Rovio, Hasbro to Combine Transformers and Angry Birds

Zacks

The Angry Birds are back. Hasbro Inc. (HAS) — license-holders of the Transformers brand — is partnering with Finnish casual game maker Rovio Entertainment for Angry Birds Transformers, a mobile game and consumer licensed goods and a toys featuring the Telepods platform.

The recent Hasbro-Rovio partnership regarding the Transformers is more than just a digital licensing agreement. Per the deal, Hasbro will also be producing physical toys under the Telepods line. The Telepods, to be introduced later this year, will feature embedded chips enabling them to “talk” to mobile devices and delivering virtual characters into the game environment that can adapt and change during the game.

With the deal, Rovio and Hasbro will not only augment game sales but also benefit from in-game purchases and hardware collectibles created via the Telepods integration that the companies launch later. The Angry Birds franchise has been a blockbuster hit for Rovio ever since its introduction in 2009. In fact, Rovio plans to release an animated Angry Birds feature film in Jul 2016.

This is not the first collaboration between Hasbro and Rovio. In 2013, Rovio expanded the licensing agreement making Hasbro its premier toy and game licensee. The two joined forces to build the immensely popular Angry Birds Star Wars and Angry Birds GO! product lines. Further, Angry Birds Stella: Telepods will be available in Sep 2014.

The toy industry, of late, has been witnessing a general decline in demand as macroeconomic uncertainty and children’s shift toward videogames and personal electronic devices for entertainment have negatively impacted profit. However, toys related to popular movie and gaming franchisees have generally been successful.

In fact, Hasbro has outshone other toymakers due to strategic agreement with The Walt Disney Company (DIS) related to its Star Wars, Avengers and Spiderman brands. In keeping with this trend, we believe the deal with Rovio will help Hasbro to tap in on the demand for toys based on popular games.

Hasbro currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the same sector is Electronic Arts Inc. (EA) sporting a Zacks Rank #1 (Strong Buy). In the broader consumer discretionary sector, stocks like Skechers USA Inc. (SKX), carrying the same Zacks Rank as Electronic Arts, is worth considering.

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