By Mark Seavy 

With tariffs and higher costs looming on the horizon, toymakers are focusing on value retailers as well as delving deeper into inbound and outbound licensing to navigate flat sales through 2027, industry executives said. 

Hasbro, for example, has seen its outbound licensing business increase 60% over the past three years, CEO Chris Cocks said. It has received $10 million per month in royalties from licensee Scopely’s Monopoly Go! mobile title, which generated $38 million in Q4 ended December 31st, Hasbro CFO Gina Goetter said. Hasbro also reported strong sales of the Littlest Pet Shop and FurReal Friends toys, brands that are licensed to Basic Fun and Just Play, respectively. Hasbro has more than 1,000 licensees that are driving 4,0000 collaborations, Cocks said. 

Hasbro has more than 140 licensed location-based entertainment (LBE) experiences open globally, which attract 50 million visitors annually, Cocks said. Hasbro is forecasting licensees investing more than $4 billion across digital games, LBE, and toys during the next three years. These investments will include collaborations across movies, themed hotels, cruise ships, quick-service restaurants, expanded toy partnerships, and videogames. 

Among these projects is a new licensing agreement that pairs Hasbro’s Play-Doh with Mattel’s Barbie in a fashion designer play set as well as a new videogame Hasbro will create with developer Sabre Interactive, which released Warhammer 40000 Space Marine 2 last year. Hasbro will also continue to expand outbound licensing, with Cocks hinting at its Nerf brand being made available given a recent decline in sales. Hasbro will spend about $250 million over the next few years on products, about half of which will go toward videogames, Goetter said. 

“Licensing is up big time,” Cocks said. “It’s a huge margin driver for us [and] it’s unexposed to some of the tariff drama that’s going on. As strong as our brands are, partners are the rocket fuel that helps them go supersonic.” 

For its part, Jakks Pacific has released Dog Man-related products in connection with the recent film (January 31st) based on author Dav Pilkey’s book series. Jakks’ launch of toys inspired by The Simpsons was “well received” last fall and there are plans for expansion this year, Jakks CEO Stephen Berman said. Jakks also launched shipments of King Homer plush that was available for pre-sale last October as an exclusive at Walmart and has Harry Potter robes launching with exclusive sales at Walmart in March. 

And while toymakers are working to grow brands through licensing in and out, there are still concerns around tighter consumer spending and rising material costs.  

There is potential for 10% tariffs being applied to goods imported into the U.S. from China and 25% tariffs for those coming from Canada and Mexico. As a result, some toymakers are shifting production away from China, a trend that began during President Trump’s first administration. At Hasbro, for example, about half of its U.S. toy and game production originates in China, but the company plans to cut that to under 40% by 2027, Goetter said. 

To further offset increased costs, including those associated with potential tariffs, Hasbro and Jakks are seeking to expand their presence in “value” retailers. The bulk of Jakks products (90%) retail for less than $50 and it recently signed a distribution agreement with Five Below, Berman said. Hasbro, meanwhile, is expanding its assortment of products priced at less than $30, Cocks said. 

“We have ample cash that we’re generating, which allows us to do other opportunistic initiatives, whether it means acquiring new IP on top of the existing IP and whether we look at potential acquisitions in the future,” Berman said. “This focus on affordability is always an asset during times of cost structure surges, whether that’s labor rates, oil and resin, or in this case, tariffs.”