Can Hasbro Get Past “Go” with a Subscription Box Service?

An unusual move for a major player in the toy industry

Author: Andria Cheng

June 19, 2017

Toymaker Hasbro Inc., maker of Monopoly and Cranium board games, plans a different way to get its games into the hands of consumers: the subscription box.

The Hasbro Gaming Crate, at $49.99 per crate and containing three new games, will launch this summer. Subscribers will receive four crates per year, and can choose to receive either an adult-oriented box or one that’s geared for families. The company may choose to sell some of the games online at its site or select retailers over time, Jonathan Berkowitz, senior vice president of marketing for Hasbro Gaming, said in an email.

“We have been watching the subscription landscape for a while, and, given the momentum of our gaming business and the fact consumers are constantly looking for new games, we felt the time was right to offer this,” Berkowitz told eMarketer Retail, adding there were 2.1 billion gamers in 2016 seeking games. Hasbro has a team working specifically on the subscription box service, he said.

Hasbro’s move comes at a time when games, from face to face board games to digital, are outpacing growth in the already rising toy industry. US toy sales rose 5% in 2016 to $20.4 billion, with annual sales rising an average of 5% since 2013, according to NPD Group. In comparison, the games segment alone jumped 21% to $307 million, driven by both demand for kids’ and adults’ games, NPD data showed. What’s driving the growth? Hasbro’s new Pie Face Showdown and Speak Out games landed in the top 10 list of new items last year, according to NPD.

“In order to do a venture like (the subscription service), you need a vast library like Hasbro Games, which encompasses a huge selection and variety for all ages,” said Jim Silver, CEO and Editor in Chief of TTPM, a toy review site. “They are the first large toy company to do this.... It builds up their customer base and gives them direct communications with their consumer, which is always a very good thing.”

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That said, there are some signs that gaming and other related subscription box traffic may be slowing. Hitwise online traffic data showed that most of the top gaming related subscription box sites, including Loot Crate and Nerd Block, saw their total visits declined by 40% and 51% respectively in the year through May, compared to an 11% increase in traffic to the overall subscription box category.

Hasbro, citing NPD data, said it’s already the largest game manufacturer in the US and had 13 of the top 15 overall “face-to-face games” in the US last year. Its games category sales, including digital, last year rose 9% to $1.4 billion, nearly 30% of the company's $5 billion in total revenue.

The move also could help Hasbro expand sales to adult consumers as about 20% of its products are used by consumers 14 and older.

“This demographic is one of our fastest growing,” CEO Brian Goldner said in the annual report. “We are growing our adult gaming business with brands like Taboo, Cranium Dark, and Trivial Pursuit, as well as digital games including Monopoly and Scrabble and Yahtzee that are played primarily by older consumers."

On the digital front, the company this year bought out the remaining stake of the mobile game maker Backflip Studios it didn’t already own.

The subscription box could aid Hasbro in its ecommerce efforts. As consumers increasingly buy toys and games online, online sales represent one of its biggest growth drivers, Hasbro has said. The company said it could help it lessen the dependence on the key holiday quarter. Retailers including Target and Walmart traditionally use toys as so-called loss leaders to drive traffic to stores during the holidays.

Online sales could be close to 40% of sales and growing for Hasbro, outpacing 20% to 25% of toy industry sales, said Jefferies analyst Stephanie Wissink.