MGA Entertainment aims to 'ship ventilator masks worldwide in a month' as it pivots Little Tikes manufactory

MGA Entertainment is now is in the third week of Operation Pac-Man, a global effort to provide healthcare workers with PPE equipment and those impacted by the COVID-19 crisis. This includes LEV LOVE masks and a limited-edition L.O.L. surprise doll. Isaac Larian, MGA Entertainment CEO, joins Yahoo Finance to discuss that and the overall state of the toy industry.

Video Transcript

BRIAN SOZZI: What started with $5 million from L.O.L Surprise Doll sales is now helping health care workers and COVID-19 patients across the country. MGA Entertainment's Operation Pac-Man is now in week three of the operation.

Isaac Larian, MGA Entertainment CEO is here with us now. Isaac, good to speak with you again. Thanks for taking some time this morning. Really key and important initiative by you guys-- you reconfigured your Little Tikes manufacturing facility in Hudson, Ohio to create these-- these scuba-like masks. How do they work?

ISAAC LARIAN: Thank you, Brian. This is what we call these LEV LOVE masks. I named it after my grandson. And they are really life savers. What these masks do is for the doc-- we make two versions, one for the doctor, the other one for the patient.

And for the doctors, it just goes over their face. It's airtight. It's connected to an oxygen tube, as well as a filter, 100% filter. So when they are operating on a patient, they do not get infected. And it's perfectly safe.

The other one is for the patients, which is reversed. Because a lot of patients do not need intubation by ventilator until later time. And eventually, tubes-- the tube that they put into the lung can damage the lung. So this will be a step before intubation.

And those two products are now in production. We have already shipped them to UCLA and a few other hospitals. And we hope to get them out. And we are shipping these for free for all the hospital workers who ask for. And we hope to get them out worldwide in a month.

ALEXIS CHRISTOFOROUS: Isaac, this is incredible, the way you've been able to pivot. And what you've been able to innovate here is truly remarkable. On the toy side of things, I know you've got a special edition L.O.L. Doll with a facemask.

Tell us why you think that's important at this time. What made you say yeah, let's go ahead and manufacture that?

ISAAC LARIAN: Alexis, for a few reasons. One is this COVID-19 is all over. The children are at home. And they are aware of this. So this also teaches children about hand washing and hygiene.

But more importantly, we are giving 10% of the sales of this L.O.L. Doll to Operation Pac-Man to keep it going. And Operation Pac-Man is going to evolve. I don't know if you know-- one in seven children in America go-- are hungry. And now with the COVID-19, over 22 million children who used to get meals at home are not able to get-- I mean, to meals at the school are unable to get that free meal. So we're going to pivot and start feeding the hungry children after this, once the PPE demand declines.

BRIAN SOZZI: Isaac, we've talked to a good number of folks in the toy industry the past two weeks here. And we get-- we're getting the sense that the smaller toy makers are struggling right now. But the larger players are doing OK, as people stay at home and play board games. How is your business holding up?

ISAAC LARIAN: Well, very good question. I think toy are selling at retail. There's no question. Because more children are at home, and they need to play with toys. But selling at retail, but selling in wholesale is down. Our business is down over 25%, 30%. And we expect that to be down for the whole year.

And we have two hottest brands-- L.O.L Surprise is the number one selling brand. And Little Tikes is the number two selling brand. But certainly, if stores are closed, where are you going to sell toys to? Yes, you sell them to an Amazon, Target, Walmart, et cetera.

But what about the others too? The pipeline is going to be basically empty. And it is going to hurt the toy business.

BRIAN SOZZI: Isaac, I've always known you as an aggressive entrepreneur. It's how you've built your business. In light of the current situation, do you think there will be consolidation in the industry later this year, and even looking out next year?

ISAAC LARIAN: Absolutely. I think a lot of toy companies which have high debt are going to have big, big problems. And I tell you, Mattel is one of them. And I think there is going to be major consolidations, because high debt combined with lack of innovation is what's going to kill the toy companies. So there is going to be a lot of consolidation by end of this year, early next year, for sure.

BRIAN SOZZI: Isaac, real quickly-- I know you dropped your bid for Mattel. But you just mentioned them again. Are you interested in re-entertaining that bid to take them over?

ISAAC LARIAN: I really-- I think Mattel's situation is dire. They have so much debt. They're burning so much cash. And they are paying interest rates of 7%, 8%, 9%. So I don't think for me or anybody else at this time is the right time to do a takeover.

Hopefully if they go into restructuring, we will be able to pick up a few pieces.

BRIAN SOZZI: All right, let's leave it there. Isaac Larian, MGA Entertainment CEO. I really appreciate what you're doing for health care workers. I wish a lot more companies would step up like you guys.

ISAAC LARIAN: Thank you, Brian. Thank you, Alexis. Nice to see you guys.