By Mark Seavy

A year after tariffs cut into business, the toy industry is showing signs of recovery as several companies take a new tack in their strategies.

These strategies, including a focus on digital gaming, the kidult demographic, and anime, were illustrated last week when Jakks Pacific and Hasbro released Q2 earnings that showed further recovery from the tariffs imposed a year ago.

For its part, Hasbro is investing heavily in digital gaming. In addition to development around Magic the Gathering and Dungeons & Dragons, the toymaker is spending $100-$250 million on publishing agreements for the Exodus (Archetype Entertainment) and Warlock (Invoke Studios) titles, both of which are due in 2027. Hasbro will spend 60% of that amount prior to the games’ launch and projects that development costs will fall 25% in 2028, CEO Chris Cocks said. It expects to spend $50-$75 million on marketing the new titles, said CFO Gina Goetter.

Hasbro’s revenue from Magic the Gathering jumped 32% in Q2 to reach $633.8 million, with the segment’s digital and licensed gaming revenue in particular surging 17% to $135.5 million. Tabletop and digital versions of the Marvel Super Heroes collaboration with Magic have generated $300 million in revenue since launching in June. Hasbro is planning several launches for 2027 that combine Magic with-third party IPs, Cocks said.

Overall, Hasbro revenue increased 16% to $1.1 billion and while Magic increased by double digits, consumer products overall were up 5% to $463 million.

In contrast, Jakks Pacific leaned more heavily on traditional toys in Q2. Those included five-inch figures and other products tied to the Super Mario Galaxy Movie (April 1), which contributed to an increase of 17% to $139 million. Revenue from toys and consumer products jumped 21% to $97.5 million during the same period.

Jakks also benefitted from strong sales of its Disney Princess doll line, which includes Frozen, the third movie of which is being released by Walt Disney Animation Studios in November 2027. The company is also a licensee for Sonic the Hedgehog and Paramount Pictures will release the franchise’s fourth film in March 2027.

“We are truly a kids consumer products company, and we don’t forget about kids at the young age [birth to seven years old),” Jakks CEO Stephen Berman said. “That is the key focus a lot of companies are moving out of, and that is the key focus where we are diving deeper.”

However, both Hasbro and Jakks are also sharpening their focus on the kidult business.

Hasbro recently licensed Nintendo’s Legend of Zelda for a toy line that will be released in 2027 and is introducing Ghostbusters figures based on Kenner’s original designs to mark the film franchise’s 40th anniversary. And while Hasbro has seen significant success in the digital gaming space, where many kidult consumers engage with brands, it is making adjustments to its digital strategy.

The company took a $56-million write down against Q2 earnings in cancelling development projects due in 2028. These included developer Giant Skull’s work on a Dungeon & Dragons action-adventure title and Atomic Arcade’s plans for a GI Joe game based on the Snake Eyes character. Hasbro has 200 game projects in development or having been released, including those with Gameloft (D&D survival title) and Gameberry (Sorry!). Most games have Hasbro as a co-publisher, Cocks said.

“Four priorities will guide our digital strategy: focus, cost discipline, ownable platforms, and partnership,” Cocks said. “Our digital investment will center on trading card games and role-playing games, with brands that can become a significant digital franchise and expand across media over time. We are… concentrating investment behind the places where Hasbro has the best chance to build durable digital franchises.”

Jakks, meanwhile, is moving forward with plans to introduce anime-related products in 2027 that are being developed as part of agreements with Crunchyroll (anime figures) and Kodansha (manga). Jakks is also creating collectibles with Cover Corp. for its stable of Virtual YouTubers (VTubers), who use an animated virtual avatar instead of their real face.

“Anime segmentation, Manga, VTubers, and digital entertainers are truly kidult and above,” Berman said. “We are in all the areas of business.”

As toy companies plan these new launches, they continue to face tariffs that have weighed on sales for much of the past year. After the U.S. Supreme Court rejected an earlier tariff plan in February, President Trump renewed the effort last week with 10% levies on goods produced in countries that have forced labor.

Since tariffs were first imposed a year ago, the “market has adapted,” Berman said.  Prices were raised to reflect the added costs of not only tariffs, but also petroleum, resins, and container ships. Jakks has cut costs and brought prices back to pre-tariff levels with a focus on the sub-$30 products, he said. The company has also returned to free-on-board shipping (where the retailer takes possession of the goods for shipping) with 75% of Jakk’s orders being delivered in that manner in Q2. At the same time, the company “dove deep” into business with Five Below, T.J. Maxx, Ross Stores, and other retailers in the “value trade,” Berman said.

During this period, brands have proven to be a difference maker for consumers, according to Basic Fun CEO Jay Foreman, who said consumers will pay for products that carry emotional value. “They’re paying $29 for blind box figures… [they] will pay for products they really want.”