Hasbro, Inc. (HAS) Earnings Call Transcript & Summary

Hi. Thank you everyone, for joining today's fireside chat with Hasbro. We have Hasbro's Chairman and CEO; Brian Goldner; CFO, Deb Thomas; and eOne CEO, Darren Throop. During our conversation today, we're going to talk about Hasbro's strategy for growth, including its brand Blueprint, eOne, the current state of toy, and toy retail industry, and do a deep dive on Hasbro's brand portfolio. Hasbro has provided a safe harbor statement, which you'll see on the slides. My name is Mike Ng, I cover Hasbro here at Goldman Sachs, and I have the privilege of moderating this discussion with Brian, Deb and Darren. First, thank you all for making yourselves available. We truly appreciate your presence at the conference. To start out, Brian, Hasbro is undergoing a transformation from a Toy and Gaming company to a Gaming, Entertainment and IP company. Could you talk a little bit about this IP opportunity at Hasbro, and discuss some of the initiatives that have been put into place to unlock the value of that IP?

Sure. Well, it always begins with the consumer and the audience. And so, for years, it's been about our understanding the consumer and the audience better than anyone else, and getting those proprietary insights that will lead us to develop our capabilities and to surround our consumers and audience with those brands and those experiences that they're most desirous of. So as we build out the capabilities, clearly, with our consumer products business, it includes consumer products licensing, Wizards of the Coast, a robust gaming business, headlined by Magic: The Gathering and Dungeons & Dragons. And now with an entertainment capability, we're able to activate our brands in any one of those areas and then orchestrate a full flywheel around our brand, Blueprint, using all of those capabilities at once. So a great example is what we're presently doing with Dungeons & Dragons. We just got through producing the live-action portion of the film, for Dungeons & Dragons, it comes out first quarter of 2023. The gaming team at Wizards is already looking at enhancements for its gaming portfolio; what will it launch, and how will they launch in the face of all of the eventizing around this incredible feature film. The consumer products theme is developing an entire line of consumer products that we ourselves will create in toys and games, but also licensing to any number of hundreds of licensees who want to participate in those different categories that we ourselves don't manufacture, whether that's backpacks or bedding or T-shirts or food goods, whatever it might be. And so, as you think about where we were back in 2006 and 2007, and you think about a Transformers, prior to the first film was, let's call it, 1x of value to Hasbro. By the time we got through the first film window in 2007, that brand was worth 5x. And then in the non-movie years that followed, where we would have television, the brand remained valuable at the 3x or 4x level. And that's been true for My Little Pony as well, where the brand was back in the early 2000s, 1x, and then we went back on television with that brand and redeveloped and re-imagined that brand, and it became worth 2x or 3x. And then, of course, over time, if you think about the last ten years to have a brand like Transformers that at minimum is offering 2x or 3x in value versus where it was prior to 2007, or a My Little Pony that had a ten-year run in animation where the brand was worth at least 2x more than it was worth prior to really activating it in the space with all the consumer products and gaming, what have you. You can see how, by activating a number of brands that haven't benefited from bespoke entertainment yet or had been benefited from bespoke entertainment years ago in the '80s or '90s, and now we're going to bring that brand back out of the vault, but owned by Hasbro. It gives us the opportunity to drive more Hasbro revenues. And obviously, Hasbro brands enjoy higher operating margins because we're able to not only activate it in consumer products or gaming, but in-licensing and other very high-margin category. So on average, Hasbro brands enjoy high teens to low 20s operating margin, while the Company's average operating margin is in the mid-teens. And so again, building this out over time, having multiple at-bats that's coming from eOne right now, 30 brands in development at eOne for content. And we see a whole schedule of branded content initiatives that will be coming for our brands, in addition to what eOne is producing with third-party brands that's really in earnest. It's in 2021, we have the My Little Pony film, in 2022, a couple of films and 2023 films and television. So it just builds on itself, and we started to get kind of a perpetual road map and schedule around Hasbro IP that then is driven across all the elements of the Blueprint.

Great. That's a fantastic overview, and I think the discussion around brand values certainly resonate with the crowd and the audience. I should mention at the onset, if anybody has questions, please feel free to submit them to the webcast, and I'll ask them on your behalf towards the end of the session. Given that this is a media and entertainment conference, I wanted to explore the entertainment strategy at Hasbro in greater detail. Maybe I'll direct this one to Darren. For investors that may be familiar with the U.S. film studio landscape, the media conglomerates, entities like Lionsgate, but may not be as familiar with eOne and Hasbro, could you provide some context into how eOne's film and TV production business fits into the broader landscape? For instance, does eOne primarily do full productions or co-pros? Are there certain studio partners that eOne tends to do more business with? What are some of the most important franchises within the eOne portfolio?

Sure. Well, eOne fits firmly in the middle of the entertainment landscape. We are a full-service production studio that covers live-action, scripted, unscripted television, feature film production and animation. So we cover it all. We have full-service capabilities in-house, and we also have relationships with the biggest platforms in the world, all the linear broadcasters, cable networks, streaming services, and we provide content to them all over the world. So we sell to all of those different platforms. So we fit firmly in the middle. We do co-productions and we do productions, but we do our own productions mostly. And with the marriage with Hasbro, what has done for our studio is not only do we have our legacy business, which is a big studio business, it does a lot of shows like The Rookie on ABC and thousands of hours or at least 1,000 hours of content on an annual basis, just the legacy business. Now suddenly, we've got some of the most recognized entertainment brands in the world that are exclusive to our studio where we can start working on entertainment road maps for those brands. So Brian touched on it, but we're really laser-focused on the Hasbro IP, and they've got great big brands, and he mentioned Transformers, for instance. While there's another Transformers movie in production, we've got animated series, we've got My Little Pony movie coming out this weekend. Again, something reactivated from a brand standpoint that Hasbro owns, where we've got a feature film launching on Netflix, which we produced. We've got some specials coming out on Netflix in the spring, which we produced. We've got new animated series coming out of Netflix next year, to the end of the year, which we produced. And in addition to that, we have digital-first content, which again is produced by our own in-house studio, laser-focused on that content, building a road map that gives engagement to fans over and over again. So we really fit right in the center of the entertainment landscape. We've got deep relationships with all of the buyers, but we've also got great talent relationships. And in the past, talent like to work with eOne, we gave them an agnostic approach to content delivery, which means depending on what type of content it was, we knew every buyer in the marketplace, and we could make sure that they got visibility in the marketplace. With our combination into the Hasbro Group of companies, suddenly, not only do we have that protocol of agnostic to delivery, but we've also got some great brands and talent who want to work on these brands. There are people that have deep connections, really deep connections, Beau Willimon working on risk, for instance, for us, right, who created House of Cards. He is a huge risk fan. And when he had the opportunity to start iterating that piece of content, he's all in on that. And we're seeing that across things like Power Rangers and Transformers and G.I. Joe and My Little Pony. So it's a real opportunity for the entertainment group to have an exclusive look at all of the wonderful brands that has progressed forward.

That's great, and I'm really excited to see what you guys are going to be able to do with the Hasbro IP. Let's talk a little bit more about this marriage or combination of eOne and Hasbro, and go through some of the synergies that will be created or have been created by the combination. I think that you guys have talked about $130 million of expected cost synergies that should be realized by the end of 2022. Maybe going through some of these drivers, Hasbro is obviously in-sourcing some of the toy licenses for Peppa Pig and PJ Masks. First, would you just talk a little bit about the progress that you've made in this in-sourcing and really frame the source of the synergies here? What's the right way to think about the economic value that's captured by legacy licensees that you'll be able to bring in, but also some of the value that you'll be able to bring in from external licensing agents?

Thanks, Mike. Let me start out with that one. We are confident that we will achieve those $130 million in synergies by year-end 2022, and we're well on our way. We expect those to come from in-sourcing as well as, and as you mentioned, in-sourcing toy and game, really integrating our consumer products licensing business. So that was fully separate before. And that is largely completed at this point. We still have some legacy licenses that are continuing on. But our consumer products licensing is taking advantage of all the wonderful properties that Darren spoke about, including Peppa Pig and PJ masks. And it's also integrating with the Toy and Game, with our team developing the entertainment, which will lead to revenue synergies, which were not included in that number and cost savings as well. So talking about Peppa and PJ, it's great, because we've recently green lit further content for those series as well. But we also, last month, just introduced our first-line of product, toy and game product associated with those two fantastic brands. And you'll see those expanding in the holiday season this year, but really expanding further globally throughout 2022. And the best part of those brands is what you'll also see is that they're going to create margins that are similar to our franchise brands. So as we see the revenue grow from those brands, leveraging Hasbro's licensing capabilities, leveraging our global footprint in toy and game, and where do you see the great innovative product lines that the team has come up with, we're really going to get those franchise brand level margins that are good, high double-digit solid margins that flow into the blueprint, combined with the further content that the team is developing. So it's really the economics that will drive the go forward.

And I guess, while we're on the topic of Peppa and PJ, I think it's very evident that eOne has a best-in-class animation studio. There's also a live-action production business, which, as I understand it, Hasbro didn't necessarily have those capabilities before. So can you talk a little bit more about some of the Hasbro eOne content projects that are in the works, and how investors should think about the returns generated from these TV shows and films? I know you guys have mentioned D&D and risk, but I was just wondering if you could expand on those things a little bit more.

Yes, for sure. I think it's fair to say that there are so many things in development. We've got more than 30 Hasbro brands in various stages of development. But fair to say that our laser focus is on the brands that activate the entire flywheel. Things that can activate consumer products and licensing and digital gaming, et cetera, et cetera. So when you look at that, the big priority brands, one that we haven't mentioned yet is Magic: The Gathering. We've got an animated series in production today with Netflix, that will be out in the latter part of 2022, a whole new window into Magic for new fans around the world and existing fans as well. So we're looking at each one of these brands individually and trying to build road maps around each one of them. But then there are many others. We're launching a new brand called [ Kia ] in partnerships with our friends at Disney, another preschool brand for Kids, obviously. So we're doing that. We've got a lot of scripted shows still in production like The Rookie. We've got Graymail coming for Netflix, Cruel Summer, just all kinds of different shows. So it's a mixture of the eOne legacy business. But what we're trying to focus on is building the Hasbro business to be -- really, that's our focal point because there is so much opportunity for additional margin around the flywheel. So we're focused on those brands while still protecting the legacy business. So it's a combination of both. But Power Rangers, we've got Jonathan Entwistle on Power Rangers, it's going to take for us right now. We've got scripted television being worked on in D&D. We've got all kinds of things happening with Transformers. So the list goes on and on, Mike. So yes, there's a lot of different content coming from eOne studios, both from a legacy standpoint, and also on Hasbro IP that we're going to fully activate around that Blueprint. Deb's point on Peppa and PJ is right. We've green lit new seasons on both of those world-renowned and some of the biggest brands in the world. And when you combine that with the power of the CP and the licensing team at Hasbro, margin is, I think, a great word that Deb used earlier.

Darren, I was just wondering if you could talk to the current state of production today, and how that affects the content licensing pipeline for eOne. There have been some delays in film productions at other studios that have been very well-publicized. Are COVID issues and concerns related to the pandemic, resulting in production issues at eOne and the industry at large?

Yes, I've read about them as well, and we've experienced obviously COVID realities in our own production businesses over the last few years. It kind of went from a hard stop to kind of a soft relaunch and reopening from a production standpoint. I can tell you now that we're in full production across all of our businesses. I mean, we really never stopped in animation, because we found a way to iterate and do that remotely. But on the big budget scripted TV shows and the big feature films, it's fair to say that there was a delay last year, and we've seen that through our results. We're now seeing us come right back to where we were pre pandemic. We've obviously had to make some adjustments in the way that we produce and keeping safety in mind for both our staff and for our crews to make sure that they're safe. But I can tell you that while we've had some COVID instances, we're very good at isolating those and keeping that productions going. So, we're kind of in full gear right now in top gear with that. One example I can give you that just wrapped in August was the D&D movie, and it's a big movie with big cast, and it was in Ireland, it was a 120-day shoot. That movie came in on-time, with not one instance of COVID on set. There are instances where there is COVID, but like I said, the team is very good at kind of isolating those and just keeping on with the production itself. So, it certainly has impacted our business. We're hopeful that the numbers continue to go down. But right now, I can tell you that we're in full production and with no slowdowns or stoppages, which speaks well to the rest of our year and the years coming up. We just got a lot of things in production right now. So a look to the future gives us a high degree of confidence and continue [ to deliver ].

And just on the topic of eOne. eOne revenue for this year was guided to be in line with 2019 levels. Hasbro sold eOne music, which, if I remember correctly was supposed to be a $60 million to $70 million impact to second half revenue. Could you talk a little bit about how eOne is tracking relative to those expectations?

Sure. Well, to follow-on from what Darren was just saying, which was a great setup for all the great things that we have in production right now. As we said in July, we do expect the Entertainment segment to be in line with 2019 revenue. So to give investors a point of reference, absent the music sale, which we said, and Mike, you got it spot on about $60 million to $70 million impact on revenue from what we had originally planned for the segment for the year and about $15 million to $20 million of operating profit in the second half. As a reminder, we divested of that business in the first half of the year. So as we think about that, I can't really comment on the quarters, because we're so close to the end of our quarter right now. But on a full year basis, we remain on track to those 2019 levels, just considering that the music business is no longer there. And Darren iterated perfectly all the things that will have in production that will impact not just this year, but years to come as well.

That's great. Why don't we shift gears and talk a little bit more about Wizards of the Coast and Magic: The Gathering. Wizards has obviously been an incredibly strong performer for the last several years and is on track for another record year. Maybe just starting out with Magic. Could you talk a little bit about the timing of card set releases, how that affects the revenue cadence for Magic, and what you're seeing in demand from some of the most recent releases like Innistrad: Midnight Hunt?

Sure. Well, go ahead, do you want to do it, Deb?

No, I was going to say, I didn't know if you wanted to take it or you wanted me to.

Go ahead. You go ahead.

We've been freezing today a little bit, Brian and I, so we're tag teaming. But Wizards really has been a strong performer for us several years, and it's on track for another record year. We talked about the releases in the second quarter being exceptionally strong. And if we think about on a full year basis, while current releases are -- they're doing well, we really expected that to be the biggest quarter of the year. That being said, we still think that we'll have growth in the second half of the year for Wizards, but the releases are being very well received. We've got some in this quarter and next quarter as well. Last year, I think our strongest quarter was in Q3. So when you start thinking about comps, Q4 is pretty strong, too, but we said Q2 was really the strongest quarter this year. And so much of the timing is around this card set release. But on a full year basis, Wizards continues to have a really strong year.

Great. And Deb, if I could follow-up on that, Wizards of the Coast has been really at the forefront of Hasbro's digital gaming transformation. Could you talk a little bit about some of the progress to date and some of the key digital game releases over the next several years from both Magic: The Gathering and D&D?

Well, Magic: The Gathering arena is really our biggest digital launch today. And it started out on PC, and earlier this year, we released Magic: The Gathering arena for mobile, which has really brought more players into the game and actually not only brought more players into the digital game, but we've seen them enter the physical trading card game as well. And we've talked about this, the boat rises, the entire boat has risen from the digital expressions. But as we move forward, we're seeing new players come in. And as a matter of fact, since we launched Arena, we've seen close to 4 billion games played. And it's been very successful, again in driving engagement across the portfolio of analog and digital. We continue to see that, and we continue to see player engagement rather high on average about nine hours per week. We're seeing players play. So it has been well received. So what we've got coming up in the future years, we have many games in development. But most recently, we're in early access on Baldur's Gate 3 which is a sequel to one of the most critically acclaimed games from the D&D series, which is developed by our partners at Larian. We're in development on another D&D role-playing game that we call Project Dante that's developed by Hidden Path, who are the makers of the hit game counter strike. And we're in development on a third D&D title with another studio called OtherSide Entertainment. And our new studio Archetype is also in development on another property that we haven't really talked a lot about yet, but it's very exciting, and it's something that we're all looking forward to very much. Brian, I don't know if you wanted to add anything?

No, look, I think you've covered it. Look, I think that what we're doing right now, Mike, is we've recognized that we are going to achieve our objective of doubling the size of the Wizards of the Coast business over that time horizon, we had set for ourselves and expectation we had set for our investors of 2018, beginning in 2018, we'll likely be able to achieve that doubling a bit early versus 2023. So the team has been working, and we've been engaged in a process of really identifying what the next leg of growth looks like for Wizards, because we believe we can continue at these kinds of growth rates, we can continue to populate the Magic business and the D&D business with incredible engagement around several areas. One is in the competitive play within analog and the casual play within analog, our digital play with video games as well as looking at more and more at the digital tabletop, which is this new area, where it's really that hybrid of playing in an analog way, but playing through a digital forum. And people are really enjoying that, where they are moving from the published materials in D&D, which for those manuals that would help you to run a game to being digitally oriented, well, for your cell phone or your iPad or your computer and people are bringing that into the gameplay. At any one period of time right now, we have nearly 60,000 live streams of teams of people playing a D&D game digitally for an audience of people who are watching and getting excited and engaged and then kind of architecting their own digital gaming or virtual digital gaming experience for tabletop. So I see this as the next material leg up on those sets of brands. And then Deb mentioned, the Archetype, we are going to launch new IP, but in the wheelhouse that Wizards' very familiar with. We believe being a leading publisher of fantasy games is a unique and differentiated position where we are able to engage consumers and gamers for their entire lifetime. We talk about the average amount of time that a Magic player plays, and then they may take a break because of a life change, without coming back through Magic arena is seven years. So you think about that's very different than a lot of the other games businesses that are out there.

Yes, it seems like there's a tremendous opportunity for these franchise. I myself, I'm a lapsed Magic: The gathering player. So I'm looking forward to getting back into it. Shifting gears, I was just wondering if you could talk a little bit about the broader toy industry. Obviously, there's been a lot of discussion about rising freight and logistic costs, ocean freight, trucking shipping. Naturally, that raises the question about, number one, whether or not Hasbro will be able to successfully meet consumer demand this holiday, rather customer demand this holiday. And the impact on gross margins, if any, would you be able to address these points in turn, what is Hasbro doing to address the risk of supply chain bottlenecks? And how should investors think about the potential impact to margins?

Yes, so let me start and maybe Deb will also add to this. And I'm sorry, I had to turn my camera off, we had some instability in the stream. But look, overall, for the full year, we are still expecting to have the kind of great year that we've been outlining throughout the year. And we believe we'll have all the product, albeit maybe we'd like a little more product in certain categories, but we'll have the product for the holidays. Now having said that, we mentioned in the prior quarter that there may be some product that we would have liked to get out for Q3 that will really arrive in early Q4, and that we're not going to get overly concerned by what line in the calendar, it falls. Does it fall at the end of September or the first two weeks of October. And that's been consistent. Just what we are seeing is a gradual unlocking of the supply chain and the team have done an incredible job in making sure we have the product that we need. We've added domestic ports in the United States. In fact, we've almost doubled the number of ports here in the U.S, we've added a number of ports that we are now using in Asia and in China. We're using all kinds of tactics and techniques to ensure that we will have the product that we need and recognize we have categories of product that's in very strong demand because we have incredible innovation in brands like NERF this year, and in Play-Doh and in our games business and across our partner brands business from Marvel to Star Wars. And again, with the My Little Pony film falling in the next few days, clearly, lots of new innovative product there as well as PJ and Peppa, where we have our brand-new product lines for the first time coming from Hasbro. So what I will tell you is, we feel as good about our full year outlook as we did months ago, recognize the team has done incredible work to give us that confidence, and that yet, that line or delineation between what really arrives in Q3 versus what's still available and we'll get to retail amply in time for our Q4 holiday, that is where it's a bit fungible, because just, again, we're ramping up this product, and we're not really focused on an artificial date of an end of a Q3 or the beginning of Q4. But overall, I feel very good. Remember also, we took pricing, and we still believe our pricing increases will cover the additional expenses, so we should not see margin degradation and the growth [ story ] in operating margin. Deb, you want to comment further?

I think you hit it perfectly, Brian.

So you mentioned the tremendous amount of consumer demand because of all the innovation and the new product lines that are out there. I'm also wondering if you could just talk a little bit more about end consumer demand, the health of retail inventories. How are some of the factors like state home measures, stimulus and other things affecting this? How do you feel about consumer demand going into the holiday?

Yes, the consumer demand has remained strong. Obviously, there are weeks where we wish we had a little more product in certain categories. And clearly, NERF has really undergone a complete revolutionary change and almost every SKU of that product line has been reinvented and reimagined, and the innovation is something that's in high demand just across all the multiple categories that we are focused on in the NERF business. Our retailers are incredibly supportive of our brands, because they're seeing what we're seeing. And I'd say that, again, the reinvention of the gaming business, Gaming has continued to be incredibly relevant and yet we're adding lots of new games to the category in this holiday period. We recognize people want to continue to game. Our research indicates that people had rediscovered the joy of gaming with one another across multiple categories, and they want to continue to spend time together. We are going to continue to see the growth in online. People are managing their lives between online purchases when the brick-and-mortar is a little less as or a little more susceptible to the COVID environment. But I will also tell you one of the most powerful new tools that retailers who work in an omni environment are using is that buy online and pick up curb side. And so buying online and picking up curbside is a major area of growth, and the consumer really values the ability to go out and get the product in the same day.

Yes. I think it's clear that there's a ton of innovation in the pipeline. One thing that Hasbro has historically done a really great job of was really working with entertainment backed consumer products. Could you talk a little bit about some of the key content-driven catalysts that should drive Hasbro toy demand? I know we have Spiderman this holiday season as well as a much broader MCU film slate and Transformers in 2022? And then separately, I was just wondering if you could make some remarks about how the shortening of theatrical windows, and the release of that need for streaming content, like what we're seeing with Marvel and Disney+ affects demand for entertainment backed consumer products, if at all?

Yes. Let me comment on that. And I'd let Darren to talk about the marketplace and the shortening window and what we really see. Look, I think in the absolute, having both theatrical events as well as stream content is only giving us more at-bats. And the retailers are becoming increasingly convinced just by the nature of the evidence, the empirical sales that we're able to achieve for the Mandalorian or for Transformers that are being streamed on these content platforms, where we're seeing and enjoying great merchandising success with the product lines. So in fact, we're in kind of a golden days of having even more opportunity to mine the strength of our partner brands at the Walt Disney Company as well as Hasbro's own brands around merchandise associated with great storytelling. But Darren, do you want to comment about windowing and what we're seeing there?

Yes, absolutely, Brian. Obviously, COVID really -- there had been talk about changes to the windowing strategy from a theatrical standpoint for many, many years. COVID kind of accelerated those conversations. And with the advent of streaming, of course, some of the suppliers of those feature films had an option to go straight to streaming. What we're seeing here as evidenced by Disney's announcement a few weeks ago where their next six films are going to a theatrical window, customers still want that theatrical experience, for big tent-pole four quadrant movies, they want to go to the cinema to see that movie. What they're doing, though, is they're shortening the window to a 45-day window. I think that speaks very well for a business like Hasbro and for the entertainment industry as a whole, what used to be a 90-day window, so you would spend all of this marketing and support on a theatrical release that was never in the cinemas for 90 days, and then there would be a gap before you could engage with consumers. So this shortening on the window, I think, is a very good thing overall for the industry itself. But to Brian's point, we got multiple ways to get to the consumer now. We looked at the My Little Pony, which is out this week on Netflix, and I encourage everybody listening to watch it, it's fantastic. The reviews are fantastic. And we looked at that and is there a theatrical [ life ] or should we partner with a global streaming platform that has circa 200 million subscribers, and we went with the latter. And the evidence that we've seen on some of the partner brands that we represent at Hasbro has proven the point that you can engage with the audience and you can build brands and you can convert that engagement to consumer product sales. So pretty excited to have the opportunity to look at each brand, each individual property, each theatrical release or not through the lens of we have options. We have different ways that we can engage and get to the consumer. And I think we've seen some tremendous success on things that have gone straight to the streaming platforms. That being said, we see Transformers next year, D&D the year after. Those are clearly theatrical releases and the fans want to engage and enjoy those on a big screen with their friends and their families. So of course, they'll go there. And then, we've got an opportunity to reengage with the fans on the streaming platform.

I think that makes perfect sense to make sure you find the right home for each piece of content, whether that's theatrical or direct-to-consumer streaming, that certainly resonates with me. One thing that was mentioned early on was the tremendous amount of innovation that's happening in NERF and how that brand is transforming. Could you just expand on that a little bit more and give some insight into these launches and some of the NERF initiatives that Brian you alluded to?

Sure. Look, one of the things that we recognize with NERF was that as you build the category and you become the category innovator and leader, that there are other companies who want to enjoy some of the success, but with the products that may not perform to the level of the NERF product line. But having said that, we also can't rest on our laurel. So we've added product that shoots further, that has more accuracy, like our ultra-product. We've added new projectiles, which are the round shape projectiles where you can have even more volume of projectiles inside the blaster with NERF Hyper. And we continue to add new categories of play from the youngest consumer where it's the dinosaurs, and we have a whole line of DinoBlasters for younger kids to the NERF Hyper where it's more for that competitive play. And you're going to see us continue to foster that competitive play over time. There are great technologies out there that will allow people to do even a better job of keeping score, of really tracking how you're winning or losing within an active outdoor game of NERF. And our team is really at the forefront of all this technology, and we needed to completely reinvent the product at every price point as well as at every play pattern. And having done that now, the product is in high demand. We wish we had some more of it at this moment, but we certainly know that for the holiday, we have ample product coming. And as I said, it may not at all ship by September 30, but certainly for the holiday period, we see the product coming into the market. And it's really heartening to see just how the NERF Nation resonates with these product lines.

Great. So we're just about at time. So why don't I ask a closing question? Brian, could you just talk a little bit about how Hasbro is going to look different in three to five years as you execute on the gaming and entertainment strategy, what's going to be different? What's going to be the same?

Yes. So well, first and foremost, we have a robust road map across Wizards of the Coast business. And so you're going to see us activate in tabletop, in digital tabletop, in video games and a robust road map that includes from us as well as from other third parties. In Entertainment One, as they continue to develop, we expect that we'll see a couple of feature films per year and a couple of scripted programs per year coming in that time horizon. I'm going to turn that video off again, I think I'm getting into a little instability. And that should give us a whole host of brands being activated. And then as you activate the first series for a brand like Magic: The Gathering or for Dungeons & Dragons in live-action television, now you can have subsequent series as you're also launching new brands. So the raft of entertainment that should come from Hasbro IP should be very robust and should, over time, approach maybe half of the production capital spend that we are spending as a Company. And then in consumer products, we'll continue to take advantage of all this activation, the innovation and the fact that we'll continue to drive the globality of our business. And we feel very good about that as well as the raft of new family brands that will come on top of Peppa and PJ, which is another strategic advantage for us now as we develop out our preschool business.

Great. That's very clear. Brian, Deb, Darren, I think I speak for everyone listening in when I say thank you so much for all of your time and offering your insights. This was tremendously helpful.

Thank you.

Thanks Mike.