory: His mission is to harness the turbo energy he possesses to morph into different cyborg forms and save the world from monsters bearing names like Elementor and Dredd. And, just like Superman, he has a mild-mannered alter ego: Maxwell McGrath, a 16-year-old high school kid with brown hair and a square jaw.
The Max Steel doll won’t be appearing on US retail shelves until August, but his launch is already well under way. Pull up maxsteel.com and you can play the Max Steel: Hero’s Journey videogame, watch videos introducing him or download a Max Steel mask. In March, a Max Steel cartoon premiered on Disney’s XD digital cable and satellite channel and will soon be available in more than 100 different markets worldwide. Toys used to spring from entertainment. Now entertainment supports the toys. “Having an action hero that’s on for a steady basis—on television, on webisodes, on digital—is going to create a more consistent demand for that product,” says Mattel’s chairman and chief executive, Bryan Stockton.
Stockton, who is 59 and has been Mattel’s top exec since January 2012, is referring to Steel, but it is no small irony that his 15th-ﬂoor oﬃce with views of the Paciﬁc and the Hollywood Hills is decorated with a dozen or so glass-encased Barbie dolls, each mounted on its own personal pedestal. They deserve to be there. Because for many decades, Barbie was Mattel and Mattel was Barbie.
Barbie is more than a toy; for the last 54 years, the 11.5-inch moulded-plastic doll has been a deﬁning feature of American girlhood. She is also a money machine. Just click over to Amazon.com. Princess Barbie, Astronaut Barbie, Paleontologist Barbie and President Barbie—some 45,532 products, all for sale.
But Barbie’s improbable ﬁgure, her piercing blue eyes and her youthful blonde mane mask the fact that she’s been showing her age on Mattel’s ﬁnancial statements for more than a decade. Last year Barbie’s global sales declined 3 percent to an estimated $1.3 billion worldwide. In the US, she is doing even worse. Barbie’s domestic sales have dropped a stunning 50 percent since 2000, according to Gerrick Johnson of BMO Capital Markets, down to $460 million in 2012. Barbie now represents 20 percent of Mattel’s $6.4 billion in revenues versus 30 percent 10 years ago.
Stockton hopes Max Steel will join Mattel’s other promising toy franchises—Monster High and American Girl—in smoothing Mattel’s way in a post-Barbie world. The task is important because some of Mattel’s other key franchises—its Matchbox cars and old Fisher-Price line—are under pressure. Their sales have fallen for nearly a decade. Then there are more existential threats, like a digital generation that favours 99- cent iPad apps over traditional toys, a shrinking number of toy stores and the looming concern that DIY 3D printing will render premade plastic toys obsolete.
Today Mattel controls 16 percent of the $20 billion US toy market, nearly double the share of its closest competitor, Hasbro. It has a portfolio of strong brands besides Barbie, including Barney, Thomas & Friends and Hot Wheels.
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