Home / Mattel, app games and digital IP: “We’ll always be a toy business first”

Mattel, app games and digital IP: “We’ll always be a toy business first”

Mattel’s head of digital Andrew Chan sees a big future in apps and gaming for the global toymaker and its brand portfolio, despite the firm’s unwavering position in the toy industry. Here he talks to Robert Hutchins about Thomas & Friends, app games and this new digital arm’s global ambition

Andrew Chan, head of digital, Mattel

Mattel’s digital arm – one spanning mobile and console games based on the toymaker’s wealth of toy IP – will never be as big as Netflix, its head of digital, Andrew Chan admits, but that’s not to say it isn’t planning on having a good go.

The firm currently has the wind in its sails, having recently posted better than expected Q1 trading results that would appear to indicate that turnaround plans for this one-time number one global toymaker are finally coming to fruition.

While the results saw sales dip three per cent to some $682 million with a big decline in the infant sector, the figures arrived as a surprise to most, who were expecting to see something rather more severe. This is a company that has, after all, rather publicly struggled in years prior to adapt to changing markets, underpinned most recently by the loss of Toys R Us.

Not that you’d know it to look at Mattel now, of course. There’s a certain sense of re-energised determination from the toymaker – led by the optimism of CEO Ynon Kriez, whose rhetoric of turning Mattel into a ‘high-performing, IP-driven toy company,’ is being mirrored in the latest developments to emerge from its headquarters.

Earlier this month, the company confirmed a renewed partnership with Disney that will now see it produce toy lines for Pixar properties, past, present and future, while simultaneously detailing plans to roll-out interactive family entertainment centres around the globe.

Now add to this that Mattel has every faith that its digital arm can and will – and does today – successfully operate as a standalone company, and you begin to see just how IP-driven this firm really is.

Mattel’s digital gaming group, a small outfit of 13 team members operating out of its home in California is responsible for all of the company’s gaming content found across console, mobile and emerging platforms today. A troupe of publishers, marketers and product developers, it is the role of this division to license Mattel’s IP, from Hot Wheels to Barbie, or from Uno to Thomas and Friends to third-party game developers.

Already, the unit has partnered with some of the biggest names in gaming, including Microsoft, Forza, and Rocket League and Psyonix (a development company who has just, by the way, been bought by Fortnite publishers, Epic) and it was just last month that it dropped its newest title, Thomas & Friends: Adventures. It’s a free-to-play game that aims to bring the children’s book series to the digital platform with track building and racing, combined with educational elements that encourage kids to learn about different countries, cultures and languages. It’s a title with exploration at its centre, which, coincidentally is exactly what Mattel’s digital venture is about, too.

“We have such a depth of IP, that we thought: ‘we have content, we have the toys, we should have a game’,” explains head of digital, Andrew Chan. “We wanted to create a holistic programme for people to engage with our brands.”

Feeding into Mattel’s chief franchise management officer, Janet Hsu’s remit of practically all licensing outside of theatrical, this digital arm is intrinsically linked to that licensing space. Feelings are, however, that this gaming and digital arm adds a whole new layer to the business; and one that will help keep its brands in front of fans for longer.

“Traditional licensing goes like: you launch the content, you measure the traction, then you go and get your licensing partners. Eventually you build a game,” explains Chan. “That delay really doesn’t help keep the content fresh, and it doesn’t keep Mattel in the spotlight of being a direct to consumer company. Typically, you’re waiting three to four years to tie all of that licensing together.

“Through this digital arm, and how it allows us to be across platforms like YouTube and YouTube Kids, there’s some real love for the pace in content that we can now maintain.”

Make no mistake, Mattel remains a toy business first. It has underlined that point fiercely. It is simply Chan’s role to make sure that this digital venture is nipping as closely at the heels of that multi-billion dollar business as it possibly can.

“We sell a lot of toys,” says Chan. “But as a standalone business, we believe apps and games can get their. We’ve seen it happen before and we have seen toy firms convert their IP into top 100 games; so there is a real opportunity here for Mattel to invest and push mobile gaming towards the forefront.

“We truly believe that apps and games can be a big business with great revenue for us.”

More and more, the physical toy space is being informed by what kids are engaging with in the digital sphere; just look back at Epic’s Fortnite for one example. And, as Chan’s division does push itself to the forefront of children’s entertainment, it’s not a trend that’s escaped the company’s attention.

“If we take Thomas & Friends as an example, right now, we are based on the lore of Thomas because Mattel has so much content. But as we go through, we can measure and find out who the most popular trains are, where people are engaging with the new female lead trains, what looks are proving the most popular.

“This anonymous data can then be used by Mattel to help guide the physical toys. That’s then a two-way street for us that helps us to build the IP objectively.”

Chan tells ToyNews that Mattel has its sights on growing its licensing business by 20 to 30 per cent a year, and that it’s work and investment with third party developers will be a major part of that continued push. The appeal, it would appear from conversations with the team, is the freedom the digital platform allows Mattel to explore how new concepts resonate with audiences around the world.

“With apps and gaming, we can cover topics like maths, reading, curriculum subjects,” says Chan. “These are areas that if Mattel tried to build in the physical, we would have to make the kind of large investment that we are not in the position to make.

“But when we get audiences of 50,000 plus subscribers across our digital platforms, we can tap into them and help them grow while we monetise our license.”

But it isn’t only existing IP that Mattel’s digital exploration is looking to cover. Over in China, the firm is making headway in the digital development of new IP through an even newer joint venture with the second largest gaming company in the region, NetEase.

This joint-venture is called Mattel163, and it is a full development team of around 65 people all working on building out mobile games. Mattel163 launched in the space with the Uno mobile game, which according to Chan “is doing above projections.”

How does it all tie together with the digital operations taking place in California? Quite simply with the one objective of “exponential growth”.

“This is how we see our business growing exponentially,” explains Chan. “We will own a development team which we can grow, for certain titles we think are justified. Meanwhile, we will continue our licensing business and grow that 20 to 30 per cent a year, and invest in third party developers to develop new IP.”

All together, the globe-spanning digital effort it looking to license around eight to ten game titles a year. In its self-publishing and co-development business it is eyeing around three or four mobile games a year.

“How that will all play out, we will have to see. There may be some failures, but there will also be some big successes,” Chan concludes.

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