Beekeeper Barbie was lonely. On a rainy Sunday afternoon in December, the foot-tall plastic doll stood on a store shelf, perfect smile frozen in place as bustling shoppers breezed by, ignoring her and her white gloves, white hat with netting, hive and bees.
Pizza Chef Barbie and Tractor Barbie weren’t faring much better. Animal Rescuer Barbie, at least, had some friends – a baby deer, a fox and some bunnies – to keep her company.
For Mattel, the 74-year-old company behind Barbie, Hot Wheels, Fisher-Price and American Girl, the toy business hasn't been much fun lately.
Dolls, action figures and miniature cars are competing for the attention of children, who are spending hours a day playing games on phones, tablets, computers and consoles. To make matters worse, toymakers lost a key outlet this year when Toys R Us shut down or sold all its stores after filing for bankruptcy.
The trouble in toyland is particularly severe for Mattel. Revenue has plunged from $6.5 billion in 2013 to a projected $4.5 billion this year, and a profit of more than $913 million has become an expected loss of $418 million. The company’s stock is down 73 per cent in that time and near a 10-year low.
Ynon Kreiz, Mattel's new chairman and chief executive, its fourth in five years, hopes to turn all that around.
Kreiz is yet another risky choice for Mattel. He has significant entertainment and media-distribution experience and some background in licensing and merchandising, but, like many of his recent predecessors, no history in the company’s core business: making toys.
Nonetheless, he hopes to start Mattel on a new path and will soon announce a live-action Barbie film starring Margot Robbie, the Australian actress nominated for an Oscar for I, Tonya.
Kreiz's plans also include turning many of Mattel's other beloved brands into movies, television series and video games. In September, as part of that push, he created an in-house studio, Mattel Films, led by producer Robbie Brenner, a 2014 Oscar nominee for Dallas Buyers Club.
“Mattel is doing what should have been done 10 years ago,” said Michael Swartz, an analyst at the investment bank SunTrust Robinson Humphrey.
Besides creating media content based on Mattel’s brands, Kreiz is slashing $650 million in expenses, laying off workers and planning to sell some manufacturing plants.
He has also shown interest in grabbing back the sparkly-princess licensing business. Mattel, which for years made Snow White, Jasmine, Elsa and every other Disney princess doll, let Hasbro take the lucrative franchise away several years ago.
In an emailed statement, Kreiz said the company had already made tangible process in its turnaround strategy. “We have a lot more work to do,” he noted, “but we are on our way towards restoring profitability, growing our top line and ultimately capturing full value from our incredible portfolio of global franchises.”
But Kreiz’s background suggests he is more adept at building young businesses than fixing older, broken ones.
Born and raised in Israel, he enrolled in the school of management at the University of California, Los Angeles (UCLA) after completing military service and a stint teaching windsurfing in the Caribbean. After graduating, he met, and became a protege of, Haim Saban, who created a media empire out of a live-action television series about a group of ordinary teenagers-turned-superheroes jumping and twirling in spandex suits: The Mighty Morphin Power Rangers.
Kreiz joined Saban Entertainment, where he was picked to lead Fox Kids Europe, part of Fox Family Worldwide, a joint venture between Saban and News Corp. By 2000, Fox Kids Europe was in 32 million households across 56 countries, and turning a profit. In 2001, Walt Disney acquired Fox Family Worldwide for $5.3 billion. Kreiz left the next year.
His next big job proved to be more challenging.
In 2007, he was named chief executive of the Dutch television company Endemol, the maker of reality and game shows such as Big Brother and Deal or No Deal. It had recently been bought for $3.55 billion by three private investors.
Within a few months, the company was struggling amid the financial crisis, heavy debt from the acquisition and plummeting advertising revenue.
In interviews, three former Endemol executives gave Kreiz credit for restructuring what they called an extremely fragmented business, diversifying into scripted programming and forming a distribution business. Eventually, Kreiz and members of the Endemol board differed over strategy. He left in 2011.
From where I sat the company was brain-dead and he re-energised it
“The shareholders did not see success with Ynon,” said Just Spee, who joined Endemol in 2010 as chief financial officer and later became its chief executive. “Was that fair? The debt was there before he came in. The industry was under a lot of pressure, particularly in southern Europe.
“From where I sat,” Spee added, “the company was brain-dead and he re-energized it.”
Two years later, Kreiz was back on more familiar territory as chief executive of Maker Studios. Maker, a media company very much in start-up mode, was part of an emerging YouTube ecosystem that pooled studio resources and branding opportunities for tens of thousands of people hoping to become stars by creating short-form videos.
A year after joining Maker, Kreiz sold it to a familiar partner, Disney.
By 2015, Kreiz had left Disney a second time when his contract ended, and Maker was on its way to becoming a headache for its new owner as it became clear that no one was really policing the YouTube content. Disney moved quickly to drop one YouTube megastar from the Maker stable, PewDiePie (real name: Felix Kjellberg), over anti-Semitic comments in his videos. Maker has had several rounds of layoffs and cutbacks since Disney acquired it.
In summer 2017, Margaret Georgiadis, Mattel's chief executive at the time, asked Kreiz to join the company's board. Less than a year later, in April, when she said she was leaving to lead the genealogy company Ancestry.com, the board asked Kreiz to step in.
Kreiz’s strategy for Mattel, analysts said, is reminiscent of one crafted by its longtime rival, Hasbro.
For years, Hasbro has licensed brands such as My Little Pony, Transformers and even the classic game Battleship to Hollywood studios and the makers of digital games. The company sold its last factories in Massachusetts and Ireland – where it had operated since 1977 and employed close to 250 people in Waterford – about three years ago.
The factory sales and other cost-cutting steps thinned Hasbro’s workforce to about a fifth the size of Mattel’s 28,000 employees. The moves, combined with the licensing push’s generous profit margins, are expected to help Hasbro to $4.7 billion in revenue this year, slightly more than Mattel, but with net income of $542 million compared with Mattel’s net loss.
Wall Street analysts note the success that Hasbro’s in-house film production and distribution arm has had in creating digital content that pulls children, and parents, to stores at holiday time to buy the latest hot toy.
“My Little Pony had lost relevance until around 2009 or 2010 when they started to reinvent it at the toy and media level,” Swartz of SunTrust said. “Now it’s a $1 billion-a-year brand.”
Analysts and investors are taking a wait-and-see approach to Mattel
Still, investors are skittish about the toy industry. After missing analysts’ third-quarter earnings expectations, Hasbro’s stock has weakened, dropping 13 per cent in the past two weeks.
Analysts and investors are taking a wait-and-see approach to Mattel, given its merry-go-round of chief executives. And the task Kreiz faces is formidable.
Beekeeper Barbie may not be a huge hit, but the brand’s revenue has been fairly stable overall. Hot Wheels revenue has climbed in recent years.
On the flip side, sales of Fisher-Price toys have fallen, and American Girl, another core brand, has stumbled badly. The Monster High doll line – the so-called Goth Barbies – which was racking up $1.5 billion in annual sales a few years ago, has collapsed, analysts said.
But creating content based on children’s brands, as Kreiz hopes to do, is not necessarily a sure thing, and Mattel is walking a tightrope with Barbie in particular. It wants to appeal to an older, and even adult, audience, while selling dolls to young girls.
About two years ago, company executives experienced heart palpitations when reports emerged that Amy Schumer would play Barbie in a live action movie. The sharp-tongued comedian and actress, whose movie characters are often lovable but drunk and unapologetically sexually active, ultimately abandoned the project because of scheduling conflicts, according to reports.
Concerned about protecting its brands, Mattel worked hard to wrestle back the film rights for Barbie and its other toys, according to current and former company executives. The question now is whether Kreiz’s Hollywood dreams for one of America’s best-known dolls will pay off.